Paul
----------
> From: Lawn,Yin <Yin.Lawn@cna.com>
> To: studygroup9 <studygroup9@lists.casact.org>
> Subject: Re: NCCI experience rating plan - Part 6 review
> Date: Tuesday, July 21, 1998 3:37 PM
>
> That won't be necessary. Is minimum premium a part of standard premium?
> Or is it just a minimum premium that puts a floor on standard premium?
> In other words, can standard premium be lower than minimum premium?
> Thank you.
>
> ---Yin
> ----------
> From: Gwendolyn L. Anderson
> To: Lawn Yin
> Cc: studygroup9
> Subject: Re: NCCI experience rating plan - Part 6 review
> Date: Tuesday, July 21, 1998 7:02AM
>
> Please excuse oversimplifying your question. No, I wasn't trying to say
> that
> minimum premiums are calculated in the same way even within the realm of
> experience rating. Tiller shows the Workers Comp experience rating plan
> minimum is based on administrative expenses for the projected full time
> equivalent personnel for the policy period, but I am not so sure that
> method
> would necessarily work with the NCCI plan. In any case, it is an
> example of a
> method that produces a fixed dollar value that would not be subject to
> the
> modification. Are you looking for an exact method to use for
> calculating
> minimum premium for the NCCI experience rating plan? If you are looking
> for a
> formula, I might be able to ask someone in another department. Are you
> also
> interested in an expense constant formula? It doesn't seem important
> for the
> exam, but I guess it could help to jog the memory a bit.
>
>
>
>
>
> Yin.Lawn@cna.com ("Lawn,Yin") on 07/21/98 10:12:00 AM
> To: studygroup9@lists.casact.org @ INTERNET
> cc: (bcc: Gwendolyn L. Anderson)
> Subject: Re: NCCI experience rating plan - Part 6 review
>
> Is this minimum premium the minimum premium in Retro plan? That can't
> be true. Minimum premium in Retro is expressed as a percentage of
> standard premium which has already been subject to the Mod. For example,
> I can quote a Retro with a minimum premium of .3 of standard premium,
> but experience modification has already been applied in order to
> generate my standard premium.
>
>
> ----------
> From: Gwendolyn L. Anderson
> To: Lawn Yin
> Cc: studygroup9
> Subject: Re: NCCI experience rating plan - Part 6 review
> Date: Tuesday, July 21, 1998 4:12AM
>
> The policy minimum premium is the least amount you will charge
> regardless of
> the modification. In any experience/retrospective rating plan, there is
> generally a minimum and a maximum premium which serves to spread losses
> among
> insureds. Otherwise the concept of insurance would break down, since
> insureds
> with catastrophic losses might pay exorbitantly high premiums and those
> with no
> losses might pay close to nothing. Minimums and maximums are covered in
> Tiller's chapter of the Foundations text.
>
> The expense constant is your fixed expenses which are added to losses,
> instead
> of being loaded multiplicitively as a percentage of loss or premium
> (your
> variable expenses). The expense constant also serves to more equitably
> allocate costs among insureds, as there are fixed cost associated with
> issuing
> any policy, regardless of the policy size. ISO's "Expense Provisions in
> the
> Rates" compares fixed and variable expenses.
>
> The loss constant is also additive, but in reality it is added to
> premium, not
> losses. The loss constant is used to smooth the loss ratio between
> large and
> small insureds. It has little effect on the expected loss ratio of
> large
> insureds, but will flatten the ELR implicit in the rates of small
> insureds.
> The loss constant is described and demonstrated in Feldblum's Workers
> Compensation paper on page 86.
>
>
>
>
>
>
> Yin.Lawn@cna.com ("Lawn,Yin") on 07/21/98 06:03:00 AM
> To: Studygroup9@lists.Casact.org @ INTERNET
> cc: (bcc: Gwendolyn L. Anderson)
> Subject: NCCI experience rating plan
>
> In NCCI experience rating plan, loss constant, expense constants and
> policy minimum premium are not subject to experience rating
> modification. Anyone has any idea what is loss constant, expense
> constant, and policy minimum premium?
>
> ---Yin
>
>
>
>