Turn claim history into a confident modifier. Adjust premiums with smart splits and weights today. Know the impact before quoting and renewing policies accurately.
| Type | Item | Value | Notes |
|---|---|---|---|
| Class | 8810 payroll | 500,000 | Payroll used to build expected losses |
| Class | 8810 ELR | 0.250 | Expected loss per $100 payroll |
| Class | 8810 D-ratio | 0.400 | Expected primary share of expected losses |
| Claim | CLM-1044 incurred | 52,000 | Primary is capped by split point |
| Parameter | Split point | 18,500 | Primary = min(incurred, split point) |
An experience modifier often translates prior losses into a pricing factor. A mod of 0.85 reduces a 120,000 manual premium to 102,000, while 1.20 lifts it to 144,000. Many mid-size accounts see movements of 0.05 to 0.15 year over year, so small changes can swing cash flow materially.
Expected Losses are built from payroll and the expected loss rate (ELR) per 100 of payroll. For example, 500,000 payroll with an ELR of 0.25 produces 1,250 expected losses. Adding a second class with 300,000 payroll and 0.40 ELR adds 1,200 more. Higher ELRs typically reflect higher hazard classes, making accurate classification critical.
Claims are split at the selected split point. With an 18,500 split point, a 12,000 claim is fully primary, while a 52,000 claim is 18,500 primary and 33,500 excess. Primary losses drive the modifier most strongly, while excess losses are partially weighted, preventing one shock loss from dominating the result.
The weighting value W governs how much excess losses count. In estimate mode, W increases as expected losses grow, reflecting greater credibility for larger employers. The ballast B adds stability to both numerator and denominator. A higher K generally lowers volatility, but can also slow improvement when loss performance gets better.
Use the calculated EMR to preview renewal impact and to test “what-if” scenarios. Reducing one 30,000 claim by 10,000 at an 18,500 split point cuts excess first, improving the mod less than reducing primary. Track expected primary versus actual primary and focus on frequency controls, return-to-work, and claim closure timing. Underwriters treat 1.00 as average. Each 0.10 change equals 10% change on mod lines. Use exports to document assumptions and share with stakeholders during budgeting, quoting, and reviews.
It means the modifier increases your mod-applied premium by about 10%. If your manual premium is 120,000, an EMR of 1.10 estimates an adjusted premium near 132,000.
Use the split point applicable to your rating plan or bureau circular for the experience period. Changing the split point shifts losses between primary and excess, which can materially change the modifier.
ELR converts payroll into expected losses, and D-ratio allocates expected losses into expected primary and expected excess. Both inputs define the denominator that your actual losses are compared against.
W controls how much excess losses influence the mod. Higher W gives excess losses more credibility, usually for larger accounts. In estimate mode, W is derived from expected losses and the stabilizing constant.
Use incurred amounts consistent with your loss runs: paid plus case reserves, and any reportable medical and indemnity components. Consistency across the experience period is more important than the specific accounting view.
Because reductions may apply to excess first. If the claim already exceeds the split point, lowering the excess portion can have a smaller effect than lowering primary. Frequency reduction typically improves modifiers faster than severity changes.
Important Note: All the Calculators listed in this site are for educational purpose only and we do not guarentee the accuracy of results. Please do consult with other sources as well.