| Compensable-Claim-Free Example |  | |
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Calculation of Actual Losses
This example considers the small firm whose Expected Losses were calculated in the Expected Loss Example, and we assume that this firm has no compensable claims during its Experience Period. This example calculates the firm's actual losses for experience rating in 2007.
The summary of the Actual Losses is shown in the table below. There are two Medical Only claims with Incurred Amounts of $916 and $1,894 (column (d)).
| Actual Loss Summary | |||||
|---|---|---|---|---|---|
| (a) | (b) | (c) | (d) | (e) | (f) |
| Actual Losses | |||||
| Class | Claim no. | Loss type | Incurred | Charged | Primary |
| 1007 | 1 | Med Only | 1,894.00 | 384.00 | 384.00 |
| 1007 | 2 | Med Only | 916.00 | 0.00 | 0.00 |
| Total | 2,810.00 | 384.00 | 384.00 | ||
Because they are both Medical Only Claims the 2007 Medical Only Deduction applies, so they are reduced by the lesser of $1,510 or the Incurred Loss Amount. Claim 1 is reduced by $1,510 to $384 (column (e)). Claim 2 is below $1,510, so it is reduced to zero (column (e)).
The Proposed 2007 Primary Formula is then applied to determine the primary portion of each loss, which is shown in column (f).
Both of the claims are below the Maximum Claim Value for rating year 2007, so they are not capped.
Neither of the claims is a fatality, so the Incurred Loss Amount is not replaced with the 2007 Average Death Value.
