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The Insurance Times

place per occurrence limits on losses, used in the
experience rating calculation.

These limits sometimes apply to losses only, with ALAE
unlimited or treated in a different manner, and sometimes
to losses and ALAE combined. If actual losses are limited,
the expected losses must also be limited . If projected
ultimate losses are to be used in the experience rating
calculation, they can be developed in a number of ways
similar to those used to determine manual rates.

(ii) Exposure - Exposure adjustments include both
converting the experience period to the current period
and adjusting for changes in the magnitude of the
exposure.

Both can be accomplished at once by dividing the
projected ultimate losses for the experience period,
adjusted to current dollar level if appropriate, and then
applying this rate to the exposure for the current period.
Expected losses are usually estimated as the product
of an expected loss rate and the exposure base. The

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