Insurance policies in which each firm pays a different price for medical insurance depending upon the past medical bills of the firm's employees are based upon a(n)

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Experience rating is a method of determining insurance premiums based on the past experience of an individual or group. This is commonly used in medical insurance policies where each firm is charged a different price depending on the past medical bills of the firm's employees. The goal of experience rating is to allocate the cost of medical treatment according to the risk posed by the group, so that insurance companies can charge premiums to accurately reflect the expected cost of providing medical coverage. Community rating charges the same premium rate to all individuals regardless of their age, health status or past medical history. Asymmetric information rating and adverse selection rating are not terms used in the insurance industry.

Insurance Policies in Which Each Firm Pays a Different Price