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.