CGL Experience Rating Plan

Question 1

CIGL Mod formula

Answer 1

Question 2

Company Subject Loss Cost

Answer 2

Expected loss for the risk, subject to basic policy limits, with adjustments; subject to experience modification

Question 3

CSLC calculation, standard method

Answer 3

1. BLEL = ELR x annual basic limits company premium
2. Multiply by Table 13B factor
3. Multiply by Table 13C factor
4. Multiply by Table 14 factor (detrend)

Question 4

Purpose of Table 13B PAFs

Answer 4

Brings loss costs for policy being rated up to an occurrence level

Question 5

Purpose of Table 13C PAFs

Answer 5

Backs off from occurrence loss cost to loss cost of the prior policy type

This eliminates mid-tail coverage

Question 6

Present Average Company Rate Method

Answer 6

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

Question 7

Historical Exposures and Present Company Rates Method

Answer 7

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

Question 8

CIGL eligibility for schedule and/or experience rating

Answer 8

Z >= 0.03 for schedule rating

Z >= 0.07 for experience rating

Question 9

Actual Experience Ratio (AER), CIGL experience rating plan

Answer 9

Question 10

Comparing NCCI experience rating plan and ISO plan

Answer 10

Question 11

Denominator of AER and EER

Answer 11

Expected ultimate losses and ALAE NOT limited by MSL

Question 12

Expected development in ISO mod calculation

Answer 12

CSLC x EER x LDF

LDFs are 0 for claims-made policies

Question 13

Assumed basic limit in ISO plan

Answer 13

Rule 5A ($100K) if not specifically listed

Question 14

If ELR for manual premium does not equal actual ELR for risk

Answer 14

Multiply premium after mod by Expense Variation Factor

EVR = ELR for manual premium / actual ELR

Question 15

Applying schedule rating in ISO plan

Answer 15

Sum up the individual credits/debits, capped at +/- 25%