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Foundations of Casualty Actuarial Science

2. Credibility should increase as the size of risk
increases, all else being equal.

3. The percentage change for any loss of a given size
should decrease as the size of risk increases.

86. The premium before adjustment for off-balance,
minimum, and maximums is determined as follows:
Unadjusted Premium =
Minimum Premium + ((A x Z) + [E x (1.000 -Z) ])

87. National Council on Compensation Insurance
(NCCI) Experience Rating Plan
The NCCI Experience Rating Plan has the unique
characteristic of dividing the losses for each claim
into a primary portion and an excess portion. The
expected and actual primary portions are compared
using one credibility factor, and the expected and
actual excess portions are compared using another
credibility factor.

88. Composite Rating

Composite rating is an administrative tool to facilitate

the rating of large, complex risk upon audit. Instead of

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