| Example of the Expected Loss Calculation with Two Risk Classes |  | |
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Firms reporting in more than one risk class
In this example, the firm installs overhead garage doors and this work is reported in risk class 0514-00. The firm also has an office staffed by an employee who answers phones, handles correspondence and bookkeeping whose hours are reported in risk class 4904-00. This example calculates the firm's expected losses for experience rating in 2007.
| Expected Loss Calculation Summary | |||||
|---|---|---|---|---|---|
| 0514 risk class | |||||
| (a) | (b) | (c) | (d) | (e) | (f) |
| Fiscal Year | Employee Units (hours) | Expected Loss Rate | Expected Losses | Primary Ratio | Expected Primary Losses |
| 2003 | 6,716 | 1.8596 | 12,489.38 | 0.479 | 5,982.41 |
| 2004 | 4,952 | 1.7086 | 8,460.40 | 0.479 | 4,052.53 |
| 2005 | 5,122 | 1.4222 | 7,284.26 | 0.479 | 3,489.16 |
| Class Total | 16,790 | 28,234.04 | 13,524.10 | ||
| 4904 risk class | |||||
| (a) | (b) | (c) | (d) | (e) | (f) |
| Fiscal Year | Employee Units (hours) | Expected Loss Rate | Expected Losses | Primary Ratio | Expected Primary Losses |
| 2003 | 960 | 0.0298 | 28.61 | 0.573 | 16.39 |
| 2004 | 960 | 0.0281 | 26.98 | 0.573 | 15.46 |
| 2005 | 960 | 0.0236 | 22.66 | 0.573 | 12.98 |
| Class Total | 2,880 | 78.25 | 44.83 | ||
| All Classes | 19,670 | 28,312.29 | 13,568.93 | ||
In each risk class the expected losses are calculated for each of the three years in the experience period. For Rating Year 2007 the experience period consists of the three fiscal years 2003, 2004 and 2005.
Column (b) shows the firm's hours worked. Column (c) shows the Expected Loss Rates for Rating Year 2007.
The Expected Losses in column (d) are the result of multiplying the hours in column (b) by the rates in column (c). The firm's total Expected Losses are shown in the All Classes row of column (d).
The Rating Year 2007 primary ratios are shown in column (e). Column (f) is the result of multiplying the Expected Losses in column (d) by the Primary Ratios in column (e). The Expected Primary Losses for the firm are shown in the All Classes row of column (f).
One can find the Expected Loss Rates and the Primary Ratios for any class by looking them up in the Expected Loss Rate and Primary Ratio tables.
Additional information
See WAC 296-17-31017 (www.leg.wa.gov) and WAC 296-17-31018 (www.leg.wa.gov) for more information on reporting work in more than one risk class.
