Health · Chapter 19 · Premium Calculation
Claims Experience & Community Rating
Definition
Two ways insurers project future claims. Experience rating — for group health, underwriters price coverage using the group's own past claims experience (claims tables built on loss history). Community rating — used mainly for smaller groups and individuals — charges the identical premium rate structure to ALL subscribers or groups in a community, regardless of their past or potential loss experience, based on the insurer's overall claims experience and healthcare costs in that geographic area.
In plain English
Experience rating: your group's history sets your price. Community rating: everyone in the area pays the same, good risks and bad alike.
Easy to confuse with
These are what this term gets tested against — if you can't tell them apart cold, drill the contrast.
Related terms