Suppose a firm had an experience factor of 1.4663 during 2008 and the computed factor for 2009 was 0.7000. Suppose also that the firm has a compensable claim in its experience period so it isn't eligible for the compensable-claim-free maximum factor.

The computed factor of 0.7000 is more than 25% smaller than 1.4663 (0.7000 / 1.4663 = 0.4774 so it is 52.26% smaller) so the 25% annual limitation would normally limit the 2009 experience factor to 1.0997 (= 1.4663 x 0.75).

However, since the computed factor (0.7000) is less than 1.0000 and the prior year experience factor (1.4663) is greater than 1.3333, the exception to the 25% annual limitation applies. The final factor is 1.0000.