Why are the experience factors increasing for large firms with good claim experience?
In actuarial studies of Washington data we observed that large firms with low experience factors had larger loss ratios (the ratios of incurred claim costs to assessed premiums) than large firms with high experience factors. By lowering the weight, or credibility, given to the actual claim experience of large firms the experience factors for those with better claim experience will increase and the factors for those with worse claim experience will decrease. With this change the assessed rates should be more proportional to the expected claim costs for large firms, bringing the subsequent loss ratios into balance, and making the plan more fair.
