1998 Adjustment NCCI Exper. Rating推荐.pdfVIP

2014-CAS8 §3 1998 Adj. NCCI Exper. Rating Plan HCM 5/13/14, Page 83 32 Section 3, The 1998 Adjustment to the NCCI Experience Rating Plan Changes Made to the NCCI Experience Rating Plan in 1998: 1. Reducing the Weight of Medical Only Losses. 2. Increasing the Weight on Excess Losses. 3. Inflation-Sensitive Primary-Excess Split of Actual Losses. Reduction in Weight for Medical-Onlys: As before, Medical Only Losses are split into a primary and excess portion, as are any other losses. Currently that split is made at $5000. However, now only 30% of the primary and excess medical only losses enter the experience rating calculation. A $3000 medical only claim would have (30%)(3000) = $900 actual primary, and no actual excess. A $9000 medical only claim would have (30%)(5000) = $1500 actual primary, and (30%)(4000) = $1200 actual excess. Exercise: Rachel had a medical only claim for $8000. Anthony had a medical only claim for $4000. In addition there were 14 small medical only claims, each of size less than $2000, that totaled $9,000. What is the contribution to the actual primary and actual excess losses for experience rating? [Solution: Rachelʼs claim contributes (0.3)($5000) = $1500 to the primary, and (0.3)($8000 - $5000) = $900 to the excess. total contribution to primary = 1500 + (0.3)(4000) + (0.3)(9000) = $5400. total contribution to excess = $900.] Prior to this change, many employers would pay medical only claims themselves and not report them to the insurer.33 Thus these claims did not enter the experience rating plan. By reducing the impact on experience rating of medical only claims, it reduces the financial incentive not to report these claims. This change reduces the ratable medical only losses, reducing the expected primary and excess losses. Thus the Expected Loss Rates (ELRs) will be slight