Managing Commercial Lines Pricing Levels in a Loss Cost Environment

The Percent of Loss Cost statistic (PoLC) is an effective tool, either alone or in conjunction with standard renewal pricing reports, to measure changes in commercial lines price levels in a loss cost environment. This paper demonstrates the calculations and definitions associated with the PoLC statistic. A case study for workers' compensation is presented which demonstrates a practical application of how PoLC can be used to segment a book of business when implementing indicated rate changes. Finally, sample reports are developed to monitor pricing results versus stated goals.