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Foundations of Casualty Actuarial Science
B = Ballast Value
w = Excess Losses Weighting Factor
Note , the denominator of this formula equals E + B
Where
E = Excess Losses
This formula is also written as
A +C + (A X w )
M= p e
Ep +C + (Ee X w)
Where C is a different stabilizing value than B. C is a
function of w, B and Ee.
M =1 + CD
Where CD is the experience rating (credit/debit)
16. Determine the experience modification
M = AP + B + (Ae X w) + [ (1 - w) X Ee ]
Ep + B + (Ee X w) + [ (1-w) X Ee]
Where
M = Experience Modification Factor
Ap = Actual Primary Loss
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