CGL Experience Rating Plan Flashcards
CIGL Mod formula
Company Subject Loss Cost
Expected loss for the risk, subject to basic policy limits, with adjustments; subject to experience modification
CSLC calculation, standard method
- BLEL = ELR x annual basic limits company premium
- Multiply by Table 13B factor
- Multiply by Table 13C factor
- Multiply by Table 14 factor (detrend)
Purpose of Table 13B PAFs
Brings loss costs for policy being rated up to an occurrence level
Purpose of Table 13C PAFs
Backs off from occurrence loss cost to loss cost of the prior policy type
This eliminates mid-tail coverage
Present Average Company Rate Method
Select special UW exposure base and calculate for policy period being rate and experience periods
Calculate average annual basic limits premium by subline
CSLC = AvgPrem x SpecExp x ELR x 13B x 13C x Detrend
Historical Exposures and Present Company Rates Method
Multiply exposures by current basic limit company rates
Multiply by ILFs at basic occurrence limits and actual policy annual agg limits
Sum across classes and locations to get one premium amount for each subline/year combination
CSLC = Premium x ELR x DeTrend
CIGL eligibility for schedule and/or experience rating
Z >= 0.03 for schedule rating
Z >= 0.07 for experience rating
Actual Experience Ratio (AER), CIGL experience rating plan
Comparing NCCI experience rating plan and ISO plan
Denominator of AER and EER
Expected ultimate losses and ALAE NOT limited by MSL
Expected development in ISO mod calculation
CSLC x EER x LDF
LDFs are 0 for claims-made policies
Assumed basic limit in ISO plan
Rule 5A ($100K) if not specifically listed
If ELR for manual premium does not equal actual ELR for risk
Multiply premium after mod by Expense Variation Factor
EVR = ELR for manual premium / actual ELR
Applying schedule rating in ISO plan
Sum up the individual credits/debits, capped at +/- 25%