SECTION VI - RATING PROCEDURE

Actual Primary Losses (Ap), as tabulated in accordance with the provisions of Rules 4 and 5 of Section V, shall be used in the rating.

Expected Losses (E) shall be determined from the application of the appropriate Expected Loss Factor, shown in Table A, to the payrolls or other exposures for each classification for the experience period.

The Credibility (C) of the experience of the risk shall correspond to Expected Losses (E), as shown in Table B.

A Limitation Charge (L) reflecting the loss dollars eliminated by the Maximum Value or “Split Point” placed on One Accident, shall be included in calculating the modification. The Limit Charge times Credibility, or L x C, shall be determined by entering Table B at the level of Expected Losses (E) for the experience period.

The Credibility Complement is computed by subtracting the Credibility (C) from unity (1.0).

The Experience Modification (M) shall be determined from the formula:

[Ap x C + E x L x C + E(1.0 – C)] / E

The experience modification shall be rounded to three decimal places.

The indicated modification will be subject to capping based on the Maximum Modification formula below:

1.10 + 0.0004 x (E / G), where G=12

If the indicated modification exceeds the Maximum Modification, the Final Modification will be capped at the Maximum Modification.

During the transition period based on the RED between 12/1/24 to 11/30/25, swing limits of +40% of the prior modification will apply, along with a Maximum Modification calculated using the formula above. The Final Modification factor will be determined by selecting the lower value between the modification capped by the+40% swing limit of the prior modification and the Maximum Modification. The +40% swing limit will be eliminated once the year transition period concludes.

Table B