What Does Prospective Rating Mean?

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What does Prospective Rating mean? Read on to discover the definition & meaning of the term Prospective Rating - to help you better understand the language used in insurance policies.

Prospective Rating

Prospective Rating

A method used in arriving at an insurance or reinsurance rate and premium for a policy period based on the loss experience of a prior period. Schedule credits, experience modification, and individual risk rating modifications are factors used in prospective rating, whereas losses incurred during the policy period have no effect on final premium. Guaranteed cost plans, with or without a dividend, are examples of prospectively rated insurance plans.

We hope the you have a better understanding of the meaning of Prospective Rating.

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