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Filing at a Glance Company: Washington Surveying and Rating Bureau
Product Name: Package Modification Factor Revision
State: Washington
TOI: 05.1 CMP Non-Liability Portion Only
Sub-TOI: 05.1003 Commercial Package
Filing Type: Rate/Rule
Date Submitted: 08/05/2015
SERFF Tr Num: WSRB-130191996
SERFF Status: Closed-Approved
State Tr Num: 289991
State Status: Approved
Co Tr Num: ML-2015-RLA1
Co Status: Approved
Effective DateRequested (New):
01/01/2016
Effective DateRequested (Renewal):
01/01/2016
Author(s): Jim Antush
Reviewer(s): Dan Forsman (primary)
Disposition Date: 08/25/2015
Disposition Status: Approved
Effective Date (New): 01/01/2016
Effective Date (Renewal):
SERFF Tracking #: WSRB-130191996 State Tracking #: 289991 Company Tracking #: ML-2015-RLA1
State: Washington Filing Company: Washington Surveying and Rating Bureau
TOI/Sub-TOI: 05.1 CMP Non-Liability Portion Only/05.1003 Commercial Package
Product Name: Package Modification Factor Revision
Project Name/Number: Package Modification Factor Revision/ML-2015-RLA1
PDF Pipeline for SERFF Tracking Number WSRB-130191996 Generated 08/26/2015 09:17 AM
General Information
Company and Contact
Filing Fees
State Specific
Project Name: Package Modification Factor Revision Status of Filing in Domicile:
Project Number: ML-2015-RLA1 Domicile Status Comments:
Reference Organization: Reference Number:
Reference Title: Advisory Org. Circular:
Filing Status Changed: 08/25/2015 Company Status Changed: 08/26/2015
State Status Changed: 08/25/2015 Deemer Date:
Created By: Jim Antush Submitted By: Jim Antush
Corresponding Filing Tracking Number:
Filing Description:
This filing presents a revision of Package Modification Factors (PMFs). The analyses used to derive these revised PMFs havebeen included for your review.
Filing Contact InformationJim Antush, Compliance Manager [email protected]
2101 4th Avenue
Suite 300
Seattle, WA 98121
206-273-7161 [Phone]
206-217-9329 [FAX]
Filing Company InformationWashington Surveying and RatingBureau
2101 4th Avenue, Suite 300
Seattle, WA 98121
(206) 217-9772 ext. [Phone]
CoCode:
Group Code:
Group Name:
FEIN Number: 74-3049163
State of Domicile: Washington
Company Type: RatingOrganization - Property
State ID Number: 1425
Fee Required? No
Retaliatory? No
Fee Explanation:
Is the Co Tracking # field populated on the General Information Tab? (yes/no): YesForm Tab Only - Are the Form # and Form Description fields populated corresponding to the attached form? (yes/no): N/A
SERFF Tracking #: WSRB-130191996 State Tracking #: 289991 Company Tracking #: ML-2015-RLA1
State: Washington Filing Company: Washington Surveying and Rating Bureau
TOI/Sub-TOI: 05.1 CMP Non-Liability Portion Only/05.1003 Commercial Package
Product Name: Package Modification Factor Revision
Project Name/Number: Package Modification Factor Revision/ML-2015-RLA1
PDF Pipeline for SERFF Tracking Number WSRB-130191996 Generated 08/26/2015 09:17 AM
© Insurance Services Office, Inc., 2015 Washington ML-2015-RLA1 ES-1
WASHINGTON
ADVISORY PACKAGE MODIFICATION FACTOR REVIEW
COMMERCIAL PACKAGE POLICY
ML-2015-RLA1
EXECUTIVE SUMMARY
PURPOSE
This document:
presents a review of advisory Package Modification Factors (PMFs). PMFs
are relativity factors used to adjust monoline loss costs as appropriate for
multiline risks.
provides the analyses used to derive these advisory PMFs.
PMF CHANGES The proposed Commercial Package Policy (CPP) Package Modification Factor
changes are:
Prop. & Liab.
Type of Policy Property Liability Total
Motel/Hotel 0.0% 0.0% 0.0%
Apartment -2.0 -1.0 -1.7
Office -1.0 +1.2 +0.6
Mercantile -2.1 +8.5 +3.7
Institutions 0.0 +11.4 +3.2
Services -5.0 0.0 -2.7
Indust./Proc. -2.0 +7.3 +3.3
Contractors -4.0 0.0 -0.3
Statewide -2.0% +1.1% -0.2%
INDICATED
VS. CAPPED
Indicated PMF changes are based on standard ISO methodology. Differences
between indicated and capped PMF changes are caused by rounding each indicated
PMF to the nearest one percent and applying an upper cap of 1.00, where
necessary.
© Copyright, Washington Surveying & Rating Bureau, 2015
© Insurance Services Office, Inc., 2015 Washington ML-2015-RLA1 ES-2
WASHINGTON
ADVISORY PACKAGE MODIFICATION FACTOR REVIEW
COMMERCIAL PACKAGE POLICY
ML-2015-RLA1
EXECUTIVE SUMMARY
HISTORICAL
SOURCE DATA
The data used in this review is from ISO reporting companies for:
Basic Group I: five fiscal accident years ended 03/31/14.
Basic Group II: ten fiscal accident years ended 03/31/14.
Special Causes of Loss: five fiscal accident years ended 03/31/14.
Crime: five calendar accident years ended 06/30/12.
Inland Marine: five calendar accident years ended 12/31/12.
Fidelity: five policy years ended 12/31/11.
Owners, Landlords, and Tenants: three fiscal accident years ended 03/31/14.
Manufacturers and Contractors: three fiscal accident years ended 03/31/14.
Products: three calendar accident years ended 12/31/13.
Local Products and Completed Operations: three calendar accident years
ended 12/31/13.
PRIOR ISO
REVISIONS
The latest revisions in this state are:
Filing ML-12-RLA1 ML-11-RLA1 ML-09-RLA1
Dates
Implemented 02/01/13 06/01/12 04/01/10
Changes
Indicated +5.6% +9.0% +1.4%
Filed +2.0% +6.7% +1.4%
Implemented +2.0% +6.7% +1.4%
© Copyright, Washington Surveying & Rating Bureau, 2015
© Insurance Services Office, Inc., 2015 Washington ML-2015-RLA1 ES-3
WASHINGTON
ADVISORY PACKAGE MODIFICATION FACTOR REVIEW
COMMERCIAL PACKAGE POLICY
ML-2015-RLA1
EXECUTIVE SUMMARY
ADJUSTMENTS
TO REPORTED
EXPERIENCE
Standard actuarial procedures have been used in the reviews underlying the
calculation of the PMFs, including adjusting the fire and liability losses to
ultimate settlement level and, for all coverages, reflecting all loss adjustment
expenses and trend. Specific procedures vary by subline.
TEN LARGEST
GROUPS IN
ISO DATA BASE
Insurers are listed in descending order based on the percent of statewide written
premium volume from Annual Statement Page 15 for the year ending 12/31/13
for the Annual Statement Line of Business (ASLOB) indicated.
COMMERCIAL MULTI PERIL (ASLOB 51 & 52)
1. Liberty Mutual Insurance Company
2. Travelers Indemnity Company
3. Tokio Marine Companies
4. Continental Casualty Company
5. Allstate Insurance Company
6. Hartford Accident & Indemnity Company
7. Admiral Insurance Company
8. California Capital Insurance Company
9. Fireman's Fund Insurance Company
10. Oregon Mutual Insurance Company
SIZE OF ISO
DATA BASE
The market share of ISO participating insurers as measured by Annual
Statement Page 15 written premium for the year ending 12/31/13 is:
Commercial Multi Peril (ASLOB 51 & 52). 59.4%.
ADDITIONAL
SUPPORTING
MATERIAL
Additional supporting material underlying the calculation of the experience
review indications used in this PMF analysis may be found in the respective
monoline experience review documents for each line.
© Copyright, Washington Surveying & Rating Bureau, 2015
© Insurance Services Office, Inc., 2015 Washington ML-2015-RLA1 ES-4
WASHINGTON
ADVISORY PACKAGE MODIFICATION FACTOR REVIEW
COMMERCIAL PACKAGE POLICY
ML-2015-RLA1
EXECUTIVE SUMMARY
COMPANY DECISION
We encourage each insurer to decide independently whether the judgments
made and the procedures or data used by ISO in developing the PMFs contained
herein are appropriate for your use. We have included within this document the
information upon which ISO relied in order to enable companies to make such
independent judgments. The data underlying the enclosed material comes from
companies reporting to Insurance Services Office, Inc. Therefore, the ISO
experience permits the establishment of a much broader statistical ratemaking
base than could be employed by using any individual company's data. A
broader data base enhances the validity of ratemaking analysis derived
therefrom.
At the same time, however, an individual company may benefit from a
comparison of its own experience to the aggregate ISO experience, and may
reach valid conclusions with respect to the manner in which its own costs can be
expected to differ from ISO's projection based on the aggregate data.
Some calculations included in this document involve areas of ISO staff
judgment. Each company should carefully review and evaluate whether the ISO
selected PMFs are appropriate for its use.
The material has been developed exclusively by the staff of Insurance Services
Office, Inc.
© Copyright, Washington Surveying & Rating Bureau, 2015
© Insurance Services Office, Inc., 2015 Washington ML-2015-RLA1 TC-1
COMMERCIAL PACKAGE POLICY
TABLE OF CONTENTS
SECTION A - SCOPE OF PMF REVISION
Methodology Overview .......................................................................................................... A-2
Summary of Package Modification Factor (PMF) Review (Table 1) ..................................... A-3
Calculation of Revised Package Modification Factors (Table 2) ........................................... A-4-12
SECTION B - CALCULATION OF PROPOSED CHANGES
PROPERTY COVERAGES
Commercial Fire & Allied Lines
Distribution of Advisory Loss Cost Level Change (Tables 3-7) ................................ B-2-20
Crime and Fidelity………………………………………………………………………….. B-21
Commercial Inland Marine
Revision of Implicit Package Modification Factor (Tables 8-9) ................................. B-22-26
LIABILITY COVERAGES
Distribution of Advisory Loss Cost Level Change (Tables 10-18) ........................................ B-27-44
SECTION C - REVISED CLM DIVISION NINE
Commercial Package Policy Package Modification Factors (Revised MLCP-PMF-1) .............. C-2
© Copyright, Washington Surveying & Rating Bureau, 2015
© Insurance Services Office, Inc., 2015 Washington ML-2015-RLA1 A-1
COMMERCIAL PACKAGE POLICY
TABLE OF CONTENTS
SECTION A - SCOPE OF PMF REVISION
Methodology Overview .......................................................................................................... A-2
Summary of Package Modification Factor (PMF) Review (Table 1) ..................................... A-3
Calculation of Revised Package Modification Factors (Table 2) ........................................... A-4-12
© Copyright, Washington Surveying & Rating Bureau, 2015
© Insurance Services Office, Inc., 2015 Washington ML-2015-RLA1 A-2
COMMERCIAL PACKAGE POLICY
METHODOLOGY OVERVIEW
OBJECTIVE A Commercial Package Policy (CPP) is essentially a combination of monoline
coverages. CPP pricing employs monoline loss costs modified by Package
Modification Factors (PMFs). These factors vary by the eight CPP types of policy
and are reviewed biennially. Monoline and multiline experience are combined and
reviewed via a monoline/multiline relativity analysis. The resulting indicated PMFs
represent the loss cost for a CPP relative to that for monoline policies providing the
same coverages.
STEP 1: THE
RELATIVITY
ANALYSES
Each line of insurance develops indicated changes to monoline and multiline
aggregate loss costs based on an experience ratio relativity analysis for that coverage.
The monoline indication represents the needed change to monoline loss costs. The
multiline indication represents the needed change to multiline aggregate loss costs,
which is implemented through changes to the PMFs. For this PMF analysis,
multiline indications are developed for each line of insurance and Type of Policy.
Relativity analyses are explained in Section B.
STEP 2:
CALCULATION
OF THE PMFs
The procedure described above generates indicated Implicit PMFs (IPMFs) which
vary by the various lines of insurance and by type of policy. IPMFs represent what
the PMF would be for the CPP risk if only a single coverage were written. For each
Type of Policy, IPMFs are weighted by CPP aggregate loss costs to determine the
indicated property and liability PMFs. These PMFs may be capped, or rounded to the
nearest one percent, and certain component IPMFs appropriately adjusted for this
change. These calculations are explained in the remainder of Section A.
© Copyright, Washington Surveying & Rating Bureau, 2015
© Insurance Services Office, Inc., 2015 Washington ML-2015-RLA1 A-3
WASHINGTON
TABLE 1
COMMERCIAL PACKAGE POLICY
SUMMARY OF THIS REVIEW
The display below summarizes the review and shows the capped
Package Modification Factors for Property and Liability.
For each type of risk, the PMFs are determined to be those
factors which when applied to the monoline loss costs
produce the appropriate CPP aggregate loss cost level as
determined by an analysis of the CPP experience.
PROP. & LIAB.
PROPERTY PMFS LIABILITY PMFS TOTAL
________________________ _________________________ ________
TYPE OF RISK CURRENT CAPPED % CHANGE CURRENT CAPPED % CHANGE % CHANGE
MOTEL/HOTEL(31) 1.00 1.00 0.0 1.00 1.00 0.0 0.0
APARTMENT (32) 1.00 0.98 -2.0 1.00 0.99 -1.0 -1.7
OFFICE (33) 0.97 0.96 -1.0 0.85 0.86 1.2 0.6
MERCANTILE (34) 0.94 0.92 -2.1 0.82 0.89 8.5 3.7
INSTITUTION(35) 1.00 1.00 0.0 0.88 0.98 11.4 3.2
SERVICES (36) 1.00 0.95 -5.0 1.00 1.00 0.0 -2.7
IND/PROC (37) 1.00 0.98 -2.0 0.82 0.88 7.3 3.3
CONTRACTORS(38) 1.00 0.96 -4.0 1.00 1.00 0.0 -0.3
_____ _____ _____
STATEWIDE -2.0% 1.1% -0.2%
© Copyright, Washington Surveying & Rating Bureau, 2015
© Insurance Services Office, Inc., 2015 Washington ML-2015-RLA1 A-4
WASHINGTON
TABLE 2
COMMERCIAL PACKAGE POLICY
CALCULATION OF REVISED CPP PACKAGE MODIFICATION FACTORS(PMF)
MOTEL/HOTEL(31) (1) (2) (3) (4) (5)
************ AGGREG- CURRENT
ATE LOSS IMPLICIT NET INDIC. CAPPED
COVERAGE COSTS PMF INDICATION PMF PMF
PROPERTY-
BASIC GRP I 506,775 1.114 1.9% 1.135 1.105
BASIC GRP II 46,409 0.873 7.3 0.937 0.912
SP CAUSE/LOSS 116,034 0.745 1.4 0.755 0.735
*CRIME 12,559 0.893 0.0 0.893 0.893
*INL. MAR. 1,266 0.824 3.2 0.850 0.850
*FIDELITY 10,356 1.000 0.0 1.000 1.000
TOTAL 693,399 1.00 2.7% 1.027 1.00
LIABILITY-
OL&T 1,321,163 1.000 2.0% 1.020 1.000
TOTAL 1,321,163 1.00 2.0% 1.020 1.00
------------ ----------- -------- ---------- ------- ------
PROP. & LIAB. 2,014,562 2.2%
TOTAL
APARTMENT (32) (1) (2) (3) (4) (5)
************ AGGREG- CURRENT
ATE LOSS IMPLICIT NET INDIC. CAPPED
COVERAGE COSTS PMF INDICATION PMF PMF
PROPERTY-
BASIC GRP I 4,297,300 1.156 3.9% 1.201 1.202
BASIC GRP II 332,631 0.500 1.5 0.508 0.508
SP CAUSE/LOSS 1,057,616 0.629 5.0 0.660 0.660
*CRIME 1,393 0.893 0.0 0.893 0.893
*INL. MAR. 201 0.824 3.2 0.850 0.850
*FIDELITY 22,442 1.000 0.0 1.000 1.000
TOTAL 5,711,583 1.00 -2.5% 0.975 0.98
LIABILITY-
OL&T 2,314,983 1.000 -0.7% 0.993 0.994
TOTAL 2,314,983 1.00 -0.7% 0.993 0.99
------------ ----------- -------- ---------- ------- ------
PROP. & LIAB. 8,026,566 -2.0%
TOTAL
* indicates coverage for which reviews are on a MULTISTATE basis.
© Copyright, Washington Surveying & Rating Bureau, 2015
© Insurance Services Office, Inc., 2015 Washington ML-2015-RLA1 A-5
WASHINGTON
TABLE 2
COMMERCIAL PACKAGE POLICY
CALCULATION OF REVISED CPP PACKAGE MODIFICATION FACTORS(PMF)
OFFICE (33) (1) (2) (3) (4) (5)
************ AGGREG- CURRENT
ATE LOSS IMPLICIT NET INDIC. CAPPED
COVERAGE COSTS PMF INDICATION PMF PMF
PROPERTY-
BASIC GRP I 920,471 1.233 -0.3% 1.229 1.230
BASIC GRP II 139,103 0.628 1.0 0.634 0.634
SP CAUSE/LOSS 549,811 0.756 4.8 0.792 0.793
*CRIME 6,123 0.893 0.0 0.893 0.893
*INL. MAR. 13,192 0.824 3.2 0.850 0.850
*FIDELITY 54,246 1.000 0.0 1.000 1.000
TOTAL 1,682,946 0.97 -0.6% 0.964 0.96
LIABILITY-
OL&T 4,248,735 0.871 1.5% 0.884 0.884
M&C 393,032 0.637 3.4 0.659 0.659
TOTAL 4,641,767 0.85 1.1% 0.859 0.86
------------ ----------- -------- ---------- ------- ------
PROP. & LIAB. 6,324,713 0.6%
TOTAL
MERCANTILE (34) (1) (2) (3) (4) (5)
************ AGGREG- CURRENT
ATE LOSS IMPLICIT NET INDIC. CAPPED
COVERAGE COSTS PMF INDICATION PMF PMF
PROPERTY-
BASIC GRP I 5,287,677 1.018 2.7% 1.045 1.046
BASIC GRP II 1,097,814 1.226 -5.1 1.163 1.164
SP CAUSE/LOSS 1,725,748 0.610 0.7 0.614 0.614
*CRIME 41,963 0.893 0.0 0.893 0.893
*INL. MAR. 194,064 0.824 3.2 0.850 0.850
*FIDELITY 359,863 1.000 0.0 1.000 1.000
TOTAL 8,707,129 0.94 -1.9% 0.922 0.92
LIABILITY-
OL&T 7,017,934 0.755 13.6% 0.858 0.859
M&C 1,531,655 1.014 0.0 1.014 1.015
LOCAL PRODUCT 679,435 1.304 4.5 1.363 1.364
*MULTI PRODUCT 1,367,053 0.778 6.9 0.832 0.832
TOTAL 10,596,077 0.82 8.8% 0.892 0.89
------------ ----------- -------- ---------- ------- ------
PROP. & LIAB. 19,303,206 4.0%
TOTAL
* indicates coverage for which reviews are on a MULTISTATE basis.
© Copyright, Washington Surveying & Rating Bureau, 2015
© Insurance Services Office, Inc., 2015 Washington ML-2015-RLA1 A-6
WASHINGTON
TABLE 2
COMMERCIAL PACKAGE POLICY
CALCULATION OF REVISED CPP PACKAGE MODIFICATION FACTORS(PMF)
INSTITUTION(35) (1) (2) (3) (4) (5)
************ AGGREG- CURRENT
ATE LOSS IMPLICIT NET INDIC. CAPPED
COVERAGE COSTS PMF INDICATION PMF PMF
PROPERTY-
BASIC GRP I 3,871,391 1.181 1.4% 1.198 1.197
BASIC GRP II 846,103 0.967 13.8 1.100 1.099
SP CAUSE/LOSS 1,398,316 0.647 2.6 0.664 0.663
*CRIME 22,187 0.893 0.0 0.893 0.893
*INL. MAR. 8,897 0.824 3.2 0.850 0.850
*FIDELITY 157,462 1.000 0.0 1.000 1.000
TOTAL 6,304,356 1.00 0.1% 1.001 1.00
LIABILITY-
OL&T 1,984,722 1.105 -0.4% 1.101 1.104
M&C 503,418 0.681 -2.7 0.663 0.665
TOTAL 2,488,140 0.88 10.6% 0.973 0.98
------------ ----------- -------- ---------- ------- ------
PROP. & LIAB. 8,792,496 3.1%
TOTAL
SERVICES (36) (1) (2) (3) (4) (5)
************ AGGREG- CURRENT
ATE LOSS IMPLICIT NET INDIC. CAPPED
COVERAGE COSTS PMF INDICATION PMF PMF
PROPERTY-
BASIC GRP I 3,729,347 1.183 -3.5% 1.142 1.143
BASIC GRP II 549,742 0.887 2.4 0.908 0.909
SP CAUSE/LOSS 1,226,965 0.631 3.7 0.654 0.654
*CRIME 22,257 0.893 0.0 0.893 0.893
*INL. MAR. 60,912 0.824 3.2 0.850 0.850
*FIDELITY 128,868 1.000 0.0 1.000 1.000
TOTAL 5,718,091 1.00 -5.0% 0.950 0.95
LIABILITY-
OL&T 1,920,543 0.939 2.2% 0.960 0.970
M&C 1,873,824 0.909 -1.1 0.899 0.909
LOCAL PRODUCT 734,176 1.500 5.2 1.578 1.500
*MULTI PRODUCT 184,911 0.837 12.4 0.941 0.941
TOTAL 4,713,454 1.00 -0.4% 0.996 1.00
------------ ----------- -------- ---------- ------- ------
PROP. & LIAB. 10,431,545 -2.9%
TOTAL
* indicates coverage for which reviews are on a MULTISTATE basis.
© Copyright, Washington Surveying & Rating Bureau, 2015
© Insurance Services Office, Inc., 2015 Washington ML-2015-RLA1 A-7
WASHINGTON
TABLE 2
COMMERCIAL PACKAGE POLICY
CALCULATION OF REVISED CPP PACKAGE MODIFICATION FACTORS(PMF)
IND/PROC (37) (1) (2) (3) (4) (5)
************ AGGREG- CURRENT
ATE LOSS IMPLICIT NET INDIC. CAPPED
COVERAGE COSTS PMF INDICATION PMF PMF
PROPERTY-
BASIC GRP I 3,616,668 1.065 3.8% 1.105 1.106
BASIC GRP II 349,278 0.706 -2.0 0.692 0.692
SP CAUSE/LOSS 1,651,177 0.948 -14.8 0.808 0.809
*CRIME 6,889 0.893 0.0 0.893 0.893
*INL. MAR. 4,224 0.824 3.2 0.850 0.850
*FIDELITY 152,364 1.000 0.0 1.000 1.000
TOTAL 5,780,600 1.00 -2.3% 0.977 0.98
LIABILITY-
M&C 5,281,793 0.877 1.8 0.893 0.894
LOCAL PRODUCT 131,728 0.885 1.2 0.896 0.897
*MULTI PRODUCT 2,359,583 0.753 11.7 0.841 0.841
TOTAL 7,773,104 0.82 6.7% 0.875 0.88
------------ ----------- -------- ---------- ------- ------
PROP. & LIAB. 13,553,704 2.9%
TOTAL
CONTRACTORS(38) (1) (2) (3) (4) (5)
************ AGGREG- CURRENT
ATE LOSS IMPLICIT NET INDIC. CAPPED
COVERAGE COSTS PMF INDICATION PMF PMF
PROPERTY-
BASIC GRP I 691,628 1.139 -1.1% 1.126 1.127
BASIC GRP II 90,312 0.872 1.2 0.882 0.883
SP CAUSE/LOSS 384,087 0.791 -3.4 0.764 0.765
*CRIME 1,739 0.893 0.0 0.893 0.893
*INL. MAR. 4,797 0.824 3.2 0.850 0.850
*FIDELITY 51,687 1.000 0.0 1.000 1.000
TOTAL 1,224,250 1.00 -4.1% 0.959 0.96
LIABILITY-
M&C 5,658,302 0.760 3.4 0.786 0.786
LOCAL PRODUCT 9,137,904 1.202 -0.1 1.201 1.202
TOTAL 14,796,206 1.00 -0.5% 0.995 1.00
------------ ----------- -------- ---------- ------- ------
PROP. & LIAB. 16,020,456 -0.8%
TOTAL
* indicates coverage for which reviews are on a MULTISTATE basis.
© Copyright, Washington Surveying & Rating Bureau, 2015
© Insurance Services Office, Inc., 2015 Washington ML-2015-RLA1 A-8
WASHINGTON
TABLE 2
COMMERCIAL PACKAGE POLICY
CALCULATION OF REVISED CPP PACKAGE MODIFICATION FACTORS(PMF)
STATEWIDE (1) (2) (3) (4) (5)
************ AGGREG- CURRENT
ATE LOSS IMPLICIT NET INDIC. CAPPED
COVERAGE COSTS PMF INDICATION PMF PMF
PROPERTY-
BASIC GRP I 22,921,257 1.116 1.6% 1.134 1.133
BASIC GRP II 3,451,392 0.879 2.3 0.898 0.898
SP CAUSE/LOSS 8,109,754 0.692 -1.0 0.685 0.684
*CRIME 115,110 0.893 0.0 0.893 0.893
*INL. MAR. 287,553 0.824 3.2 0.850 0.850
*FIDELITY 937,288 1.000 0.0 1.000 1.000
TOTAL 35,822,354 0.982 -2.0% 0.962 0.962
LIABILITY-
OL&T 18,808,080 0.869 5.7% 0.918 0.918
M&C 15,242,024 0.829 1.7 0.843 0.845
LOCAL PRODUCT 10,683,243 1.219 0.6 1.226 1.223
*MULTI PRODUCT 3,911,547 0.765 10.1 0.842 0.842
TOTAL 48,644,894 0.926 1.0% 0.935 0.936
------------ ----------- -------- ---------- ------- ------
PROP. & LIAB. 84,467,248 -0.3%
TOTAL
* indicates coverage for which reviews are on a MULTISTATE basis.
© Copyright, Washington Surveying & Rating Bureau, 2015
© Insurance Services Office, Inc., 2015 Washington ML-2015-RLA1 A-9
WASHINGTON
TABLE 2
COMMERCIAL PACKAGE POLICY
COMBINED PMFs
CURRENT INDICATED CAPPED
TYPE OF RISK COMBINED COMBINED COMBINED
MOTEL/HOTEL(31) 1.00 1.022 1.00
APARTMENT (32) 1.00 0.980 0.98
OFFICE (33) 0.90 0.884 0.88
MERCANTILE (34) 0.88 0.905 0.91
INSTITUTION(35) 0.97 0.993 0.99
SERVICES (36) 1.00 0.971 0.97
IND/PROC (37) 0.91 0.915 0.92
CONTRACTORS(38) 1.00 0.993 0.99
NOTE: Combined PMFs are provided for informational purposes only.
© Copyright, Washington Surveying & Rating Bureau, 2015
© Insurance Services Office, Inc., 2015 Washington ML-2015-RLA1 A-10
EXPLANATORY NOTES TO TABLE 2
CALCULATION OF REVISED PACKAGE MODIFICATION FACTORS
OBJECTIVE Commercial package policies were introduced in the 1960's as a convenient tool for
both insurer and insured to have the many types of insurance needed by commercial
risks packaged under one cover. Thus fire, extended coverage, crime, liability
insurance, etc. could be written using a single policy instead of several. Today,
virtually any type of monoline coverage can also be purchased as part of a package
policy such as the CPP.
The types of insured which can be written under a CPP are generally categorized into
the following Types of Policy:
. Motels and Hotels (TOP 31)
. Apartments (TOP 32)
. Offices (TOP 33)
. Mercantile Operations (TOP 34)
. Institutions (TOP 35)
. Service Operations (TOP 36)
. Industrial and Processing Operations (TOP 37)
. Contractors (TOP 38)
PRICING OF
POLICIES
Since a CPP is essentially a combination of monoline coverages, CPP pricing
employs monoline loss costs modified by PMFs (Package Modification Factors).
These factors vary by the categories shown above and are reviewed annually.
CPP PMF
REVIEW
PROCEDURE
The CPP review of Package Modification Factors, which appears in Table 2 of this
document, determines the appropriate PMF loss cost level for each of the eight CPP
categories. This is done by combining the indications of the simultaneous reviews of
monoline and multiline experience for the various lines (or coverages).
A detailed explanation of the calculation of the revised PMFs follows.
© Copyright, Washington Surveying & Rating Bureau, 2015
© Insurance Services Office, Inc., 2015 Washington ML-2015-RLA1 A-11
EXPLANATORY NOTES TO TABLE 2 (Cont'd)
LINES OF
INSURANCE
(COVERAGES)
INCLUDED
The CPP review reflects the contribution from each significant coverage which can
be written on a CPP. Included are:
Property Coverages
. Basic Group I (BGI) - the predominant property coverage included.
. Basic Group II (BGII) - both Basic Group I and Basic Group II must be
purchased under a CPP contract.
. Special Causes of Loss (SCL) - typically a type of insurance which is
purchased in addition to Basic Group I and Basic Group II in order to provide
"all risk" property coverage for the insured.
. Crime (CRIME) - Crime insurance is a commonly purchased CPP coverage.
. Inland Marine (INL. MAR.) - A highly specialized line of property insurance,
Inland Marine coverages can be purchased as part of a package policy.
. Fidelity (FIDELITY) - Certain forms of fidelity insurance can be part of the
CPP package. Various forms of employee dishonesty coverage are available.
Liability Coverages
. Owners, Landlords and Tenants (OL&T) Liability - this is the prevalent type of
Premises/Operations liability for CPP insureds.
. Manufacturers and Contractors Liability (M&C) - this is the type of
Premises/Operations liability insurance for risks whose liability exposure is
more heavily off-premises than on.
. Products/Completed Operations Liability (PROD) - this type of insurance
protects against claims for damages arising from products/completed
operations in conjunction with an insured's business. For review purposes, this
line of insurance is split into the following two categories:
- Products: experience for this category is reviewed on a multistate basis.
- Local Products/ Completed Operations: experience for this category
reflects an exposure to loss which is local in nature; therefore, individual
state experience is used.
© Copyright, Washington Surveying & Rating Bureau, 2015
© Insurance Services Office, Inc., 2015 Washington ML-2015-RLA1 A-12
EXPLANATORY NOTES TO TABLE 2 (Cont'd)
THE IMPLICIT
PACKAGE
MODIFICATION
FACTOR
For each applicable coverage listed under each of the eight (8) CPP categories, a
"current implicit PMF" is shown in column (2). The definition of this factor follows:
For a given CPP category (e.g., apartments) the published Package Modification
Factor (PMF) represents the loss cost for a CPP relative to that for monoline policies
providing the same coverages. Thus a property (liability) PMF of .80 represents a
20% lower aggregate loss cost for a CPP than for the comparable monoline policies.
This PMF, however, represents the CPP "loss cost" for all property (liability)
coverages combined. Based on CPP experience, it has been determined that this CPP
"loss cost" can differ significantly if it is determined for each property (liability)
coverage individually. The IPMF represents what the PMF would be for that CPP
risk if only a single coverage were written. The use of the IPMF in monoline/
multiline ratemaking and in the determination of revised CPP Package Modification
Factors is significant in that it appropriately identifies how different the component
parts of the multiline "loss cost" are.
THE MULTILINE
INDICATION
Under the CPP ratemaking procedures, monoline and multiline experience are
combined for each coverage. The results of these coverage analyses are indicated
changes to monoline loss costs and also indicated CPP aggregate loss cost level
changes. The CPP indications by coverage are then incorporated in the CPP PMF
review. These indications (shown in column (3)) represent the needed adjustments to
the IPMFs (shown in column (2)) described above.
The development of these indications is detailed in Section B.
THE INDICATED
PMF
For each CPP category (and for property vs. liability), the indicated PMF is
calculated as follows:
Each of the current IPMFs in column (2) is multiplied by the indicated percent
change shown in column (3). A weighted average of the indicated IPMFs, using
weights based on latest year aggregate loss costs at current ISO loss cost level
(column (1) divided by column (2)), yields the indicated PMF at the bottom of
column (4).
THE CAPPED
PMF
The indicated PMF for each category (and for property vs. liability) shown at the
bottom of column (4) is limited to a maximum of 1.00 in arriving at the proposed
PMF (bottom of column (5)). All indicated PMFs which are below 1.00 are rounded
to the nearest .01 in determining the proposed PMF. To the extent that any indicated
PMFs are capped at 1.00, indicated PMFs below this value are adjusted in order to
minimize any revenue changes which would result from capping.
In addition to the adjustments just described, the IPMFs (for property and liability)
shown in column (4) are subject to minimum and maximum values and adjusted in
column (5) so that they average to the proposed PMF shown at the bottom of column
(5).
© Copyright, Washington Surveying & Rating Bureau, 2015
© Insurance Services Office, Inc., 2015 Washington ML-2015-RLA1 B-1
COMMERCIAL PACKAGE POLICY
TABLE OF CONTENTS
SECTION B - CALCULATION OF PROPOSED CHANGES
PROPERTY COVERAGES
Commercial Fire & Allied Lines
Distribution of Advisory Loss Cost Level Change (Tables 3-7) .............................. B-2-20
Crime and Fidelity…………………………………………………………………… B-21
Commercial Inland Marine
Revision of Implicit Package Modification Factor (Tables 8-9) .............................. B-22-26
LIABILITY COVERAGES
Distribution of Advisory Loss Cost Level Change (Tables 10-18) .............................. B-27-44
© Copyright, Washington Surveying & Rating Bureau, 2015
© Insurance Services Office, Inc., 2015 Washington ML-2015-RLA1 B-2
WASHINGTON
TABLE 3 - BASIC GROUP I RELATIVITY ANALYSIS
(1) (2) (3) (4) (5)
$ LST SQ CREDIBILITY Z-WTD. BALANCED INDICATED
FORMULA Z RELATIVITY RELATIVITY CHANGE *
TOP RELATIVITY
---------------------------------------------------------------------------------
10 0.911 0.128 0.988 0.986
31 1.259 0.030 1.007 1.005 +1.9%
32 1.146 0.188 1.026 1.024 +3.9%
33 0.720 0.048 0.984 0.983 -0.3%
34 1.069 0.220 1.015 1.013 +2.7%
35 1.011 0.174 1.002 1.000 +1.4%
36 0.745 0.163 0.953 0.951 -3.5%
37 1.173 0.152 1.025 1.023 +3.8%
38 0.515 0.035 0.977 0.975 -1.1%
BALANCED RATING ID RELATIVITY: SPECIFIC 0.983 CLASS 1.018
RATING
GROUP
01 0.869 0.315 0.957 0.952
02 0.854 0.137 0.979 0.974
03 1.371 0.067 1.021 1.017
04 1.071 0.424 1.030 1.025
05 0.844 0.026 0.996 0.991
06 0.927 0.222 0.983 0.979
07 1.030 0.076 1.002 0.998
08 1.381 0.247 1.083 1.078
09 1.207 0.207 1.040 1.035
10 0.817 0.074 0.985 0.981
11 1.012 0.028 1.000 0.996
13 0.879 0.132 0.983 0.979
14 0.704 0.108 0.963 0.959
15 0.956 0.119 0.995 0.990
17 0.380 0.076 0.929 0.925
18 0.595 0.073 0.963 0.959
19 0.513 0.018 0.988 0.984
20 0.613 0.010 0.995 0.991
21 0.881 0.151 0.981 0.977
22 1.237 0.101 1.022 1.017
* INDICATED CHANGE = (BALANCED RELATIVITY FOR TOP) / (MONOLINE RELATIVITY (TOP 10)) - 1
© Copyright, Washington Surveying & Rating Bureau, 2015
© Insurance Services Office, Inc., 2015 Washington ML-2015-RLA1 B-3
WASHINGTON
TABLE 4 - SPECIAL CAUSES OF LOSS RELATIVITY ANALYSIS
____________________________________________________
(1) (2) (3) (4) (5)
$ LST SQ CREDIBILITY Z-WTD. BALANCED INDICATED
FORMULA Z RELATIVITY RELATIVITY CHANGE *
TOP RELATIVITY
--------------------------------------------------------------------------------------
10 0.960 0.190 0.992 1.009
31 1.288 0.021 1.005 1.023 +1.4%
32 1.430 0.114 1.042 1.059 +5.0%
33 1.695 0.073 1.039 1.057 +4.8%
34 0.992 0.189 0.998 1.016 +0.7%
35 1.118 0.152 1.017 1.035 +2.6%
36 1.236 0.132 1.028 1.046 +3.7%
37 0.380 0.173 0.846 0.860 -14.8%
38 0.442 0.052 0.958 0.975 -3.4%
CATEGORY
01 0.979 0.651 0.986 0.995
02 0.876 0.086 0.989 0.997
03 0.660 0.150 0.940 0.948
04 0.699 0.175 0.939 0.947
05 1.154 0.097 1.014 1.023
06 1.110 0.051 1.005 1.014
07 0.851 0.024 0.996 1.005
08 0.878 0.094 0.988 0.996
09 0.837 0.129 0.977 0.986
10 0.715 0.096 0.968 0.977
11 1.701 0.197 1.110 1.120
12 0.638 0.095 0.958 0.967
13 0.979 0.096 0.998 1.007
14 1.865 0.086 1.055 1.064
* INDICATED CHANGE = (BALANCED RELATIVITY FOR TOP) / (MONOLINE RELATIVITY (TOP 10)) - 1
© Copyright, Washington Surveying & Rating Bureau, 2015
© Insurance Services Office, Inc., 2015 Washington ML-2015-RLA1 B-4
EXPLANATORY NOTES TO TABLES 3 AND 4
BASIC GROUP I AND SPECIAL CAUSES OF LOSS RELATIVITY ANALYSIS
OBJECTIVE The explanations which follow clarify Tables 3 and 4, the Basic Group I Relativity
Analysis and the Special Causes of Loss Relativity Analysis, respectively. The
purpose of these analyses is to:
(1) determine monoline classification loss cost level needs for Basic
Group I for class versus specifically rated risks;
(2) determine monoline category loss cost level needs for Special
Causes of Loss;
(3) determine indicated changes to the eight property CPP Package
Modification Factors (PMFs) based on Basic Group I/Special Causes of
Loss experience.
COLUMN (1) LEAST SQUARES FORMULA RELATIVITIES
The Least Squares Formula Relativities are the marginal relativities which result
from the application of the simultaneous review procedure to the raw experience
(where marginal refers to the relativities for a given rating variable, e.g. type of
policy, across all subsets of any other rating variables, i.e. rating group and rating
ID for Basic Group I, and category for Special Causes of Loss).
The purpose of such a simultaneous review procedure is to arrive at a set of type
of policy relativities (which will serve to price CPP policies relative to monoline
policies via the PMF); a set of rating group relativities for Basic Group I; and a set
of category relativities for Special Causes of Loss that best represent the
experience. This procedure is in contrast to a review of each rating variable's
experience separately. Such one-way types of review do not take into account
differing percentages of monoline and multiline experience in each rating variable,
nor differing percentages of a particular rating variable's experience in the
monoline and multiline types of policy. The simultaneous relativity procedure
accounts for these different distributions in generating relativities for the various
rating variables.
© Copyright, Washington Surveying & Rating Bureau, 2015
© Insurance Services Office, Inc., 2015 Washington ML-2015-RLA1 B-5
EXPLANATORY NOTES TO TABLES 3 AND 4 (Cont'd)
COLUMN (1)
(Cont'd)
The procedure uses an iterative technique to determine a set of marginal
relativities by rating variable that is a best fit to the individual cell relativities,
with each cell being defined as the cross-section of specific values of each rating
variable. The process uses the relativity of the five year experience ratios by
rating cell to the overall statewide experience ratio and the latest year aggregate
loss costs for each rating cell. (This experience is shown in Table 5 for Basic
Group I and Table 6 for Special Causes of Loss). Specifically, the iteration
procedure uses the following formulas:
BASIC GROUP I:
n
j
jij
n
j
jijij
i
RGW
RGRW
TOP
1
22
1
2
, where 1 i m;
m
i
iij
m
i
iijij
j
TOPW
TOPRW
RG
1
22
1
2
, where 1 j n;
SPECIAL CAUSES OF LOSS:
n
j
jij
n
j
jijij
i
CATW
CATRW
TOP
1
22
1
2
, where 1 i m;
m
i
iij
m
i
iijij
j
TOPW
TOPRW
CAT
1
22
1
2
, where 1 j n;
© Copyright, Washington Surveying & Rating Bureau, 2015
© Insurance Services Office, Inc., 2015 Washington ML-2015-RLA1 B-6
EXPLANATORY NOTES TO TABLES 3 AND 4 (Cont'd)
COLUMN (1)
(Cont'd)
. TOPi is the relativity for the ith Type of Policy;
. RGj is the relativity for the jth Rating Group;
. CATj is the relativity for the jth Category;
. Wij is the aggregate loss costs for the ith Type of Policy, jth Rating
Group or Category;
. Rij is the experience ratio relativity for the ith
Type of Policy, jth Rating Group or Category;
. m is the number of Types of Policy in the analysis;
. n is the number of Rating Groups or Categories in the analysis.
The procedure determines m Type of Policy relativities using the above
formulas. Then, using those results, a set of n Rating Group or Category
relativities are determined. These steps form an iterative process which
continues until there is no appreciable difference in results from one iteration to
the next.
COLUMN (2) CREDIBILITY
The credibility of the experience for each rating variable is determined from the
formula:
KP
PZ
where P is the 5-year adjusted aggregate loss costs for a given rating variable,
and K is a constant value. For Basic Group I, K equals an aggregate loss cost
volume of $40,000,000 for rating group and $100,000,000 for type of policy.
For Special Causes of Loss, K equals an aggregate loss cost volume of
$15,000,000.
© Copyright, Washington Surveying & Rating Bureau, 2015
© Insurance Services Office, Inc., 2015 Washington ML-2015-RLA1 B-7
EXPLANATORY NOTES TO TABLES 3 AND 4 (Cont'd)
COLUMN (3) CREDIBILITY-WEIGHTED RELATIVITIES
Credibility-weighted relativities are calculated based on the formula
ZRW
where Z is the credibility, R is the least squares formula relativity and W is the
credibility-weighted relativity for a given rating variable.
This formula implicitly assigns the complement of credibility to a relativity of
unity.
COLUMN (4) BALANCED RELATIVITIES
The credibility-weighted relativities are balanced to assure that the average
relativity across all rating variables remains at unity.
BALANCED RELATIVITIES - RATING ID (BASIC GROUP I ONLY)
For Basic Group I, balanced relativities are calculated for rating IDs (class
versus specific). These relativities are calculated via a separate simultaneous
procedure, which differs in a number of ways from the simultaneous review
discussed above.
The BGI rating ID relativities resulting from this procedure are balanced and
weighted together with the results of the Table 3 simultaneous review procedure
used to generate marginal relativities for the other BGI rating variables to
produce the monoline loss cost changes.
MULTILINE
CONSIDERATIONS
The type of policy (TOP) relativities are used to generate multiline indications
which apply to the current Implicit Package Modification Factors (IPMFs). The
indicated IPMFs are calculated as follows:
TOP y indicated = (TOP y current IPMF)x(TOP y relativity)
IPMF monoline relativity
© Copyright, Washington Surveying & Rating Bureau, 2015
© Insurance Services Office, Inc., 2015 Washington ML-2015-RLA1 B-8
EXPLANATORY NOTES TO TABLES 3 AND 4 (Cont'd)
MULTILINE
CONSIDERATIONS
(Cont'd)
For each CPP Type of Policy the indicated IPMF is subject to a minimum value of
0.50 and a maximum value of 1.50. If an indicated IPMF falls outside one of those
limits, it is capped at that amount, the aggregate loss costs for that Type of Policy
are adjusted to the capped IPMF level, and the entire relativity review as described
above is re-performed to take this into account. If an IPMF has been capped it is so
noted at the bottom of Table 3 and Table 4.
Loss cost changes for each TOP are calculated as described on Tables 3 and 4.
© Copyright, Washington Surveying & Rating Bureau, 2015
© Insurance Services Office, Inc., 2015 Washington ML-2015-RLA1 B-9
Entire State (Washington)
**************************
WASHINGTON
BASIC GROUP I RELATIVITY ANALYSIS
TABLE 5 - SUMMARY OF EXPERIENCE USED IN SIMULTANEOUS REVIEW
(1) (2) (3) (4) (5)
ACCIDENT YEAR 5 - YEAR 5 - YEAR Z-WEIGHTED
ENDING 03/31/14 AGGREGATE EXPERIENCE EXPERIENCE Z-WEIGHTED
AGGREGATE LOSS LOSS COSTS RATIO RATIO RELATIVITY
TYPE OF POLICY CATEGORY COSTS
------------------------------------------------------------------------------------------------------------------------------------
10 MONOLINE 01 APARTMENTS 108,788 409,820 0.101 0.483 0.601
02 OTHER HABITATIONAL 85,368 580,410 0.429 0.587 0.731
03 RESTAURANTS & BARS 22,195 133,519 0.000 0.539 0.671
04 OTHER MERCANTILE RS 852,259 4,387,618 0.807 0.789 0.983
05 PUBLIC BUILDINGS 50,981 209,417 0.000 0.510 0.635
06 CHURCHES 13,354 69,885 0.023 0.571 0.711
07 SCHOOLS 22,666 132,922 0.293 0.608 0.757
08 OFFICES AND BANKS 386,192 2,048,256 1.844 1.489 1.854
09 REC. FACILITIES 276,320 1,463,500 0.073 0.314 0.391
10 HOTELS AND MOTELS 37,685 172,633 0.279 0.596 0.742
11 HOSPITALS/NURS H0ME 74,284 382,461 4.200 1.953 2.432
13 MOTOR VEHICLE RISKS 136,475 816,159 0.104 0.407 0.507
14 OTHER NON-MANUF. 153,949 927,572 0.348 0.519 0.646
15 STORAGE 98,291 453,553 0.004 0.436 0.543
17 FOOD MANUFACTURING 16,665 101,850 0.000 0.552 0.687
18 WOOD MANUFACTURING 49,052 352,424 0.000 0.463 0.577
19 WEARING APPAREL 14,992 91,269 0.000 0.557 0.694
20 CHEM. MANUFACTURING 32,445 259,142 0.000 0.492 0.613
21 METAL MANUFACTURING 253,250 1,224,018 0.104 0.356 0.443
22 OTHER MANUFACTURING 96,254 516,146 0.867 0.771 0.960
TOTAL* 2,781,465 14,732,574 0.710 0.741 0.924
31 MULTILINE 10 HOTELS AND MOTELS 506,776 3,041,499 0.762 0.852 1.061
MOTEL/HOTEL TOTAL* 506,776 3,041,499 0.762 0.852 1.061
32 MULTILINE 01 APARTMENTS 3,327,037 17,964,232 0.723 0.825 1.027
APARTMENT 02 OTHER HABITATIONAL 970,264 5,174,918 0.577 0.810 1.009
TOTAL* 4,297,301 23,139,150 0.690 0.821 1.023
33 MULTILINE 08 OFFICES AND BANKS 920,472 5,030,806 0.641 0.824 1.026
OFFICE TOTAL* 920,472 5,030,806 0.641 0.824 1.026
34 MULTILINE 03 RESTAURANTS & BARS 424,983 2,433,299 2.734 1.218 1.517
MERCANTILE 04 OTHER MERCANTILE RS 3,812,126 19,600,302 1.094 0.948 1.181
08 OFFICES AND BANKS 153,325 821,761 0.008 0.729 0.908
13 MOTOR VEHICLE RISKS 159,384 1,421,924 0.398 0.791 0.985
14 OTHER NON-MANUF. 116,722 577,694 0.234 0.768 0.956
15 STORAGE 621,138 3,421,158 0.892 0.877 1.092
TOTAL* 5,287,678 28,276,138 1.131 0.946 1.178
© Copyright, Washington Surveying & Rating Bureau, 2015
© Insurance Services Office, Inc., 2015 Washington ML-2015-RLA1 B-10
Entire State (Washington)
**************************
WASHINGTON
BASIC GROUP I RELATIVITY ANALYSIS
TABLE 5 - SUMMARY OF EXPERIENCE USED IN SIMULTANEOUS REVIEW
(1) (2) (3) (4) (5)
ACCIDENT YEAR 5 - YEAR 5 - YEAR Z-WEIGHTED
ENDING 03/31/14 AGGREGATE EXPERIENCE EXPERIENCE Z-WEIGHTED
AGGREGATE LOSS LOSS COSTS RATIO RATIO RELATIVITY
TYPE OF POLICY CATEGORY COSTS
------------------------------------------------------------------------------------------------------------------------------------
35 MULTILINE 02 OTHER HABITATIONAL 99,977 603,820 0.425 0.800 0.996
INSTITUTIONAL 05 PUBLIC BUILDINGS 120,402 878,289 0.000 0.727 0.905
06 CHURCHES 2,024,586 11,365,524 0.514 0.776 0.966
07 SCHOOLS 568,646 3,179,550 0.817 0.863 1.075
08 OFFICES AND BANKS 419,409 2,181,923 2.374 1.147 1.428
09 REC. FACILITIES 328,487 1,616,339 1.933 1.060 1.320
11 HOSPITALS/NURS H0ME 222,587 774,212 0.002 0.728 0.907
13 MOTOR VEHICLE RISKS 7,279 31,769 0.000 0.735 0.915
14 OTHER NON-MANUF. 80,019 430,693 0.018 0.734 0.914
TOTAL* 3,871,392 21,062,119 0.821 0.848 1.057
36 MULTILINE 03 RESTAURANTS & BARS 56,534 307,268 0.019 0.540 0.672
SERVICES 04 OTHER MERCANTILE RS 335,941 1,662,659 0.853 0.738 0.919
08 OFFICES AND BANKS 367,300 1,782,588 0.380 0.551 0.686
09 REC. FACILITIES 1,329,894 7,344,576 0.819 0.772 0.961
13 MOTOR VEHICLE RISKS 750,733 3,810,029 0.463 0.552 0.687
14 OTHER NON-MANUF. 441,223 2,293,151 0.122 0.421 0.524
15 STORAGE 296,460 1,477,589 0.032 0.433 0.539
21 METAL MANUFACTURING 75,214 360,135 0.023 0.535 0.666
22 OTHER MANUFACTURING 76,049 405,999 1.111 0.759 0.945
TOTAL* 3,729,348 19,443,994 0.540 0.626 0.779
37 MULTILINE 04 OTHER MERCANTILE RS 206,663 1,034,954 2.271 1.164 1.450
INDUST/PROCESS 08 OFFICES AND BANKS 133,372 615,936 0.109 0.527 0.656
13 MOTOR VEHICLE RISKS 1,153 1,962 0.000 0.578 0.720
14 OTHER NON-MANUF. 90,916 441,280 0.283 0.582 0.725
15 STORAGE 12,928 42,402 0.000 0.572 0.712
17 FOOD MANUFACTURING 592,899 3,181,879 0.093 0.369 0.460
18 WOOD MANUFACTURING 493,072 2,790,992 0.487 0.578 0.720
19 WEARING APPAREL 108,044 658,863 0.000 0.496 0.618
20 CHEM. MANUFACTURING 25,203 145,467 0.000 0.558 0.695
21 METAL MANUFACTURING 1,178,926 5,510,806 0.982 0.867 1.080
22 OTHER MANUFACTURING 773,493 3,561,615 1.659 1.204 1.499
TOTAL* 3,616,669 17,986,156 0.897 0.801 0.997
© Copyright, Washington Surveying & Rating Bureau, 2015
© Insurance Services Office, Inc., 2015 Washington ML-2015-RLA1 B-11
Entire State (Washington)
**************************
WASHINGTON
BASIC GROUP I RELATIVITY ANALYSIS
TABLE 5 - SUMMARY OF EXPERIENCE USED IN SIMULTANEOUS REVIEW
(1) (2) (3) (4) (5)
ACCIDENT YEAR 5 - YEAR 5 - YEAR Z-WEIGHTED
ENDING 03/31/14 AGGREGATE EXPERIENCE EXPERIENCE Z-WEIGHTED
AGGREGATE LOSS LOSS COSTS RATIO RATIO RELATIVITY
TYPE OF POLICY CATEGORY COSTS
------------------------------------------------------------------------------------------------------------------------------------
38 MULTILINE 04 OTHER MERCANTILE RS 537,414 2,730,323 0.225 0.451 0.562
CONTRACTORS 08 OFFICES AND BANKS 126,757 666,446 0.684 0.670 0.834
14 OTHER NON-MANUF. 27,458 182,196 0.042 0.560 0.697
TOTAL* 691,629 3,578,965 0.302 0.496 0.617
TOTAL ALL TOPS* 01 APARTMENTS 3,435,825 18,374,052 0.703 0.814 1.014
02 OTHER HABITATIONAL 1,155,609 6,359,148 0.553 0.793 0.987
03 RESTAURANTS & BARS 503,712 2,874,086 2.309 1.112 1.385
04 OTHER MERCANTILE RS 5,744,403 29,415,856 0.998 0.873 1.088
05 PUBLIC BUILDINGS 171,383 1,087,706 0.000 0.662 0.825
06 CHURCHES 2,037,940 11,435,409 0.511 0.775 0.965
07 SCHOOLS 591,312 3,312,472 0.797 0.853 1.063
08 OFFICES AND BANKS 2,506,827 13,147,716 1.013 0.911 1.135
09 REC. FACILITIES 1,934,701 10,424,415 0.902 0.756 0.941
10 HOTELS AND MOTELS 544,461 3,214,132 0.729 0.834 1.039
11 HOSPITALS/NURS H0ME 296,871 1,156,673 1.052 1.035 1.288
13 MOTOR VEHICLE RISKS 1,055,024 6,081,843 0.403 0.571 0.711
14 OTHER NON-MANUF. 910,287 4,852,586 0.179 0.530 0.660
15 STORAGE 1,028,817 5,394,702 0.548 0.703 0.876
17 FOOD MANUFACTURING 609,564 3,283,729 0.090 0.374 0.466
18 WOOD MANUFACTURING 542,124 3,143,416 0.443 0.567 0.707
19 WEARING APPAREL 123,036 750,132 0.000 0.503 0.627
20 CHEM. MANUFACTURING 57,648 404,609 0.000 0.521 0.649
21 METAL MANUFACTURING 1,507,390 7,094,959 0.787 0.764 0.952
22 OTHER MANUFACTURING 945,796 4,483,760 1.534 1.124 1.400
TOTAL* 25,702,730 136,291,401 0.799 0.803 1.000
* TOTALS IN COLUMNS (3), (4) & (5) ARE AVERAGES USING COLUMN (1) AS WEIGHTS.
© Copyright, Washington Surveying & Rating Bureau, 2015
© Insurance Services Office, Inc., 2015 Washington ML-2015-RLA1 B-12
WASHINGTON
SPECIAL CAUSES OF LOSS RELATIVITY ANALYSIS
TABLE 6 - SUMMARY OF EXPERIENCE USED IN SIMULTANEOUS REVIEW
(1) (2) (3) (4) (5)
ACCIDENT YEAR 5 - YEAR 5 - YEAR Z-WEIGHTED
ENDING 03/31/14 AGGREGATE EXPERIENCE EXPERIENCE Z-WEIGHTED
AGGREGATE LOSS LOSS COSTS RATIO RATIO RELATIVITY
TYPE OF POLICY CATEGORY COSTS
-------------------------------------------------------------------------------------------------------------------------------------
10 MONOLINE 01 BUILDINGS 846,773 4,206,910 1.884 1.754 1.065
02 RES. APTS. AND COND 22,639 165,247 0.372 1.042 0.633
03 OFFICES 235,630 1,197,163 0.933 1.106 0.672
04 MERCANTILE - HIGH 292,626 1,474,712 0.538 0.862 0.523
05 MERCANTILE - MEDIUM 45,674 250,447 1.797 1.462 0.888
06 MERCANTILE - LOW 27,682 162,916 0.645 1.120 0.680
07 MOTELS AND HOTELS 4,986 30,353 0.000 1.010 0.613
08 INSTITUTIONAL - HIG 21,422 82,674 0.355 1.069 0.649
09 INSTITUTIONAL - LOW 95,516 318,796 0.162 0.920 0.559
10 INDUST-PROC - HIGH 23,409 155,120 0.496 1.081 0.656
11 INDUST-PROC - LOW 131,499 613,862 1.935 1.573 0.955
12 SERVICE - HIGH 26,424 153,728 0.263 1.016 0.617
13 SERVICE - LOW 87,163 585,400 0.774 1.086 0.659
14 CONTRACTORS 3,060 4,033 0.222 1.073 0.651
TOTAL* 1,864,503 9,401,361 1.311 1.390 0.844
31 MULTILINE 01 BUILDINGS 78,395 523,632 2.805 2.221 1.349
MOTEL/HOTEL 07 MOTELS AND HOTELS 37,640 345,476 1.668 1.936 1.175
TOTAL* 116,035 869,108 2.436 2.128 1.292
32 MULTILINE 01 BUILDINGS 887,658 3,891,037 2.723 2.467 1.498
APARTMENT 02 RES. APTS. AND COND 169,959 1,253,388 2.511 2.211 1.342
TOTAL* 1,057,617 5,144,425 2.689 2.426 1.473
33 MULTILINE 01 BUILDINGS 332,705 1,664,050 4.009 2.923 1.775
OFFICE 03 OFFICES 212,002 1,454,643 1.933 1.978 1.201
04 MERCANTILE - HIGH 14 14 0.000 1.770 1.075
08 INSTITUTIONAL - HIG 2,779 7,897 0.000 1.765 1.072
11 INDUST-PROC - LOW 11 11 0.000 1.770 1.075
12 SERVICE - HIGH 208 232 0.000 1.770 1.075
14 CONTRACTORS 2,093 2,115 0.000 1.769 1.074
TOTAL* 549,812 3,128,962 3.171 2.548 1.547
© Copyright, Washington Surveying & Rating Bureau, 2015
© Insurance Services Office, Inc., 2015 Washington ML-2015-RLA1 B-13
WASHINGTON
SPECIAL CAUSES OF LOSS RELATIVITY ANALYSIS
TABLE 6 - SUMMARY OF EXPERIENCE USED IN SIMULTANEOUS REVIEW
(1) (2) (3) (4) (5)
ACCIDENT YEAR 5 - YEAR 5 - YEAR Z-WEIGHTED
ENDING 03/31/14 AGGREGATE EXPERIENCE EXPERIENCE Z-WEIGHTED
AGGREGATE LOSS LOSS COSTS RATIO RATIO RELATIVITY
TYPE OF POLICY CATEGORY COSTS
-------------------------------------------------------------------------------------------------------------------------------------
34 MULTILINE 01 BUILDINGS 1,134,622 5,563,956 1.569 1.696 1.030
MERCANTILE 04 MERCANTILE - HIGH 280,925 1,696,019 1.024 1.557 0.945
05 MERCANTILE - MEDIUM 192,450 1,351,766 2.087 2.043 1.240
06 MERCANTILE - LOW 94,866 642,285 1.977 2.002 1.216
08 INSTITUTIONAL - HIG 434 943 0.000 1.770 1.075
12 SERVICE - HIGH 2,212 7,366 0.000 1.766 1.072
13 SERVICE - LOW 15,131 45,536 0.126 1.758 1.067
14 CONTRACTORS 5,109 14,966 0.000 1.761 1.069
TOTAL* 1,725,749 9,322,837 1.541 1.730 1.050
35 MULTILINE 01 BUILDINGS 818,918 3,934,043 1.871 1.921 1.166
INSTITUTIONAL 03 OFFICES 23 23 0.000 1.770 1.075
08 INSTITUTIONAL - HIG 247,480 1,429,895 1.360 1.734 1.053
09 INSTITUTIONAL - LOW 330,897 1,799,392 1.347 1.697 1.030
12 SERVICE - HIGH 280 481 0.000 1.770 1.075
14 CONTRACTORS 719 1,925 0.000 1.769 1.074
TOTAL* 1,398,317 7,165,759 1.655 1.835 1.114
36 MULTILINE 01 BUILDINGS 724,677 3,514,693 2.158 2.131 1.294
SERVICES 03 OFFICES 251 620 0.000 1.075 0.653
04 MERCANTILE - HIGH 3,160 7,358 0.000 1.021 0.620
05 MERCANTILE - MEDIUM 62 69 0.000 1.080 0.656
08 INSTITUTIONAL - HIG 9,867 26,189 0.000 0.894 0.543
09 INSTITUTIONAL - LOW 33,791 106,990 0.000 0.584 0.355
11 INDUST-PROC - LOW 478 935 0.000 1.072 0.651
12 SERVICE - HIGH 283,618 1,408,582 1.400 1.389 0.843
13 SERVICE - LOW 158,155 959,445 2.380 2.267 1.376
14 CONTRACTORS 12,907 35,305 0.000 0.844 0.512
TOTAL* 1,226,966 6,060,186 1.905 1.907 1.158
37 MULTILINE 01 BUILDINGS 798,270 3,835,811 0.478 0.499 0.303
INDUST/PROC 10 INDUST-PROC - HIGH 244,978 1,445,648 0.424 0.481 0.292
11 INDUST-PROC - LOW 607,729 3,074,658 1.293 1.292 0.784
12 SERVICE - HIGH 201 619 0.000 1.075 0.653
14 CONTRACTORS 0 113 0.000 1.000 1.000
TOTAL* 1,651,178 8,356,849 0.770 0.788 0.479
© Copyright, Washington Surveying & Rating Bureau, 2015
© Insurance Services Office, Inc., 2015 Washington ML-2015-RLA1 B-14
WASHINGTON
SPECIAL CAUSES OF LOSS RELATIVITY ANALYSIS
TABLE 6 - SUMMARY OF EXPERIENCE USED IN SIMULTANEOUS REVIEW
(1) (2) (3) (4) (5)
ACCIDENT YEAR 5 - YEAR 5 - YEAR Z-WEIGHTED
ENDING 03/31/14 AGGREGATE EXPERIENCE EXPERIENCE Z-WEIGHTED
AGGREGATE LOSS LOSS COSTS RATIO RATIO RELATIVITY
TYPE OF POLICY CATEGORY COSTS
-------------------------------------------------------------------------------------------------------------------------------------
38 MULTILINE 01 BUILDINGS 159,982 825,493 0.555 0.635 0.386
CONTRACTORS 03 OFFICES 2,081 2,081 0.000 1.063 0.645
08 INSTITUTIONAL - HIG 465 1,263 0.000 1.070 0.650
11 INDUST-PROC - LOW 4 4 0.000 1.080 0.656
12 SERVICE - HIGH 102 102 0.000 1.080 0.656
14 CONTRACTORS 221,454 1,348,880 1.504 1.485 0.902
TOTAL* 384,088 2,177,823 1.098 1.128 0.685
TOTAL ALL TOPS* 01 BUILDINGS 5,782,000 27,959,625 1.887 1.792 1.088
02 RES. APTS. AND COND 192,598 1,418,635 2.260 2.074 1.259
03 OFFICES 449,987 2,654,530 1.399 1.517 0.921
04 MERCANTILE - HIGH 576,725 3,178,103 0.772 1.201 0.729
05 MERCANTILE - MEDIUM 238,186 1,602,282 2.031 1.931 1.173
06 MERCANTILE - LOW 122,548 805,201 1.676 1.803 1.095
07 MOTELS AND HOTELS 42,626 375,829 1.473 1.828 1.110
08 INSTITUTIONAL - HIG 282,447 1,548,861 1.219 1.654 1.004
09 INSTITUTIONAL - LOW 460,204 2,225,178 1.002 1.454 0.883
10 INDUST-PROC - HIGH 268,387 1,600,768 0.430 0.533 0.324
11 INDUST-PROC - LOW 739,721 3,689,470 1.406 1.341 0.815
12 SERVICE - HIGH 313,045 1,571,110 1.291 1.361 0.826
13 SERVICE - LOW 260,449 1,590,381 1.712 1.842 1.119
14 CONTRACTORS 245,342 1,407,337 1.360 1.455 0.884
TOTAL* 9,974,265 51,627,310 1.636 1.647 1.000
* TOTALS IN COLUMNS (3) & (4) ARE AVERAGES USING COLUMN (1) AS WEIGHTS.
© Copyright, Washington Surveying & Rating Bureau, 2015
© Insurance Services Office, Inc., 2015 Washington ML-2015-RLA1 B-15
EXPLANATORY NOTES TO TABLES 5 AND 6
BASIC GROUP I/SPECIAL CAUSES OF LOSS RELATIVITY ANALYSIS
SUMMARY OF EXPERIENCE USED IN SIMULTANEOUS REVIEW
INTRODUCTION The experience used in the relativity analysis and displayed in Tables 5 and 6 is
the latest five years of accident year data as reported under the Commercial
Statistical Plan. As in the overall review, loss costs have been adjusted to
current ISO loss cost and prospective amount of insurance levels (with
multiline aggregate loss costs adjusted additionally by the current implicit
package modification factors). Incurred losses are adjusted to prospective cost
levels, and are further adjusted by the Basic Group I large loss procedure and
the Special Causes of Loss excess procedure. Losses have also been developed
to their ultimate settlement value by application of loss development factors.
COLUMN (1) AGGREGATE LOSS COSTS
The latest year adjusted aggregate loss costs (adjusted as described above) are
used as weights both in the calculation of any totals shown in this table and in
the iterative formulae used in the simultaneous review procedure.
COLUMN (2) 5 - YEAR AGGREGATE LOSS COSTS
The combined five-year adjusted aggregate loss costs (adjusted as described
above) are used to calculate the experience ratios in column (3).
COLUMN (3) FIVE-YEAR EXPERIENCE RATIOS
These are the ratio of the combined five-year adjusted incurred losses (adjusted
as described above) to the combined five-year adjusted aggregate loss costs as
shown in Column (2). Any totals which are shown are weighted averages using
the adjusted aggregate loss costs in Column (1).
COLUMN (4)
CREDIBILITY (Z) WEIGHTED EXPERIENCE RATIO
A credibility procedure is applied to the initial experience ratios in column (3)
on a cell-by-cell basis prior to the simultaneous review procedure. The
credibility values are calculated using an empirical Bayesian credibility
procedure. In the following discussion, cell refers to an individual combination
of TOP, rating group or category, and territory (where applicable).
© Copyright, Washington Surveying & Rating Bureau, 2015
© Insurance Services Office, Inc., 2015 Washington ML-2015-RLA1 B-16
EXPLANATORY NOTES TO TABLES 5 AND 6 (Cont'd)
COLUMN (4)
(Cont'd)
The important concept underlying empirical Bayesian credibility is that the
credibility should depend both on the overall variation of the group of which
the cell is a member, in addition to the variation of the yearly experience ratios
for each cell. Therefore, if a cell's data is itself very stable then we would
assign a relatively high credibility value, and vice versa.
The empirical Bayesian credibility formula for individual cell credibility is
Z = ((C-3)/C) (P/(P+K)) + (3/C). P equals the cell's five-year adjusted
aggregate loss costs and C equals the number of unique combinations of rating
variables (Territory, TOP and Rating Group/Category) within a class group.
The K value is estimated from the underlying data using the empirical Bayes
method and varies by TOP group and by territory where applicable. The three
TOP groups used in this analysis are: Monoline (TOP 10), Premises (TOP's 31-
35), and Operations (TOP's 36-38). The 3/C term corrects for the statistical
bias associated with the credibility process. The minimum credibility that is
possible is 3/C.
The calculated credibility (Z) is then applied to the five-year experience ratio
with the complement of credibility applied to the credibility-weighted average
of the individual experience ratios of the group, where group refers to the
specified TOP/territory group. In a non-territory state, K values would be
determined for the three TOP groups on an entire state basis.
COLUMN (5) WEIGHTED RELATIVITIES
The relativities are the ratios of the five-year credibility-weighted experience
ratios shown in column (4) to the average five-year credibility-weighted
experience ratio for all TOP's, rating groups and territories (where applicable)
combined. These relativities represent how much better or worse than average
the experience for a given cell is. They are used along with the aggregate loss
costs in column (1) as input for the simultaneous review procedure.
© Copyright, Washington Surveying & Rating Bureau, 2015
© Insurance Services Office, Inc., 2015 Washington ML-2015-RLA1 B-17
WASHINGTON
TABLE 7 - BASIC GROUP II RELATIVITY ANALYSIS
(1) (2) (3) (4) (5) (6) (7) (8)
ACCIDENT YEAR ACCIDENT YEARS
ENDING 03/31/14 2005-2014 Z BALANCED NORMALIZED
AGGR. LOSS COSTS EXPER. RATIO FORMULA CREDI- WEIGHTED FORMULA FORMULA
AT CURRENT AT CURRENT RELATIVITY BILITY Z RELA- RELA- RELA- INDICATED
IMPLICIT PMF PMF (2)/ 1.060 C TIVITY D TIVITY E TIVITY F CHANGE G
-------------------------------------------------------------------------------------------------------
MONOLINE 559,202 0.941 0.888 0.126 0.986 0.986 0.9812
MULTILINE 3,451,399 1.079 1.018 0.469 1.008 1.008 1.0034
---------------- ------- ------ ------ ------ ------ --------
COVERAGE 4,010,601 1.060 1.000 1.0049 B 1.0003
MULTILINE TOP
31 MOTEL/HOTEL 46,410 4.572 4.313 0.016 1.053 1.058 1.0528 +7.3%
32 APARTMENT 332,631 0.993 0.937 0.061 0.996 1.001 0.9961 +1.5%
33 OFFICE 139,104 0.801 0.756 0.037 0.991 0.996 0.9911 +1.0%
34 MERCANTILE 1,097,815 0.739 0.697 0.227 0.931 0.936 0.9314 -5.1%
35 INSTITUTIONAL 846,104 1.675 1.580 0.200 1.116 1.122 1.1165 +13.8%
36 SERVICES 549,743 1.109 1.046 0.108 1.005 1.010 1.0051 +2.4%
37 INDUST/PROCESS 349,279 0.488 0.460 0.072 0.961 0.966 0.9613 -2.0%
38 CONTRACTORS 90,313 0.694 0.655 0.020 0.993 0.998 0.9931 +1.2%
---------------- ------- ------ ------ ------ ------ --------
3,451,399 1.079 B 1.018 1.003 B 1.008 B 1.0034 B
B - AVERAGE WEIGHTED BY COLUMN (1)
C - CREDIBILITY = P/(P+K) WHERE P REPRESENTS THE TOTAL 10 YEAR ADJUSTED LOSS COSTS AND K = 45,000,000
D - (5) = (3) * (4) + (1.000 - (4))
E - (6) = (5) * (1.008/1.003)
F - (7) = (6) / 1.0049
G - (8) = (NORMALIZED RELATIVITY FOR TOP) / (NORMALIZED MONOLINE RELATIVITY (TOP 10)) - 1
© Copyright, Washington Surveying & Rating Bureau, 2015
© Insurance Services Office, Inc., 2015 Washington ML-2015-RLA1 B-18
EXPLANATORY NOTES TO TABLE 7
BASIC GROUP II RELATIVITY ANALYSIS
OBJECTIVE The explanations which follow clarify Table 7, the Basic Group II (BGII)
relativity analysis. The purpose of this analysis is to:
(1) determine the monoline loss cost level need;
(2) determine indicated changes to the eight property Commercial
Package Policy (CPP) Package Modification Factors (PMFs)
based on Basic Group II experience.
COLUMN (1) AGGREGATE LOSS COSTS
The latest accident year adjusted aggregate loss costs (adjusted in the same
manner as in the overall review, i.e. to current manual loss cost and prospective
amount of insurance levels, with multiline aggregate loss costs further adjusted
to current IPMF level) are used as weights in the calculation of any totals shown
in this table.
COLUMN (2) 10 - YEAR EXPERIENCE RATIO
These experience ratios are the ratio of the combined ten year CSP adjusted
incurred losses (adjusted to current deductible and prospective cost levels
including loss development, and also adjusted to reflect the BGII excess loss
procedure) to the combined ten year CSP adjusted aggregate loss costs. Any
totals which are shown are weighted averages using the aggregate loss costs in
Column (1). When a dash is displayed in the column, it indicates that the
indicated IPMF which resulted from this procedure was capped. The procedure
which follows when capping occurs is described below.
COLUMN (3) FORMULA RELATIVITY
The formula relativities are the ratios of the ten year experience ratios for the
type of policy (either monoline vs. multiline or individual multiline programs) to
the average ten year experience ratio for monoline and multiline combined.
These relativities represent how much better or worse than average the
experience for a given type of policy is. Again, any totals which are shown are
weighted averages and the display of a dash indicates that the resulting IPMF
was capped.
© Copyright, Washington Surveying & Rating Bureau, 2015
© Insurance Services Office, Inc., 2015 Washington ML-2015-RLA1 B-19
EXPLANATORY NOTES TO TABLE 7 (Cont'd)
COLUMN (3)
(Cont'd)
Unlike the BGI and SCL relativity analyses, the BGII analysis does not employ
a simultaneous review procedure since a one way review is involved. That is,
the overall loss cost change is only distributed across type of policy; no other
rating variables are considered.
COLUMN (4) CREDIBILITY
The credibility of the experience for each type of policy is determined from the
formula:
KP
PZ
where P is the ten year adjusted aggregate loss costs for a given type of policy,
and K is a constant loss cost volume of $45,000,000.
COLUMN (5) Z - WEIGHTED RELATIVITY
The weighted relativity is a weighted average of the individual TOP formula
relativity and the overall (coverage) formula relativity using credibility and its
complement as the respective weights. Therefore, to the extent that the
indication for a type of policy is not fully credible, the complement of credibility
is assigned to the statewide coverage level change.
COLUMN (6) BALANCED FORMULA RELATIVITY
The individual multiline weighted relativities are balanced to the multiline
weighted relativity level by applying a factor equal to the overall multiline
relativity (i.e. the weighted relativity for all multiline combined which is shown
on the top of the exhibit directly under the corresponding monoline relativity)
divided by the average multiline relativity (i.e. the weighted average of the
individual multiline weighted relativities which is shown on the bottom of the
exhibit). When the indicated IPMF for a type of policy is capped, the balanced
relativity is set equal to the product of the capped IPMF and the monoline
balanced formula relativity, divided by the current IPMF.
© Copyright, Washington Surveying & Rating Bureau, 2015
© Insurance Services Office, Inc., 2015 Washington ML-2015-RLA1 B-20
EXPLANATORY NOTES TO TABLE 7 (Cont'd)
COLUMN (7) NORMALIZED FORMULA RELATIVITY
The normalized relativity is equal to the balanced formula relativity divided by
the average monoline/multiline combined relativity. This balances the average
monoline/multiline relativity to unity.
COLUMN (8) INDICATED LOSS COST CHANGES
The indicated multiline (by TOP) changes are calculated by taking the ratio of
the TOP relativity (Column 7) to the monoline relativity.
For each type of policy the indicated IPMF is subject to a minimum value of
0.50 and a maximum value of 1.50. If an indicated IPMF falls outside one of
those limits, it is capped at that amount, the aggregate loss costs for that type of
policy are adjusted to the capped IPMF level, and the entire relativity review as
described above is redone to take this into account. If an IPMF has been capped
it is so noted in footnote A.
© Copyright, Washington Surveying & Rating Bureau, 2015
© Insurance Services Office, Inc., 2015 Washington ML-2015-RLA1 B-21
CRIME AND FIDELITY
Crime and Fidelity filing CR-2013-RLA1 revised advisory prospective loss costs for both the Burglary and Theft
and the Fidelity coverages. The reviews for Burglary and Theft and for Fidelity were done on a multistate basis,
combining both multiline and monoline experience. However, unlike other coverages included in a Commercial
Package Policy, there is no simultaneous review procedure for either Burglary and Theft or for Fidelity in which
separate loss cost level changes can be determined for multiline and monoline experience. In the absence of a
simultaneous review procedure we are unable to determine Type of Policy relativities with which to price CPP
policies relative to monoline policies and therefore have assumed a multiline change of 0.0% and thus no change
to the historic Crime or Fidelity IPMFs.
© Copyright, Washington Surveying & Rating Bureau, 2015
© Insurance Services Office, Inc., 2015 Washington ML-2015-RLA1 B-22
WASHINGTON
TABLE 8
COMMERCIAL I.M. RELATIVITY ANALYSIS
(1) (2) (3) (4) (5)
BALANCED CURRENT INDICATED SELECTED
TOP RELATIVITY IPMF IPMF* IPMF
10 0.986 0.824 0.850 0.850
3X & 7X 1.018
CLASSIFICATION
150 0.581
191 1.364
192 0.900
220 0.934
221 0.947
234 1.061
235 0.810
240 0.984
241 0.824
327 0.947
328 1.676
340 0.947
341 0.947
342 0.950
343 0.947
403 0.873
451 0.825
452 0.792
453 1.164
454 0.850
460 0.738
482 0.906
510 0.709
514 0.998
530 0.578
534 0.947
*COLUMN(4) = COLUMN(3)*(TOP 3X & 7X COLUMN(2)/TOP 10 COLUMN(2))
© Copyright, Washington Surveying & Rating Bureau, 2015
© Insurance Services Office, Inc., 2015 Washington ML-2015-RLA1 B-23
WASHINGTON
COMMERCIAL INLAND MARINE RELATIVITY ANALYSIS
TABLE 9 - SUMMARY OF EXPERIENCE USED IN SIMULTANEOUS REVIEW
(1) (2) (3) (4)
RATING 2012 AGGREGATE 2008 - 2012 FIVE-YEAR
TYPE OF POLICY GROUP LOSS COSTS AGGREGATE LOSS COSTS EXP RATIO RELATIVITY
MONOLINE 10 150 314,481 1,654,242 1.821 1.899
191 2,616,974 9,783,792 1.589 1.657
192 451,946 1,333,293 0.827 0.862
220 16,517 76,263 0.123 0.128
221 420 3,767 0.000 0.000
234 2,886,563 13,221,606 0.895 0.933
235 4,322,297 12,302,495 0.726 0.757
240 1,025,405 4,604,627 0.982 1.024
241 101,927 136,118 0.006 0.006
327 30,551 146,499 0.000 0.000
328 2,992,830 13,607,177 1.940 2.023
340 6,165 36,694 0.000 0.000
341 0 0 0.000 0.000
342 312 2,495 0.000 0.000
343 189 1,238 0.000 0.000
403 1,592,716 6,914,972 0.840 0.876
451 3,490,297 14,442,401 0.747 0.779
452 30,138 258,095 0.407 0.424
453 69,657 654,373 2.681 2.796
454 130,725 640,114 1.070 1.116
460 696,560 2,902,338 0.610 0.636
482 374,148 1,581,934 0.904 0.943
510 6,360 615,925 0.010 0.010
514 274,664 837,150 1.304 1.360
530 611,790 2,859,730 0.609 0.635
534 0 0 0.000 0.000
TOTAL# 22,043,632 88,617,338 1.062 1.107
© Copyright, Washington Surveying & Rating Bureau, 2015
© Insurance Services Office, Inc., 2015 Washington ML-2015-RLA1 B-24
WASHINGTON
COMMERCIAL INLAND MARINE RELATIVITY ANALYSIS
TABLE 9 - SUMMARY OF EXPERIENCE USED IN SIMULTANEOUS REVIEW
(1) (2) (3) (4)
RATING 2012 AGGREGATE 2008 - 2012 FIVE-YEAR
TYPE OF POLICY GROUP LOSS COSTS AGGREGATE LOSS COSTS EXP RATIO RELATIVITY
MULTILINE ## 150 859,610 4,456,944 0.174 0.181
3X & 7X 191 651,281 4,161,943 0.235 0.245
192 156,579 678,482 0.098 0.102
220 9,090 51,291 1.695 1.767
221 2,471 2,474 0.000 0.000
234 11,084,896 43,452,337 1.064 1.109
235 568,014 2,581,720 0.782 0.815
240 24,059 100,037 0.548 0.571
241 1,609 24,343 0.123 0.128
327 4,680 42,335 0.000 0.000
328 1,557 2,881,208 0.072 0.075
340 17,892 55,645 0.000 0.000
341 0 0 0.000 0.000
342 7,623 16,567 2.280 2.377
343 1,473 22,831 0.000 0.000
403 786,286 3,704,680 0.651 0.679
451 76,269 960,752 0.205 0.214
452 67,585 209,525 0.029 0.030
453 18,163 776,345 0.007 0.007
454 221,459 1,084,210 0.418 0.436
460 2,391,309 9,647,429 0.651 0.679
482 209,780 1,355,831 0.474 0.494
510 23,951 96,662 0.075 0.078
514 74,879 338,326 0.179 0.187
530 962,497 4,466,197 0.298 0.311
534 0 0 0.000 0.000
TOTAL# 18,223,012 81,168,114 0.833 0.869
## REFLECTS CURRENT IPMF OF 0.824.
© Copyright, Washington Surveying & Rating Bureau, 2015
© Insurance Services Office, Inc., 2015 Washington ML-2015-RLA1 B-25
WASHINGTON
COMMERCIAL INLAND MARINE RELATIVITY ANALYSIS
TABLE 9 - SUMMARY OF EXPERIENCE USED IN SIMULTANEOUS REVIEW
(1) (2) (3) (4)
RATING 2012 AGGREGATE 2008 - 2012 FIVE-YEAR
TYPE OF POLICY GROUP LOSS COSTS AGGREGATE LOSS COSTS EXP RATIO RELATIVITY
TOTAL ALL TOPS# 150 1,174,091 6,111,186 0.615 0.641
191 3,268,255 13,945,735 1.319 1.375
192 608,525 2,011,775 0.639 0.666
220 25,607 127,554 0.681 0.710
221 2,891 6,241 0.000 0.000
234 13,971,459 56,673,943 1.029 1.073
235 4,890,311 14,884,215 0.733 0.764
240 1,049,464 4,704,664 0.972 1.014
241 103,536 160,461 0.008 0.008
327 35,231 188,834 0.000 0.000
328 2,994,387 16,488,385 1.939 2.022
340 24,057 92,339 0.000 0.000
341 0 0 0.000 0.000
342 7,935 19,062 2.190 2.284
343 1,662 24,069 0.000 0.000
403 2,379,002 10,619,652 0.778 0.811
451 3,566,566 15,403,153 0.735 0.766
452 97,723 467,620 0.146 0.152
453 87,820 1,430,718 2.128 2.219
454 352,184 1,724,324 0.660 0.688
460 3,087,869 12,549,767 0.642 0.669
482 583,928 2,937,765 0.750 0.782
510 30,311 712,587 0.061 0.064
514 349,543 1,175,476 1.063 1.108
530 1,574,287 7,325,927 0.419 0.437
534 0 0 0.000 0.000
TOTAL# 40,266,644 169,785,452 0.959 1.000
# TOTAL IN COLUMN (3) IS AN AVERAGE USING COLUMN (1) AS WEIGHTS.
© Copyright, Washington Surveying & Rating Bureau, 2015
© Insurance Services Office, Inc., 2015 Washington ML-2015-RLA1 B-26
EXPLANATORY NOTES TO TABLES 8 AND 9
COMMERCIAL INLAND MARINE RELATIVITY ANALYSIS
EXPERIENCE
BASE
The Commercial Inland Marine IPMF review presented in the attached exhibits is
based on a review of the latest available five years of monoline and multiline
experience through accident year 2012 for all companies reporting data to Insurance
Services Office under the Inland Marine Module of the Commercial Statistical Plan
(CSP) and the Intermediate Level of the Commercial Minimum Statistical Plan
(CMSP).
ADJUSTMENT
OF DATA
Aggregate loss costs for each year in the review period have been adjusted to the
levels which would have been earned had the current loss costs applied throughout
the experience period. Reported premiums are adjusted to current level on an
individual policy basis by applying a factor equal to all loss cost level changes that
have been implemented subsequent to the policy being written. These adjusted
premiums are then converted to a loss cost at current level. In order to eliminate the
impact of company deviations from the manual level and individual risk
modifications which were in effect at the time the policy was written, aggregate loss
costs are further adjusted based on reported Rate Modification and Rate Departure
Factors/Loss Cost Multipliers. Multiline aggregate loss costs are further adjusted to
the level of the current Implicit Package Modification Factor (IPMF). Incurred
losses are loaded for all loss adjustment expenses by applying a factor of 1.105.
RELATIVITY
ANALYSIS
For Inland Marine coverage, a multistate IPMF level is determined via a two-way
relativity analysis similar to the analysis used in Basic Group I. The experience for
all reviewed classes is used to form class group relativities. These relativities for
monoline and multiline (all programs combined) are determined through an iterative
procedure. The ratio of the multiline relativity to the monoline relativity is multiplied
by the current IPMF to yield the indicated IPMF. The indicated IPMF is subject to a
minimum value of 0.500 and a maximum value of 1.500. If an indicated IPMF falls
outside one of those limits, it is capped at that amount, the premiums for that Type of
Policy (i.e., TOP 10 versus TOP 3X) are adjusted to the capped IPMF level, and the
entire relativity review is reperformed to take this into account.
© Copyright, Washington Surveying & Rating Bureau, 2015
© Insurance Services Office, Inc., 2015 Washington ML-2015-RLA1 B-27
TABLE 10
WASHINGTON
OWNERS, LANDLORDS AND TENANTS
BASIC LIMIT RELATIVE CHANGE ANALYSIS
------------------------------------
(1) (2) (3) (4) (5)
BAILEY
FORMULA CREDIBILITY Z-WTD BALANCED INDICATED
TOP RELATIV. Z RELATIV. RELATIV. CHANGE *
10 0.855 0.212 0.967 0.965
31 0.898 0.131 0.986 0.984 +2.0%
32 0.719 0.123 0.960 0.958 -0.7%
33 0.893 0.165 0.981 0.979 +1.5%
34 1.536 0.220 1.099 1.096 +13.6%
35 0.767 0.142 0.963 0.961 -0.4%
36 0.916 0.129 0.989 0.986 +2.2%
CLASS
GROUP
01 0.776 0.077 0.981 0.985
02 0.542 0.149 0.913 0.916
03 0.940 0.120 0.993 0.997
04 1.318 0.039 1.011 1.015
05 0.610 0.043 0.979 0.983
06 0.939 0.056 0.996 1.000
07 1.131 0.120 1.015 1.019
08 0.726 0.030 0.990 0.994
09 1.276 0.147 1.037 1.041
10 1.896 0.155 1.104 1.109
11 1.488 0.133 1.054 1.058
12 0.888 0.238 0.972 0.976
13 1.002 0.070 1.000 1.004
16 0.000 0.000 1.000 1.004
TERRITORY
1 1.208 0.219 1.042 1.048
2 0.936 0.377 0.975 0.980
* INDICATED CHANGE = (BALANCED RELATIVITY FOR TOP) / (MONOLINE RELATIVITY (TOP 10)) - 1
© Copyright, Washington Surveying & Rating Bureau, 2015
© Insurance Services Office, Inc., 2015 Washington ML-2015-RLA1 B-28
TABLE 11
WASHINGTON
MANUFACTURERS AND CONTRACTORS
BASIC LIMIT RELATIVE CHANGE ANALYSIS
------------------------------------
(1) (2) (3) (4) (5)
BAILEY
FORMULA CREDIBILITY Z-WTD BALANCED INDICATED
TOP RELATIV. Z RELATIV. RELATIV. CHANGE *
10 0.973 0.224 0.994 0.990
33 2.252 0.035 1.029 1.024 +3.4%
34 0.933 0.089 0.994 0.990 0.0%
35 0.323 0.030 0.967 0.963 -2.7%
36 0.829 0.093 0.983 0.979 -1.1%
37 1.118 0.111 1.012 1.008 +1.8%
38 1.149 0.203 1.029 1.024 +3.4%
CLASS
GROUP
30 1.246 0.095 1.021 1.017
31 1.523 0.167 1.073 1.068
32 1.089 0.226 1.019 1.015
33 0.542 0.077 0.954 0.950
34 0.733 0.097 0.970 0.966
35 0.395 0.041 0.963 0.959
36 0.450 0.083 0.936 0.932
37 0.773 0.048 0.988 0.984
38 1.147 0.091 1.013 1.008
* INDICATED CHANGE = (BALANCED RELATIVITY FOR TOP) / (MONOLINE RELATIVITY (TOP 10)) - 1
© Copyright, Washington Surveying & Rating Bureau, 2015
© Insurance Services Office, Inc., 2015 Washington ML-2015-RLA1 B-29
TABLE 12
WASHINGTON
OWNERS, LANDLORDS AND TENANTS
BASIC LIMIT RELATIVE CHANGE ANALYSIS
------------------------------------
SUMMARY OF EXPERIENCE USED IN RELATIVE CHANGE ANALYSIS
TERRITORY ALL
(1) (2) (3) (4) (5) (6)
FISCAL A.Y.E. FISCAL A.Y.E.
03/31/2014 AGGREGATE 2010 - 2014 FIVE YEAR
LOSS COSTS AT AGG LOSS COST EXPERIENCE NUMBER OF BAL CELL
TYPE OF POLICY CLASS GROUP CURRENT LEVEL CURRENT LEVEL RATIO RELATIV. OCCURRENCES RELATIV.
10 MONOLINE 01 FOOD&BEV.(RETAIL) $61,930 $268,553 1.119 12
02 RESTAURANTS 198,414 641,263 0.652 33
03 STORES 199,428 1,048,800 0.957 102
04 VENDING & RENTAL 11,364 81,204 5.291 8
05 FOOD & BEV. DIST. 40,173 153,700 0.672 5
06 NON-FOOD&BEV.DIST 62,781 299,453 0.204 5
07 CLUBS,AMSMT&SPRTS 455,387 2,589,513 1.068 118
08 HEALTH CARE FACIL 71,922 326,341 0.138 2
09 HOTELS AND MOTELS 381,623 1,253,562 1.080 70
10 SCHLS & CHURCHES 353,315 1,742,097 1.767 134
11 APARTMENTS 472,988 1,903,189 1.298 82
12 BUILDINGS&OFFICES 1,326,393 5,827,893 0.848 232
13 MISC. PREMISES 62,461 263,720 0.859 13
TOTAL * $3,698,179 $16,399,288 1.032 816
31 MULT MOTEL/HOTEL 09 HOTELS AND MOTELS $779,908 $4,656,929 1.225 309
TOTAL * $779,908 $4,656,929 1.225 309
32 MULT APARTMENT 11 APARTMENTS $1,080,758 $7,718,028 1.185 241
12 BUILDINGS&OFFICES 285,821 1,414,759 0.605 33
TOTAL * $1,366,579 $9,132,787 1.063 274
33 MULT OFFICE 12 BUILDINGS&OFFICES $2,493,806 $13,446,735 0.869 492
13 MISC. PREMISES 14,304 315,673 0.000 0
TOTAL * $2,508,110 $13,762,408 0.864 492
34 MULT MERCANTILE 01 FOOD&BEV.(RETAIL) $798,248 $2,147,567 1.215 96
02 RESTAURANTS 1,656,846 7,044,297 0.900 367
03 STORES 647,551 2,313,734 1.516 128
04 VENDING & RENTAL 9,028 33,480 0.764 10
05 FOOD & BEV. DIST. 236,366 989,874 0.979 29
06 NON-FOOD&BEV.DIST 284,979 1,314,067 1.668 53
12 BUILDINGS&OFFICES 507,015 2,519,171 1.587 192
13 MISC. PREMISES 2,788 16,433 0.000 0
TOTAL * $4,142,821 $16,378,623 1.198 875
© Copyright, Washington Surveying & Rating Bureau, 2015
© Insurance Services Office, Inc., 2015 Washington ML-2015-RLA1 B-30
TABLE 12
WASHINGTON
OWNERS, LANDLORDS AND TENANTS
BASIC LIMIT RELATIVE CHANGE ANALYSIS
------------------------------------
SUMMARY OF EXPERIENCE USED IN RELATIVE CHANGE ANALYSIS
TERRITORY ALL
(1) (2) (3) (4) (5) (6)
FISCAL A.Y.E. FISCAL A.Y.E.
03/31/2014 AGGREGATE 2010 - 2014 FIVE YEAR
LOSS COSTS AT AGG LOSS COST EXPERIENCE NUMBER OF BAL CELL
TYPE OF POLICY CLASS GROUP CURRENT LEVEL CURRENT LEVEL RATIO RELATIV. OCCURRENCES RELATIV.
35 MULT INSTITUT. 07 CLUBS,AMSMT&SPRTS $157,857 $1,038,364 0.356 25
08 HEALTH CARE FACIL 174,692 870,984 0.804 15
10 SCHLS & CHURCHES 801,005 4,159,642 1.514 301
12 BUILDINGS&OFFICES 16,855 82,481 5.079 22
13 MISC. PREMISES 10,435 43,094 0.000 0
16 GOVT SUBDIVISIONS 10,776 399,188 0.000 0
TOTAL * $1,171,620 $6,593,753 1.276 363
36 MULT SERVICES 03 STORES $202,250 $1,016,852 1.094 31
04 VENDING & RENTAL 47,440 255,533 0.498 10
07 CLUBS,AMSMT&SPRTS 353,438 2,233,692 1.272 118
08 HEALTH CARE FACIL 2,992 20,095 0.000 0
09 HOTELS AND MOTELS 66,898 341,067 1.633 13
10 SCHLS & CHURCHES 830 10,604 0.000 0
12 BUILDINGS&OFFICES 267,663 1,604,167 0.417 53
13 MISC. PREMISES 192,223 989,863 1.201 77
TOTAL * $1,133,734 $6,471,873 1.011 302
TOTAL ALL TOP 01 FOOD&BEV.(RETAIL) $860,178 $2,416,120 1.208 108
02 RESTAURANTS 1,855,260 7,685,560 0.874 400
03 STORES 1,049,229 4,379,386 1.328 261
04 VENDING & RENTAL 67,832 370,217 1.336 28
05 FOOD & BEV. DIST. 276,539 1,143,574 0.935 34
06 NON-FOOD&BEV.DIST 347,760 1,613,520 1.404 58
07 CLUBS,AMSMT&SPRTS 966,682 5,861,569 1.026 261
08 HEALTH CARE FACIL 249,606 1,217,420 0.602 17
09 HOTELS AND MOTELS 1,228,429 6,251,558 1.202 392
10 SCHLS & CHURCHES 1,155,150 5,912,343 1.590 435
11 APARTMENTS 1,553,746 9,621,217 1.219 323
12 BUILDINGS&OFFICES 4,897,553 24,895,206 0.912 1,024
13 MISC. PREMISES 282,211 1,628,783 1.008 90
16 GOVT SUBDIVISIONS 10,776 399,188 0.000 0
TOTAL * $14,800,951 $73,395,661 1.081 3,431
* TOTALS IN COLUMN (3) ARE AVERAGES USING COLUMN (1) AS WEIGHTS.
© Copyright, Washington Surveying & Rating Bureau, 2015
© Insurance Services Office, Inc., 2015 Washington ML-2015-RLA1 B-31
TABLE 13
WASHINGTON
MANUFACTURERS AND CONTRACTORS
BASIC LIMIT RELATIVE CHANGE ANALYSIS
------------------------------------
SUMMARY OF EXPERIENCE USED IN RELATIVE CHANGE ANALYSIS
(1) (2) (3) (4) (5) (6)
FISCAL A.Y.E. FISCAL A.Y.E.
03/31/2014 AGGREGATE 2010 - 2014 FIVE YEAR
LOSS COSTS AT AGG LOSS COST EXPERIENCE NUMBER OF BAL CELL
TYPE OF POLICY CLASS GROUP CURRENT LEVEL CURRENT LEVEL RATIO RELATIV. OCCURRENCES RELATIV.
10 MONOLINE 30 SERVICE $319,209 $1,095,641 0.953 1.089 40 1.007
31 LIGHT CONTRACTING 1,496,813 4,406,593 1.587 1.812 277 1.058
32 MEDIUM CONTRCTING 3,078,052 14,005,396 0.820 0.936 432 1.005
33 HEAVY CONTRACTING 404,838 1,848,555 0.596 0.680 40 0.940
34 DEALER OR DISTRIB 239,845 1,338,552 0.812 0.927 42 0.957
35 LGT. MANUFACTURER 29,208 138,036 0.555 0.634 2 0.949
36 MED. MANUFACTURER 523,404 1,742,983 0.262 0.299 19 0.923
37 HVY. MANUFACTURER 120,324 566,272 0.120 0.136 7 0.974
38 MISC. OPERATION 368,367 1,593,189 0.868 0.991 50 0.998
TOTAL * $6,580,060 $26,735,217 0.931 909
33 MULT OFFICE 31 LIGHT CONTRACTING $9,444 $136,774 1.770 2.020 2 1.095
32 MEDIUM CONTRCTING 1,598 10,377 0.269 0.307 0 1.040
33 HEAVY CONTRACTING 137,368 646,733 0.239 0.273 5 0.973
38 MISC. OPERATION 83,605 353,951 3.801 4.339 16 1.033
TOTAL * $232,015 $1,147,835 1.585 23
34 MULT MERCANTILE 30 SERVICE $46,106 $196,543 0.124 0.142 3 1.006
32 MEDIUM CONTRCTING 92,694 553,878 2.077 2.371 35 1.005
34 DEALER OR DISTRIB 674,419 3,448,847 0.568 0.649 73 0.956
38 MISC. OPERATION 90,947 434,817 0.411 0.469 32 0.998
TOTAL * $904,166 $4,634,085 0.685 143
35 MULT INSTITUT. 31 LIGHT CONTRACTING $6,285 $33,003 0.017 0.020 1 1.028
32 MEDIUM CONTRCTING 290,893 2,297,770 0.317 0.362 16 0.977
TOTAL * $297,178 $2,330,773 0.311 17
36 MULT SERVICES 30 SERVICE $42,684 $298,242 0.401 0.458 16 0.995
31 LIGHT CONTRACTING 163,311 656,120 2.183 2.492 38 1.046
32 MEDIUM CONTRCTING 137,653 804,415 0.324 0.369 8 0.994
33 HEAVY CONTRACTING 69,509 424,479 0.137 0.157 2 0.930
34 DEALER OR DISTRIB 381,120 1,841,254 0.302 0.345 46 0.946
36 MED. MANUFACTURER 45,789 152,610 0.007 0.008 1 0.912
38 MISC. OPERATION 266,089 1,215,033 0.946 1.080 47 0.987
TOTAL * $1,106,155 $5,392,153 0.719 158
© Copyright, Washington Surveying & Rating Bureau, 2015
© Insurance Services Office, Inc., 2015 Washington ML-2015-RLA1 B-32
TABLE 13
WASHINGTON
MANUFACTURERS AND CONTRACTORS
BASIC LIMIT RELATIVE CHANGE ANALYSIS
------------------------------------
SUMMARY OF EXPERIENCE USED IN RELATIVE CHANGE ANALYSIS
(1) (2) (3) (4) (5) (6)
FISCAL A.Y.E. FISCAL A.Y.E.
03/31/2014 AGGREGATE 2010 - 2014 FIVE YEAR
LOSS COSTS AT AGG LOSS COST EXPERIENCE NUMBER OF BAL CELL
TYPE OF POLICY CLASS GROUP CURRENT LEVEL CURRENT LEVEL RATIO RELATIV. OCCURRENCES RELATIV.
37 MULT INDUST/PROC. 31 LIGHT CONTRACTING $426 $3,142 0.841 0.960 0 1.077
32 MEDIUM CONTRCTING 308,854 1,548,996 0.488 0.557 31 1.024
33 HEAVY CONTRACTING 50,541 214,108 0.472 0.539 9 0.958
34 DEALER OR DISTRIB 89,412 398,178 1.432 1.635 11 0.974
35 LGT. MANUFACTURER 483,531 1,706,218 0.374 0.427 29 0.967
36 MED. MANUFACTURER 1,451,747 6,618,373 0.494 0.564 105 0.940
37 HVY. MANUFACTURER 709,765 2,965,850 0.848 0.968 35 0.992
38 MISC. OPERATION 23,668 139,026 0.336 0.383 3 1.017
TOTAL * $3,117,944 $13,593,891 0.581 223
38 MULT CONTRACTORS 30 SERVICE $494,920 $2,547,682 1.451 1.657 104 1.042
31 LIGHT CONTRACTING 681,280 6,193,908 0.664 0.758 186 1.094
32 MEDIUM CONTRCTING 1,715,718 9,047,440 1.368 1.562 398 1.040
33 HEAVY CONTRACTING 381,838 2,160,468 0.757 0.864 51 0.973
38 MISC. OPERATION 66,448 423,743 0.370 0.423 3 1.033
TOTAL * $3,340,204 $20,373,241 1.147 742
TOTAL ALL TOP 30 SERVICE $902,919 $4,138,108 1.158 163
31 LIGHT CONTRACTING 2,357,559 11,429,540 1.358 504
32 MEDIUM CONTRCTING 5,625,462 28,268,272 0.951 920
33 HEAVY CONTRACTING 1,044,094 5,294,343 0.571 107
34 DEALER OR DISTRIB 1,384,796 7,026,831 0.593 172
35 LGT. MANUFACTURER 512,739 1,844,254 0.384 31
36 MED. MANUFACTURER 2,020,940 8,513,966 0.423 125
37 HVY. MANUFACTURER 830,089 3,532,122 0.742 42
38 MISC. OPERATION 899,124 4,159,759 1.067 151
TOTAL * $15,577,722 $74,207,195 0.876 2,215
* TOTALS IN COLUMN (3) ARE AVERAGES USING COLUMN (1) AS WEIGHTS.
© Copyright, Washington Surveying & Rating Bureau, 2015
© Insurance Services Office, Inc., 2015 Washington ML-2015-RLA1 B-33
TABLE 14
WASHINGTON
PRODUCTS
BASIC LIMIT RELATIVE CHANGE ANALYSIS
------------------------------------
(1) (2) (3) (4) (5)
BAILEY
FORMULA CREDIBILITY Z-WTD BALANCED INDICATED
TOP RELATIV. Z RELATIV. RELATIV. CHANGE *
10 0.835 0.389 0.932 0.929
34 1.025 0.444 1.011 1.008 +8.5%
36 1.278 0.231 1.058 1.055 +13.6%
37 1.073 0.578 1.041 1.038 +11.7%
CLASS
GROUP
3 1.127 0.580 1.072 1.058
4 0.980 0.463 0.991 0.979
5 0.773 0.122 0.969 0.957
6 1.009 0.372 1.003 0.991
7 0.774 0.176 0.956 0.944
* INDICATED CHANGE = (BALANCED RELATIVITY FOR TOP) / (MONOLINE RELATIVITY (TOP 10)) - 1
NOTE: THE INDICATED CHANGES BY TOP WERE FURTHER ADJUSTED BY THE
FOLLOWING DIFFERENTIALS: TOP 34: 0.985
TOP 36: 0.989
TOP 37: 1.000
© Copyright, Washington Surveying & Rating Bureau, 2015
© Insurance Services Office, Inc., 2015 Washington ML-2015-RLA1 B-34
TABLE 15
MULTISTATE
PRODUCTS
BASIC LIMIT RELATIVE CHANGE ANALYSIS
------------------------------------
SUMMARY OF EXPERIENCE USED IN RELATIVE CHANGE ANALYSIS
(1) (2) (3) (4) (5) (6)
CALENDAR A.Y.E. CALENDAR A.Y.E.
12/31/2013 AGGREGATE 2009 - 2013 FIVE YEAR
LOSS COSTS AT AGG LOSS COST EXPERIENCE NUMBER OF BAL CELL
TYPE OF POLICY CLASS GROUP CURRENT LEVEL CURRENT LEVEL RATIO RELATIV. OCCURRENCES RELATIV.
10 MONOLINE 03 MAN,DLR,DSTFD/DRG $16,536,214 $67,523,384 1.071 0.989 1,658 0.983
04 DLR,DST-NOTFD/DRG 11,186,953 41,139,189 0.891 0.823 565 0.909
05 MAN.NTFD/DRG(LOW) 1,914,235 8,808,823 0.387 0.358 48 0.889
06 MAN.NTFD/DRG(MED) 9,673,966 47,693,417 0.845 0.781 607 0.920
07 MAN.NTFD/DRG(HGH) 3,149,312 11,922,955 0.795 0.735 152 0.877
TOTAL * $42,460,680 $177,087,768 0.921 3,030
34 MULT MERCANTILE 03 MAN,DLR,DSTFD/DRG $5,919,769 $29,644,057 1.262 1.166 1,271 1.066
04 DLR,DST-NOTFD/DRG 34,403,785 173,361,305 1.086 1.003 2,674 0.986
06 MAN.NTFD/DRG(MED) 18,531 61,062 0.000 0.000 0 0.998
TOTAL * $40,342,085 $203,066,424 1.111 3,945
36 MULT SERVICES 04 DLR,DST-NOTFD/DRG $4,560,684 $22,242,189 1.355 1.252 1,061 1.032
06 MAN.NTFD/DRG(MED) 82,327 383,106 1.438 1.329 7 1.045
TOTAL * $4,643,011 $22,625,295 1.356 1,068
37 MULT INDUST/PROC. 03 MAN,DLR,DSTFD/DRG $20,584,794 $98,014,714 1.262 1.166 3,814 1.098
05 MAN.NTFD/DRG(LOW) 4,969,801 27,926,556 1.018 0.940 250 0.993
06 MAN.NTFD/DRG(MED) 29,239,676 141,165,738 1.193 1.103 2,165 1.028
07 MAN.NTFD/DRG(HGH) 10,419,262 45,896,931 0.870 0.804 469 0.980
TOTAL * $65,213,533 $313,003,939 1.150 6,698
TOTAL ALL TOP 03 MAN,DLR,DSTFD/DRG $43,040,777 $195,182,155 1.188 6,743
04 DLR,DST-NOTFD/DRG 50,151,422 236,742,683 1.067 4,300
05 MAN.NTFD/DRG(LOW) 6,884,036 36,735,379 0.842 298
06 MAN.NTFD/DRG(MED) 39,014,500 189,303,323 1.107 2,779
07 MAN.NTFD/DRG(HGH) 13,568,574 57,819,886 0.853 621
TOTAL * $152,659,309 $715,783,426 1.082 14,741
* TOTALS IN COLUMN (3) ARE AVERAGES USING COLUMN (1) AS WEIGHTS.
© Copyright, Washington Surveying & Rating Bureau, 2015
© Insurance Services Office, Inc., 2015 Washington ML-2015-RLA1 B-35
TABLE 16
WASHINGTON
LOCAL PRODUCTS/COMPLETED OPERATIONS
BASIC LIMIT RELATIVE CHANGE ANALYSIS
------------------------------------
(1) (2) (3) (4) (5)
BAILEY
FORMULA CREDIBILITY Z-WTD BALANCED INDICATED
TOP RELATIV. Z RELATIV. RELATIV. CHANGE *
10 0.990 0.812 0.992 0.992
34 1.061 0.612 1.037 1.037 +4.5%
36 1.080 0.553 1.044 1.044 +5.2%
37 1.028 0.168 1.005 1.004 +1.2%
38 0.991 1.000 0.991 0.991 -0.1%
CLASS
GROUP
1 0.908 0.607 0.943 0.938
2 0.910 0.544 0.950 0.945
11 1.111 0.347 1.037 1.031
12 1.021 1.000 1.021 1.015
13 0.858 0.309 0.954 0.948
* INDICATED CHANGE = (BALANCED RELATIVITY FOR TOP) / (MONOLINE RELATIVITY (TOP 10)) - 1
© Copyright, Washington Surveying & Rating Bureau, 2015
© Insurance Services Office, Inc., 2015 Washington ML-2015-RLA1 B-36
TABLE 16
MULTISTATE
LOCAL PRODUCTS/COMPLETED OPERATIONS
BASIC LIMIT RELATIVE CHANGE ANALYSIS *
--------------------------------------
(1) (2) (3) (4)
BAILEY
FORMULA CREDIBILITY Z-WTD BALANCED
STATE RELATIV. Z RELATIV. RELATIV.
1.502 0.386 1.170 1.165
1.153 0.651 1.097 1.093
1.219 0.404 1.083 1.079
1.235 0.357 1.078 1.074
1.175 0.430 1.072 1.068
1.272 0.287 1.072 1.067
1.172 0.241 1.039 1.035
1.222 0.193 1.039 1.035
1.089 0.413 1.036 1.032
WASHINGTON 1.097 0.363 1.034 1.030
1.194 0.183 1.033 1.029
1.088 0.333 1.028 1.024
1.039 0.615 1.024 1.020
1.044 0.503 1.022 1.018
1.043 0.395 1.017 1.013
1.025 0.643 1.016 1.012
1.024 0.556 1.013 1.009
1.066 0.180 1.012 1.008
1.012 0.583 1.007 1.003
1.004 0.406 1.002 0.998
0.999 0.457 1.000 0.996
0.992 0.228 0.998 0.994
0.989 0.313 0.996 0.992
0.981 0.411 0.992 0.988
0.980 0.516 0.990 0.986
0.961 0.254 0.990 0.986
0.946 0.247 0.986 0.982
0.961 0.402 0.984 0.980
0.963 0.462 0.983 0.979
0.970 0.623 0.981 0.978
0.902 0.240 0.975 0.972
0.776 0.100 0.975 0.971
0.938 0.449 0.972 0.968
0.877 0.234 0.970 0.966
0.916 0.347 0.970 0.966
0.851 0.229 0.964 0.960
0.792 0.160 0.963 0.960
0.932 0.562 0.961 0.958
0.757 0.140 0.962 0.958
0.833 0.223 0.960 0.956
0.881 0.330 0.959 0.955
0.917 0.499 0.958 0.954
0.781 0.209 0.950 0.946
0.811 0.250 0.949 0.945
0.787 0.257 0.940 0.937
0.655 0.167 0.932 0.928
0.774 0.323 0.921 0.917
0.353 0.085 0.915 0.912
0.545 0.154 0.911 0.907
0.635 0.250 0.893 0.889
0.514 0.176 0.890 0.886
0.361 0.122 0.883 0.880
* Sorted by balanced relative change.
© Copyright, Washington Surveying & Rating Bureau, 2015
© Insurance Services Office, Inc., 2015 Washington ML-2015-RLA1 B-37
TABLE 17
WASHINGTON
LOCAL PRODUCTS/COMPLETED OPERATIONS
BASIC LIMIT RELATIVE CHANGE ANALYSIS
----------------------------------------------
SUMMARY OF EXPERIENCE USED IN RELATIVE CHANGE ANALYSIS
(1) (2) (3) (4) (5) (6)
CALENDAR A.Y.E. CALENDAR A.Y.E.
12/31/2013 AGGREGATE 2009 - 2013 FIVE YEAR
LOSS COSTS AT AGG LOSS COST EXPERIENCE NUMBER OF BAL CELL
TYPE OF POLICY CLASS GROUP CURRENT LEVEL CURRENT LEVEL RATIO RELATIV. OCCURRENCES RELATIV.
10 MONOLINE 01 RET.STRS-FOOD/DRG $14,355 $127,276 0.661 0.700 4 0.958
02 RET.STRS-NTFD/DRG 19,721 94,830 0.442 0.468 9 0.965
11 COMP. OPS. (LOW) 115,728 342,025 1.145 1.212 10 1.053
12 COMP. OPS. (MED) 3,162,831 9,686,345 1.553 1.644 239 1.037
13 COMP. OPS. (HGH) 146,374 406,657 0.184 0.195 3 0.969
TOTAL * $3,459,009 $10,657,133 1.471 265
34 MULT MERCANTILE 01 RET.STRS-FOOD/DRG $186,186 $749,875 1.777 1.881 74 1.001
02 RET.STRS-NTFD/DRG 168,688 656,744 0.880 0.931 12 1.009
12 COMP. OPS. (MED) 42,225 155,642 0.169 0.179 2 1.084
TOTAL * $397,099 $1,562,261 1.225 88
36 MULT SERVICES 01 RET.STRS-FOOD/DRG $17,013 $69,525 1.154 1.222 4 1.008
02 RET.STRS-NTFD/DRG 249,396 849,523 0.618 0.654 39 1.015
11 COMP. OPS. (LOW) 52,305 255,371 0.203 0.215 3 1.108
12 COMP. OPS. (MED) 71,112 410,064 0.196 0.208 4 1.091
13 COMP. OPS. (HGH) 39,267 271,893 3.171 3.357 9 1.019
TOTAL * $429,093 $1,856,376 0.752 59
37 MULT INDUST/PROC. 11 COMP. OPS. (LOW) $4,899 $25,599 0.000 0.000 0 1.067
12 COMP. OPS. (MED) 72,091 293,298 0.798 0.845 5 1.050
TOTAL * $76,990 $318,897 0.748 5
38 MULT CONTRACTORS 11 COMP. OPS. (LOW) $279,176 $1,509,085 0.706 0.747 14 1.053
12 COMP. OPS. (MED) 4,725,480 26,835,905 0.812 0.860 286 1.036
13 COMP. OPS. (HGH) 336,027 1,498,285 0.386 0.409 8 0.968
TOTAL * $5,340,683 $29,843,275 0.780 308
TOTAL ALL TOP 01 RET.STRS-FOOD/DRG $217,554 $946,676 1.655 82
02 RET.STRS-NTFD/DRG 437,805 1,601,097 0.711 60
11 COMP. OPS. (LOW) 452,108 2,132,080 0.752 27
12 COMP. OPS. (MED) 8,073,739 37,381,254 1.093 536
13 COMP. OPS. (HGH) 521,668 2,176,835 0.539 20
TOTAL * $9,702,874 $44,237,942 1.043 725
* TOTALS IN COLUMN (3) ARE AVERAGES USING COLUMN (1) AS WEIGHTS.
© Copyright, Washington Surveying & Rating Bureau, 2015
© Insurance Services Office, Inc., 2015 Washington ML-2015-RLA1 B-38
TABLE 18
MULTISTATE
LOCAL PRODUCTS/COMPLETED OPERATIONS
BASIC LIMIT RELATIVE CHANGE ANALYSIS
----------------------------------------------
SUMMARY OF EXPERIENCE USED IN RELATIVE CHANGE ANALYSIS
(1) (2) (3) (4) (5) (6)
CALENDAR A.Y.E. CALENDAR A.Y.E.
12/31/2013 AGGREGATE 2009 - 2013 FIVE YEAR
LOSS COSTS AT AGG LOSS COST EXPERIENCE NUMBER OF BAL CELL
TYPE OF POLICY CLASS GROUP CURRENT LEVEL CURRENT LEVEL RATIO RELATIV. OCCURRENCES RELATIV.
10 MONOLINE 01 RET.STRS-FOOD/DRG $3,804,932 $14,529,929 0.631 739
02 RET.STRS-NTFD/DRG 3,497,865 18,088,088 0.888 560
11 COMP. OPS. (LOW) 3,897,760 20,827,151 1.001 410
12 COMP. OPS. (MED) 90,710,799 466,256,266 0.960 7,796
13 COMP. OPS. (HGH) 12,058,603 57,404,696 0.795 406
TOTAL * $113,969,959 $577,106,130 0.931 9,911
34 MULT MERCANTILE 01 RET.STRS-FOOD/DRG $11,940,248 $58,340,065 0.946 4,526
02 RET.STRS-NTFD/DRG 7,876,553 36,951,036 0.843 957
12 COMP. OPS. (MED) 2,515,191 11,690,630 1.042 142
TOTAL * $22,331,992 $106,981,731 0.920 5,625
36 MULT SERVICES 01 RET.STRS-FOOD/DRG $986,259 $4,910,241 1.215 264
02 RET.STRS-NTFD/DRG 11,411,740 51,425,867 0.962 2,928
11 COMP. OPS. (LOW) 3,536,713 15,019,960 1.240 544
12 COMP. OPS. (MED) 4,287,563 20,362,765 0.826 750
13 COMP. OPS. (HGH) 1,525,237 7,889,930 0.775 114
TOTAL * $21,747,512 $99,608,763 0.979 4,600
37 MULT INDUST/PROC. 01 RET.STRS-FOOD/DRG $22,403 $127,585 0.093 1
11 COMP. OPS. (LOW) 201,804 1,028,555 0.499 23
12 COMP. OPS. (MED) 5,023,478 24,379,484 0.983 403
13 COMP. OPS. (HGH) 272,632 1,173,352 1.580 1
TOTAL * $5,520,317 $26,708,976 0.991 428
38 MULT CONTRACTORS 11 COMP. OPS. (LOW) $10,340,054 $49,406,265 1.042 837
12 COMP. OPS. (MED) 199,324,480 951,879,368 0.959 16,883
13 COMP. OPS. (HGH) 19,712,420 91,154,990 0.802 920
TOTAL * $229,376,954 $1,092,440,623 0.949 18,640
TOTAL ALL TOP 01 RET.STRS-FOOD/DRG $16,753,842 $77,907,820 0.889 5,530
02 RET.STRS-NTFD/DRG 22,786,158 106,464,991 0.910 4,445
11 COMP. OPS. (LOW) 17,976,331 86,281,931 1.066 1,814
12 COMP. OPS. (MED) 301,861,511 1,474,568,513 0.959 25,974
13 COMP. OPS. (HGH) 33,568,892 157,622,968 0.805 1,441
TOTAL * $392,946,734 $1,902,846,223 0.945 39,204
* TOTALS IN COLUMN (3) ARE AVERAGES USING COLUMN (1) AS WEIGHTS.
© Copyright, Washington Surveying & Rating Bureau, 2015
© Insurance Services Office, Inc., 2015 Washington ML-2015-RLA1 B-39
EXPLANATORY NOTES TO GENERAL LIABILITY
RELATIVITY ANALYSIS - TABLES 10 THROUGH 18.
OBJECTIVES The objectives of this procedure are to:
1) determine monoline loss cost level needs for the appropriate rating variables;
2) determine indicated changes to the eight liability Commercial Package Policy
(CPP) Package Modification Factors (PMFs) based on Premises/Operations and
Products/Completed Operations data.
EXPERIENCE
BASE
The experience used in this relativity analysis is the latest five (5) years of accident
year data, as reported under the Commercial Statistical Plan with aggregate loss costs
adjusted to current loss cost level (multiline aggregate loss costs adjusted additionally
by the current Implicit Package Modification Factors). Losses have been trended and
developed in the Relativity Analysis. ALCCL have been trended.
SIMULTANEOUS
DETERMINATION
OF RATING
VARIABLE
RELATIVITIES
Once the aggregate loss costs at current level and incurred losses used in the analysis
have been appropriately adjusted, the 5-year experience ratios are calculated for each
combination of the appropriate rating variables. From these ratios, relativities to the
statewide 5-year experience ratio are calculated. These relativities are then used in a
minimum bias iterative review procedure, which simultaneously determines the
relativities for each rating variable.
The purpose of a simultaneous review procedure is to arrive at a set of relativities for
each rating variable that best represent the experience. For example, the type of
policy relativities will serve to derive the relationship of CPP policies relative to
monoline policies, via the PMF, while the class group and territory (if applicable)
relativities will serve to derive the relationship of the various classification and
territories relative to one another. An iterative technique is used to derive relativities
for each rating variable. This procedure is in contrast to a one-way type of review,
wherein relativities for each rating variable would each be reviewed separately.
Such one-way types of review do not take into account differing percentages of
experience of each rating variable within the other rating variables. The simultaneous
review procedure accounts for these different distributions in generating relativities
for each rating variable.
RATING
VARIABLES
USED
For Premises/Operations and Products/Completed Operations, the rating variables
used in the relativity analysis are as follows:
Manufacturers and Contractors -
Owners, Landlords and Tenants -
Products -
Local Products/Completed Operations-
type of policy and class group
type of policy, territory and class group
type of policy and class group
type of policy, state and class group
© Copyright, Washington Surveying & Rating Bureau, 2015
© Insurance Services Office, Inc., 2015 Washington ML-2015-RLA1 B-40
EXPLANATORY NOTES TO GENERAL LIABILITY
RELATIVITY ANALYSIS - TABLES 10 THROUGH 18.
ITERATIVE
PROCEDURE
The iterative technique referred to in the previous paragraph solves for a set of
relativities for each rating variable based on the experience for the cells; that is,
based on the experience ratio and latest year adjusted aggregate loss cost volume
for each combination of rating variables relative to the experience ratio and
adjusted aggregate loss cost volume for all combinations of rating variables
combined. Specifically, the iterative procedure uses the following formulas:
For Owners, Landlords and Tenants:
TOP
W r
W CG TERi
ijk ijk
kj
ijk j k
kj
where 1 i m
CG
W r
W TOPTERj
ijk ijk
ki
ijk i k
ki
where 1 j n
TER
W r
W TOPCGk
ijk ijk
ji
ijk i j
ji
where 1 k p
TOPi is the relative change for the ith type of policy;
CGj is the relative change for the jth class group;
TERk is the relative change for the kth territory;
Wijk is the aggregate loss costs at current level for the ith
type of policy, jth class group and kth territory;
rijk is the relative change for the ith type of policy,
jth class group and kth territory;
m is the number of types of policy in the analysis;
n is the number of class groups in the analysis;
p is the number of territories in the analysis;
© Copyright, Washington Surveying & Rating Bureau, 2015
© Insurance Services Office, Inc., 2015 Washington ML-2015-RLA1 B-41
EXPLANATORY NOTES TO GENERAL LIABILITY
RELATIVITY ANALYSIS - TABLES 10 THROUGH 18.
For Manufacturers and Contractors, and Products:
TOP
W r
W CGi
ij ij
j
ij j
j
where 1 i m
CG
W r
W TOPj
ij ij
i
ij i
i
where 1 j n
TOPi is the relative change for the ith type of policy;
CGj is the relative change for the jth class group;
Wij is the aggregate loss costs at current level for the ith
type of policy and jth class group;
rij is the relative change for the ith type of policy
and jth class group;
m is the number of types of policy in the analysis;
n is the number of class groups in the analysis;
© Copyright, Washington Surveying & Rating Bureau, 2015
© Insurance Services Office, Inc., 2015 Washington ML-2015-RLA1 B-42
EXPLANATORY NOTES TO GENERAL LIABILITY
RELATIVITY ANALYSIS - TABLES 10 THROUGH 18.
For Local Products/Completed Operations:
TOP
W r
W CG STi
ijk ijk
kj
ijk j k
kj
where 1 i m
CG
W r
W TOPSTj
ijk ijk
ki
ijk i k
ki
where 1 j n
ST
W r
W TOPCGk
ijk ijk
ji
ijk i j
ji
where 1 k p
TOPi is the relative change for the ith type of policy;
CGj is the relative change for the jth class group;
STk is the relative change for the kth state;
Wijk is the aggregate loss costs at current level for the ith
type of policy, jth class group and kth state;
rijk is the relative change for the ith type of policy,
jth class group and kth state;
m is the number of types of policy in the analysis;
n is the number of class groups in the analysis;
p is the number of states in the analysis;
© Copyright, Washington Surveying & Rating Bureau, 2015
© Insurance Services Office, Inc., 2015 Washington ML-2015-RLA1 B-43
EXPLANATORY NOTES TO GENERAL LIABILITY
RELATIVITY ANALYSIS - TABLES 10 THROUGH 18.
ITERATIVE
PROCEDURE
(Cont'd)
For example, for Owners, Landlords and Tenants, the procedure starts by inserting
the actual relativities for type of policy and class group into the third formula to
get a territory relativity. This result is then used with the class group relativity in
the first formula to get a new type of policy relativity, which in turn is substituted
along with the territory relativity into the second formula to get a new class group
relativity. The process continues on in that fashion until there is no appreciable
difference from one iteration to the next.
APPLICATION OF
CREDIBILITY
Consideration is then given to the credibility of the experience for each rating
variable. The credibility of each of these categories is based on the formula
Z =000,18
P for Owners, Landlords and Tenants, Z =000,18
P for
Manufacturers and Contractors and Z = 000,20
P for Products, where P is the 5
year occurrence total for a given class group, territory or type of policy. For Local
Products/Completed Operations, separate formulas are used to calculate the
credibility of the experience for each type of policy and class group versus the
credibility of the experience for each state, namely Z =000,15
P for type of
policy and class group, and Z = 500,5
P for state(in this case, P is the 5 year
occurrence total for a given state). Credibility-weighted relativities are then
calculated as follows:
W = RZ where:
Z is the class group, territory, state or type of policy credibility;
R is the class group, territory, state or type of policy relativity;
W is the credibility-weighted relativity.
The resulting credibility-weighted relativities are then balanced to assure that the
average relativity remains at unity.
© Copyright, Washington Surveying & Rating Bureau, 2015
© Insurance Services Office, Inc., 2015 Washington ML-2015-RLA1 B-44
EXPLANATORY NOTES TO GENERAL LIABILITY
RELATIVITY ANALYSIS - TABLES 10 THROUGH 18.
MULTILINE
CONSIDERATIONS
The monoline relativities and the class group, territory (if applicable) and state
relativities which result from the aforementioned procedures are then used to
generate indicated monoline classification loss cost changes. The multiline
relativities are used to generate multiline indications that apply to the current
Implicit Package Modification Factors. The indicated IPMFs are calculated as
follows:
TOP y indicated IPMF= (TOP y current IPMF) x (TOP y relativity)
(monoline relativity )
For each CPP Type of Policy the indicated IPMF is subject to a minimum value of
0.50 and a maximum value of 1.50. If an indicated IPMF falls outside one of those
limits, it is capped at that amount, the aggregate loss costs for that Type of Policy
are adjusted to the capped IPMF level, and the entire relativity review as described
above is re-performed to take this into account.
© Copyright, Washington Surveying & Rating Bureau, 2015
© Insurance Services Office, Inc., 2015 Washington ML-2015-RLA1 C-1
COMMERCIAL PACKAGE POLICY
TABLE OF CONTENTS
SECTION C - REVISED CLM DIVISION NINE
Commercial Package Policy Package Modification Factors (Revised MLCP-PMF-1) .................................. C-2
© Copyright, Washington Surveying & Rating Bureau, 2015
COMMERCIAL LINES MANUAL
DIVISION NINE – MULTIPLE LINE
COMMERCIAL PACKAGE POLICY
PACKAGE MODIFICATION FACTORS
WASHINGTON (46)
© Insurance Services Office, Inc., 2015 Washington ML-2015-RLA1 C-2
PACKAGE MODIFICATION FACTORS
Premium From CLM Division
Package Modification Assignment
(PMA)
Two
Three, Four, Five, Eight
Property
Four, Six
Liability
All Other
Divisions
Apartment House .90 .98 .99 1.00 Contractors .90 .96 1.00 1.00 Industrial & Processing .90 .98 .88 1.00 Institutional .90 1.00 .98 1.00 Mercantile .90 .92 .89 1.00 Motel/Hotel .90 1.00 1.00 1.00 Office .90 .96 .86 1.00 Service .90 .95 1.00 1.00
Table 1. Package Modification Factors
© Copyright, Washington Surveying & Rating Bureau, 2015