Final answer:
Credibility in ISO schedules and experience rating refers to the measure of reliability and trustworthiness of the data used to determine insurance premiums. It involves balancing the insurer's actual loss experience with the industry average and making adjustments to premiums based on the insured's own loss history.
Step-by-step explanation:
In the context of ISO schedules and experience ratings, credibility refers to the measure of reliability and trustworthiness of the data used to determine insurance premiums.
The credibility factor is used to balance the insurer's actual loss experience with the industry average. It helps in making adjustments to premiums based on the insured's own loss history in relation to the industry as a whole.
To calculate credibility, a formula is used which takes into account the policyholder's own experience as well as the credibility factor.
The credibility factor ranges from 0 to 1, representing the weight given to the policyholder's own experience compared to the industry average.
A credibility factor of 0 indicates that the policyholder's own experience is disregarded, while a factor of 1 gives full weight to the policyholder's experience.
The complete question is: What is Credibility for ISO schedule and experience rating?