What term is used to describe the adjustment of workers' compensation based on the previous three years of claims experience?

The term that describes the adjustment of workers' compensation premiums based on the previous three years of claims experience is known as "Experience Rating." This method allows insurers to determine a premium that reflects the actual loss record of an employer in comparison to the industry average.

Experience rating helps to ensure that businesses with better safety records, and therefore lower claims, pay lower premiums, while those with higher claims experience pay more. This creates an incentive for businesses to maintain safe working conditions and reduce injuries, as they can benefit from reduced insurance costs through effective risk management.

In the context of workers' compensation, using the experience rating methodology ensures that premiums are more accurately aligned with the risk exposure of the employer, ultimately helping manage costs while promoting safety.