How many firms would get a higher or lower Experience Modification Factor using the proposed 2007 Experience Rating Plan?
Each year, approximately 80% of the firms have compensable-claim-free experience and these firms will have no significant change to their experience rating calculation. Of the remaining 20% of firms that are not compensable-claim free, applying the new Experience Factor Calculation to historical data for firms with compensable claims, approximately 41% of these firms would have a larger Experience Factor under the new plan and approximately 41% would have a smaller Experience Factor under the new plan and the remaining 18% would have the same factor under either plan based upon a study of rating year 2007 data. So approximately 41% of 20% = 8% of all firms will have a larger factor as a result of the changing of the plans. Note that based on a study of rating years 2000 through 2004, it was previously estimated that of the remaining 20% of the firms that are not compensable claim-free, 44% of the firms would have larger factors, 39% would have smaller factors and 17% would have the sam
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