DEFINITION of 'Calendar Year Experience'

Calendar year experience is used in the insurance industry to signify an insurance company's "experience" during a calendar year. It is the difference between the premiums earned and the losses that have been incurred (but are not necessarily occurring) within a 12-month accounting period – regardless of whether the premiums have been received, or the losses have been booked or paid.

BREAKING DOWN 'Calendar Year Experience'

Calendar year experience — also known as underwriting year experience or accident year experience — is the insurance company’s underwriting income, and measures the premiums and losses entered on accounting records during the 12-month calendar. Insurance underwriters insure people and businesses by weighing up the risks and determining the premium to charge to insure that risk. To be profitable, their calendar year experiences need to be greater than 1.

An insurer’s calendar year experience is, therefore, a measure of how well a company underwrites insurance and its ability to evaluate risks. Note that the company may earn a premium or incur a loss at one point in time and receive or payout the cash associated with those events later.

Calendar Year Experience = Accounting Earned Premium / Incurred Losses and Loss Adjustment Expenses for all losses

Incurred Losses = Claims paid out during the year and changes to the loss reserves

  1. Calendar Year Accounting Incurred ...

    Calendar year accounting incurred losses is a term used in the ...
  2. Experience Rating (Insurance)

    Experience rating (insurance) is the amount of loss that an insured ...
  3. Loss Development

    Loss development is the difference between the final losses recorded ...
  4. Valuation Premium

    A valuation premium is rate set by a life insurance company ...
  5. Converted Losses

    Converted Losses are the total amount of claims incurred multiplied ...
  6. Earned Premium

    Earned premium is a pro-rated amount of paid-in-advance premiums ...
Related Articles
  1. Insurance

    Is Insurance Underwriting Right For You?

    If you have excellent analytical skills and an eye for detail, this may be your calling.
  2. Insurance

    How To Value An Insurance Company

    In the insurance space, accurate predictions of metrics such as ROE are important, and paying a low P/B can help put the odds in investors' favor.
  3. Financial Advisor

    All About Impaired Risk Annuites and Insurance

    What are impaired risk insurance products and understanding life insurance rate classes, table ratings and flat extra premiums.
  4. Financial Advisor

    Understanding Life Insurance Premiums

    When buying permanent life insurance, what amount of premium should you pay for the coverage?
  5. Insurance

    The Basics of Premium Financing for Life Insurance

    Here's a look at the role premium financing plays in life insurance and how it works.
  6. Insurance

    Term Life Insurance: Everything You Need to Know

    Term life insurance is an affordable way to financially protect your loved ones after your death. Here's what you need to know before purchasing a policy.
  7. Insurance

    Why Health Insurance Premiums Will Rise in 2017

    To battle the costs and challenges of the Affordable Care Act, many health insurances are raising their premiums in 2017.
  1. Why is my insurance premium so high/low?

    Insurance premiums can be affected by many factors including: type and amount of risk size of deductible amount of coverage ... Read Answer >>
  2. How do I become an underwriter?

    Learn about the education, training and certification required to become an insurance underwriter and the important qualities ... Read Answer >>
  3. How To Choose an Insurance Company?

    Knowing how to choose an insurance company is not an easy task, there are several factors you should consider, learn to make ... Read Answer >>
Trading Center