NCCI 2 - Retro Rating for WC and Employers Liablity Flashcards Preview

CAS Exam 8B > NCCI 2 - Retro Rating for WC and Employers Liablity > Flashcards

Flashcards in NCCI 2 - Retro Rating for WC and Employers Liablity Deck (2):
1

Excess loss premium

Intend to minimize the effect that high cost losses will have on retro premium

Excess loss premium = SP * ELPF *LCF

2

Retro Development Prem
Reason why an insurance company will include retro development factor

stabilize premium adjustment. Included in first 3 adjustment of retro premium.

Retro development premium = SP*RDPF*LCF

- include this b/c it stabilizes premium adj. bringing them closer to ultimate so that premium paid upfront is closer to final amount.
- it reduces credit risk of collecting subsequent premiums from adjustment.