|
| An Example of the Exception to the 25% Rule |  |
| |
Suppose a firm had an experience factor of 0.7000 during 2006 and the computed factor for 2007 was 1.1971. Suppose also that the firm has a compensable claim in its experience period so it is not eligible for the compensable-claim-free maximum factor.
The computed factor of 1.1971 is more than 25% larger than 0.7000 (1.1971 / 0.7000 = 1.7101 so it is 71.01% larger) so the 25% annual limitation would normally limit the 2007 experience factor to 0.8750 (= 0.7000 x 1.25). However since the computed factor (1.1971) is greater than 1.0000 and the factor limiting the change to 25% (0.8750) is less than 1.0000, the exception to the 25% annual limitation applies. The final factor is 1.0000.
| Computed Experience Factor |
1.1971 |
| Claim Free Max |
N/A |
| Limitation |
1.0000 |
| Final Factor |
1.0000 |
| |
| Prior Year Factor |
0.7000 |
