What is the assessment method that considers the historical claims data of the insured to modify the premium?

The assessment method that considers the historical claims data of the insured to modify the premium is known as Experience Rating. This method involves analyzing the insured's past claims experience in order to determine the risk and set premiums accordingly. If an insured has a history of high claims, their premium will increase to reflect the higher level of risk they pose to the insurer. Conversely, if the insured has a lower claim frequency and severity, it may result in a reduced premium. Experience Rating closely aligns the cost of insurance coverage with the actual risk presented by the insured’s historical claims data, making it a fairer system for pricing.

Other methods, such as Manual Rating, utilize broad statistical data relevant to specific classes of risk rather than individual claims history, while Judgment Rating relies on an underwriter's experience and expertise without a structured formula, and Retrospective Rating adjusts premiums based on the insured’s actual loss experience over a policy period but does not primarily focus on historical claims to set the initial premium. Each of these alternatives serves different needs and objectives in the rating process but does not specifically alter the premium based on an individual’s claims history like Experience Rating does.