Retrospective Rating: Excess Loss Factors

Keywords: Workers Compensation, Experience Rating Plans, Excess of Loss. This paper explains how Excess Loss Factors (ELFs) are computed. It is organized so the essential elements of the computation are described first, then the detailed origins of these elements are added. The detail may be found in the many spreadsheets used in the production of ELFs. The writer has attempted to show how each fits into the structure and leads to the final values. The calculations are quite technical; to understand the whole, it may be necessary to trace the numbers through the spreadsheets using the text as a guide. The procedure of computing ELFs has changed since it was last documented, the most significant revision occurring in 1986. In describing the parts that have changed, the author has supplied justifications, or at least rationales, for the particular changes.