Workers Compensation Experience Rating: What Every Actuary Should Know

The calculation of plan parameters and rating values, which is described in Sections 5 and 6 of the original paper, has been significantly improved. The calculation of expected loss rates (ELRs) has been improved by breaking down published rates into (partial) pure premium components before adjusting for trend, development, and amendment factors that vary by component. Coupled with other refinements, this better reflects the distribution of injuries by class, and improves the accuracy of the ELRs. The calculation of D-ratios has been improved, using data more closely matching that of the experience period. Finally, changes have been made in the plan parameters to reduce swing in the experience modifications of small risks; in the course of implementation, this was referred to as graduating the plan.