A Note on Basic Limits Trend Factors

This paper explores the problem of estimating the basic limits trend once the overall trend has been determined. Although the log-normal, is used for numerical examples, it can be expected that the general conclusions hold for most actual claim size distributions. Generally speaking, the relative trend (that is, the basic limit trend relative to the unlimited trend) is less that 1.0 and decreasing as the ratio of the basic limits to the unlimited mean is decreasing. Practical applications of the relative trend concept are not limited to the basic limits ratemaking. An example is presented to show what the increase in subject wages will be for workers' compensation insurance, given a fixed dollar payroll initiation.