Excess Loss Ratios via Los Distributions

Modifications of the retrospective rating procedures were adopted this year by the National Council on Compensation Insurance. These modifications included the optional provision of limiting ratable losses to stated amounts of $10,000, $15,000, or $25,000, per accident. With such loss limitations, the adopted retrospective premium formula can be expressed as follows: Retrospective premium = basic premium + expected excess losses and claim expense + limited losses and claim expense, subject to the tax multiplier and the appropriate minimum and maximum premium limits.