What factor influences the final premium based on the insured's own history of losses?

Experience rating is a crucial component in determining the final premium an insured pays based on their own history of losses. This method evaluates the insured’s past claims history and loss experience to assess risk more accurately. When an individual or entity has a record of frequent or severe claims, this typically results in a higher premium, reflecting the increased risk the insurer takes on. Conversely, if a policyholder has a clean record with few or no claims, they may benefit from lower premiums.

The other options relate to different aspects of insurance pricing. Rate making involves setting the overall rates for different classes of business but does not consider individual loss history. Loss adjustment pertains to the process of settling claims and does not directly influence premium calculations. Premium deficiency refers to a situation where the premium collected is less than the amount needed to cover potential losses, which is not specifically tied to an insured’s past claims history. Therefore, experience rating is the most relevant factor in this context, making it the right choice.