More Workers Comp - earned prem & parallelogram method

Vladimir Shander ( VShander@compuserve.com )
Sat, 28 Feb 1998 10:30:50 -0500

Formula you use is algebraically different from the one in the book:

Let the exposure period consist of 2 pieces :
Period1 - size A with rate level x =

and =

Period2 - size B with rate level y
Let current level be z and A+B=3D1.

Feldblum=92s formula calculates average historical premium level as xA+yB=
, so =

that the on-level factor is =

z/(xA+yB). =

You calculate separate on-level factors for Period1 (z/x) and for Period2=
(z/y) and =

then average them, getting =

A(z/x)+ B(z/y) =3D z(A/x+B/y)

I know no actuarial interpretation for the weighted average of on-level f=
actors.

Vladimir=