Experience Rating Formula

Some of you have asked about the actual formula.  Here it is!

The experience rating modification formula:

Is used to determine the experience rating modification for all risks eligible for experience rating.
Includes the data of all states in a risk’s experience period to produce an experience rating modification.
Primary Losses Stabilizing Value Ratable Excess Totals
Actual Primary Losses + (1 minus Weighting Value)
x
Expected Excess Losses
+ Ballast Value + Weighting Value
x
Actual Excess Losses
= Total A
Expected Primary Losses + (1 minus Weighting Value)
x
Expected Excess Losses
+ Ballast Value + Weighting Value
x
Expected Excess Losses
= Total B

For the experience rating modification, divide Total A by Total B, then round to two decimal places.

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