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  #11  
Old 08-15-2019, 09:27 AM
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Originally Posted by therealsylvos View Post
Check out the appendix to W&m. Specifically D-17.
This is useful. I guess the 'real' question was how the selection for item 8 is derived. But that's probably very open to assumptions, etc. and I can figure that out. Why they don't call it a 'loss cost multiplier' anywhere in the text is still annoying (can't search for it).
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You could use a Rate Departure Factor to reflect different experience. It gets multiplied in and results in a different LCM.
Is 'rate departure factor' an industry term? Never heard it before. I can obviously deduce what it is in any case.
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Originally Posted by act_123 View Post
LCMs are in Bahenman text in exam 8.
Any insight as to where exactly? I've not been through this text at all. Again, the phrase 'loss cost multiplier' is apparently never used, and a cursory glance through the table of contents wasn't helpful either.
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Old 08-15-2019, 09:29 AM
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Its embedded in the last chapter. It's used in the ILF discussion. LCM symbol is used and only slightly discussed as being 1/PLR.
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Old 08-15-2019, 09:30 AM
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I have never heard of "rate departure" we called it "rate deviation," seems to be the same thing.
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Old 08-15-2019, 09:31 AM
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I would imagine that a profit provision would be part of the LCM as well.

As I understand it (from an industry perspective), LCM's are generally a Worker's Comp and reinsurance contexts. At least, I've seen this item used only in those two contexts.
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Old 08-15-2019, 09:39 AM
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I would imagine that a profit provision would be part of the LCM as well.

As I understand it (from an industry perspective), LCM's are generally a Worker's Comp and reinsurance contexts. At least, I've seen this item used only in those two contexts.
Right, I was lumping profit in with expenses there since it uses a VPLR. Should've specified.

WC is also what I'm familiar with. We're implementing a new product more or less from scratch and I was looking to dive into any details I'm less familiar with just to cover everything.

Thanks everyone!
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Old 08-15-2019, 09:41 AM
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Quote:
Originally Posted by Vorian Atreides View Post
I would imagine that a profit provision would be part of the LCM as well.

As I understand it (from an industry perspective), LCM's are generally a Worker's Comp and reinsurance contexts. At least, I've seen this item used only in those two contexts.
Yeah it is in there as well. Sorry I wasn't specific. 1/PLR,
where PLR = 1 - Expenses - Profit.

It is not just limited to WC, any bureau rated loss cost that is used can have an LCM adjustment.
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Old 08-16-2019, 06:22 PM
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Quote:
Originally Posted by ALivelySedative View Post
This is useful. I guess the 'real' question was how the selection for item 8 is derived. But that's probably very open to assumptions, etc. and I can figure that out. Why they don't call it a 'loss cost multiplier' anywhere in the text is still annoying (can't search for it).

Is 'rate departure factor' an industry term? Never heard it before. I can obviously deduce what it is in any case.


Any insight as to where exactly? I've not been through this text at all. Again, the phrase 'loss cost multiplier' is apparently never used, and a cursory glance through the table of contents wasn't helpful either.
It's been a long time, but back when I was doing Work Comp filings I would use an RDF to reflect the writing company's different experience from NCCI. To create my LCMs for tiered rating I would use the same expenses and PLR for each company but vary the RDF to come up with deviated LCMs. I think it was an industry term back in the day, at least for some states - but I may be conflating it with something else. In any event, the filing forms had a spot where I could put a factor to reflect that my experience was different from NCCI. It was how I justified the different rates with the same expense structure across several companies. I might use RDFs of 1.0, .95, .9, and .75 for example.
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Old 08-16-2019, 06:36 PM
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Quote:
Originally Posted by Vorian Atreides View Post
I would imagine that a profit provision would be part of the LCM as well.

As I understand it (from an industry perspective), LCM's are generally a Worker's Comp and reinsurance contexts. At least, I've seen this item used only in those two contexts.
I've seen it mostly in WC or more generally when a carrier is adopting loss costs from an advisory org (eg ISO GL).

Where do they come up in reinsurance?
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Old 08-17-2019, 10:01 AM
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I've seen it mostly in WC or more generally when a carrier is adopting loss costs from an advisory org (eg ISO GL).

Where do they come up in reinsurance?
Thinking back, I would say in the situation where the reinsurer is serving the role of an "advisory" organization.

Our company was looking to offer a product (as an endorsement) to our homeowners line for which we had no data for. The arrangement was basically the reinsurer would cover the losses from this new product. But since it was an endorsement to our product, we had to do the filing for the new endorsement. The filing information provided by the reinsurer used the loss-cost with LCM as their way to show the indicated rate for the product.
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Old 08-20-2019, 01:46 PM
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Originally Posted by ALivelySedative View Post
The phrase 'loss cost multiplier' doesn't actually appear in exam 5 or exam 8 provided pdfs. I obviously get how the general formula works in terms of accounting for expenses as all variable (required in my state), but what else goes into their calculation? Surely some form of modification based on loss experience is used? (Questions are intentionally vague...I know how some things are done but more interested in things I haven't actually thought of).
WC has an experience mod which is intended to adjust the average class experience (as reflected in the published bureau loss costs) for the recent past loss experience of an individual insured

there's a high level paper somewhere on the NCCI.com website that explains it, but i don't know where it is and don't have time to look for it. i suppose you could call their helpdesk and ask for it
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