Which rating is based on loss control efforts in a factory or business?

The schedule merit rating is designed to evaluate the safety and loss control efforts of an individual business or factory. This rating system assesses the specific risks associated with that business and considers the effectiveness of its loss control measures. In this system, the insurance premium can be adjusted based on the implementation and outcomes of safety programs and practices undertaken by the business. When a company demonstrates strong loss control practices, it can lead to lower premiums, while poor practices might result in higher rates.

Experience rating, conversely, is focused on a business’s past loss experience over a set period, affecting future rates based on claims history. Retrospective rating adjusts the premium based on the actual loss experience during the policy period, but it does not primarily consider ongoing loss control efforts. Individual rating pertains to the specific characteristics of a business without a direct focus on loss control initiatives. Therefore, the schedule merit rating specifically recognizes and rewards loss control efforts, making it the correct choice.