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.

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