Experience rating and credibility

Let me begin with some practical examples of experience rating.a) Swiss Automobile Tariff 1963— Within each tariff-position there are 22 grades: — The new owner of a car starts at grade 9— The basic premium is determined on the basis of objective characteristics of the risk and essentially depends on the horse-power classification of the car— The 22 grades are experience-rated as follows: For each accident one rises three grades and for each accident-free year one falls one grade. A driver who has I accident in every 4 years hence remains within four adjacent grades.b) Sliding Scale Premiums in ReinsuranceExcess of Loss Contracts often stipulate that:The rate of premium to be applied to the subject premium volume is determined at the end of the cover period as follows: subject to a minimum of 0,04and a maximum of 0,08c) Participation in Mortality Profit in Group Life InsuranceA group life insurance covers the members of the group on a one year term basis. It is often agreed that at the end of the year mortality profits are given back to the group according to the formularefund = x% gross premiums — y% claims (where x