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Experience Rating: Maximum Mods

Experience rating modifications have maximum limits based on a formula.;

The Graduated Experience Rating Tables became effective 1/1/96 and allows for gradual maximums (caps) on debit modifications.  The cap formula had been as follows until 1/1/16:
CAP = 1 + 0.00005(E + 2E/G)
 
Effective 1/1/16 the formula was changed to:
CAP = 1.10 + 0.0004(E/G)
 
Where E = expected losses and
G = State Per Claim Accident limitation divided by 25,000 rounded to the nearest 0.05.
 
For the following years G is equal to:
 
Effective Date
Accident Limit
Limit/ 25,000
G Value (Rounded)
1/1/2000
52,000
2.08
2.10
1/1/2001
53,500
2.14
2.15
1/1/2002
57,000
2.28
2.30
1/1/2003
64,000
2.56
2.55
1/1/2004
71,500
2.86
2.85
1/1/2005
80,500
3.22
3.20
1/1/2006
92,000
3.68
3.70
1/1/2007
102,000
4.08
4.10
1/1/2008
109,500
4.38
4.40
1/1/2009
118,000
4.72
4.70
1/1/2010
125,000
5.00
5.00
1/1/2011
135,500
5.42
5.40
1/1/2012
147,000
5.88
5.90
1/1/2013
160,500
6.42
6.40
1/1/2014
172,000
6.88
6.90
1/1/2015
179,000
7.16
7.15
 1/1/2016
 184,500
7.38
7.40 
1/1/2017 190,000 ​   7.60 ​      7.60
  
For interstate rated risk, use the state per claim accident limit for the state with the most expected losses. Because an interstate risk is usually large, the cap formula may not have an effect.
 
This max or cap formula is shown as a footnote as "Cap on Modifications" in the Experience Rating Plan Manual, Part Five, Rates, at the end of the rate pages below the Table of Ballast Values chart.
 
To calculate a maximum mod, simply determine the expected losses for a risk and input that number into the attached spreadsheet. It will do the math.
 
State Per Claim Accident Limitation by State spreadsheet.

 

 

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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.