Parameterizing the Workers' Compensation Experience Rating Plan

This paper describes the underlying assumptions and statistical evaluations used to develop the Revised Workers' Compensation Experience Rating Plan. This revision is being filed in all jurisdictions in which NCCI administers the Plan. In addition, it has been recommended to the independent jurisdictions. The foremost characteristic of the new plan is that it was thoroughly and objectively tested to see that its performance was optimal. As described in the body of the paper, mathematical statistics provide justification for the mathematical form of the modification, but the coefficients were evaluated by extensive trial and error. The resulting plan will produce ratings which justify the adjective Standard to the individual risk premium.