Example of the Expected Loss Calculation

	Frequently Asked Questions

The expected losses are calculated for each of the three years in the experience period. The firm reports all of its hours in the single class 1007. This example calculates the firm's expected losses for experience rating in 2007.

Expected Loss Calculation Summary

Expected Loss Calculation Summary
(a)	(b)	(c)	(d)	(e)	(f)	(g)
Class	Fiscal Year	Employee Units (Hours)	Expected Loss Rate	Expected Losses	Primary Ratio	Expected Primary Losses
1007	2003	918	0.3725	341.96	.490	167.56
1007	2004	921	0.3431	316.00	.490	154.84
1007	2005	1,237	0.2861	351.91	.490	173.42
Total		3,076		1,011.87		495.82

Column (c) shows the firm's reported exposures or employee units. Column (d) shows the Expected Loss Rate in the Expected Loss Rates for Rating Year 2007.

The Expected Losses in column (e) are the result of multiplying the exposures in column (c) by the rates in column (d). The total of column (e) is the firm's Expected Loss. The Primary Ratio in column (f) is the Primary Ratio for Rating Year 2007. Column (g) is the result of multiplying the Expected Losses in column (e) by the Primary Ratio in column (f). The total of column (g) is the Expected Primary Loss for the firm rounded to the nearest penny.