What calculation is often used for determining premiums on large group life or health insurance plans?

Experience rating is a crucial calculation used for determining premiums on large group life or health insurance plans because it bases the premium amount on the actual loss experience of the specific group being insured. This method considers the historical claims data of the group, which allows insurers to assess the risk associated with that particular group's health status and claim patterns. As a result, groups with fewer claims or lower costs may benefit from lower premiums, while those with higher claims may face increased costs.

This approach provides a more tailored and individualized assessment of risk compared to other methods, which either rely on generalized data or do not adjust premiums based on the group’s specific claims history. Other methods like manual rating rely on standardized rates that do not take the claims experience of a particular group into account, making them less relevant for larger groups with unique health risks.