CUSTOM EXPERIENCE RATING FOR SELF-INSURED GROUPS

For a self-insured group, Sigma computes unique expected loss rates (ELRs) and discount rates (D-ratios), which reflect the experience history of the group. Payroll data is gathered to accompany the loss data and an experience modifier is computed for each entity in the group. Finally, an internal benchmark analysis is performed to determine how each entity compares to the group averages. A unique Sigma test ratio is computed for each entity to help fund decision makers identify entities that are contribute significantly to the group loss rate. The methodology takes into consideration the size of each entity, actual loss experience and expected losses.

This study provides the following analyses for a self-insured group:

• A unique set of expected loss ratios and discount ratios for the group
• Promulgation of experience modification factors for each member of the group based on unique group factors
• A comparative analysis which identifies the contribution of each entity in the group to the overall loss rate and identifies specific members in the group that are contributing more losses than would be expected
• A loss reserve analysis which estimate the ultimate incurred loss for each of the historical years utilized in establishing the unique rates
• A loss projection for the coming policy period