What does Experience Account mean? Read on to discover the definition & meaning of the term Experience Account - to help you better understand the language used in insurance policies.
An account into which premiums are deposited that is established as part of a finite risk insurance program. There is no risk sharing with the funds of any other of the insurer's clients in an experience account (i.e., they contain only a single insured's reserve fund that has been established for a specific program). Therefore, balances reflect an individual insured's actual loss experience under a finite program. The account earns investment income, and at the end of the policy term (usually several years), any principal and interest that has not been paid out as losses is returned to the insured.
We hope the you have a better understanding of the meaning of Experience Account.