What does Policy Year Experience mean? Read on to discover the definition & meaning of the term Policy Year Experience - to help you better understand the language used in insurance policies.
Policy Year Experience
The premium and losses associated with a given annual policy period. The policy year experience for an individual insurance policy includes each premium and loss transaction that relates to that particular policy. An aggregate policy year experience for an entire book of business is calculated by including the individual experience of all policies that became effective during that year. For example, 2014 policy year data would include the experience of all policies effective between January 1, 2014, and December 31, 2014, regardless of the date on which losses or other events associated with those policies occur. This approach provides a clear match between losses and premiums.
We hope the you have a better understanding of the meaning of Policy Year Experience.