When firms experience their first compensable claim, their experience factor will increase a large percentage even for only an additional one dollar claim charge. To reduce this effect L&I changed the system to:

  1. Increase credibility weights for small firms.
  2. Deduct a small amount ($1,510 in 2007) from each Medical-Only claim.

The chart below illustrates the percentage change to the experience factor due to the first dollar of compensable claim costs under both the 2006 plan and the 2007 plan.

A chart showing the computed percent change in experience factor due to the first dollar of compensable claim costs for previously compensable-claim free firms. The 2006 plan shows an increase from 10 percent to 30 percent, approximately, while the 2007 plan shows an increase from 2 percent to 13 percent, approximately.

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