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Losses: Unlimited in Pure Premiums

Losses are limited, but then are adjusted to an unlimited basis.

Question:
Are losses limited in the pure premium calculations? In the Technical Supplement to the 1/1/02 rate filing, Appendix B-I, the "indicated pure premiums" column appears to limit losses at $698,000. However, the "pure premiums present on rate level" column states that losses are unlimited.

Answer:
The losses are limited, but then are converted to an unlimited basis using an unlimited to limited ratio, thus the term "converted losses." Please refer to the last step in Appendix B-1 of the technical supplement. The present on rate levels are those from last year's filing and thus are on an unlimited basis, consistent with the indicated pure premiums.

The material in this document has been prepared and shared for informational purposes only and should not be relied upon as legal advice on any particular situation.