Accident Limitations for Retrospective Rating [Discussion]

This paper presents a method for calculating excess loss premium factors (ELPF's). Applying the ELPF to the standard premium determines the premium required to cover losses in excess of a given per accident limitation. The ELPF is essentially calculated in two phases. First, claim size distributions are required for three types of claims: deaths, permanent total disabilities and major permanent partial disabilities. The claim size distribution gives the percentage of total losses for that injury type which are in excess of a certain accident limitation. Second, the percentage of losses by injury type in excess of the accident limitation are multiplied by the cost of that injury type as a percentage of total premium. Adding the costs for the three injury types yields the ELPF. Auto Liability, Workers Compensation, Retrospective Rating