In this example, the firm installs overhead garage doors and this work is reported in risk class 0514-00. The firm also has an office staffed by an employee who answers phones, handles correspondence and bookkeeping whose hours are reported in risk class 4904-00. This firm had two claims in the 2012 experience period (fiscal years 2008-2010):

1. A smaller medical only claim with $916 in incurred losses.
2. A larger medical only claim with $2,894 in incurred losses.

The Actual Primary and Excess Losses are shown in column (b) and the Expected Primary and Excess Losses are shown in column (c). The 2012 Primary and Excess Credibilities for a firm with these expected losses are shown in column (d), and the calculation of the Credible Primary Actual Loss Estimate and Credible Excess Actual Loss Estimate is shown in column (e).

Experience Factor Calculation Example
(a)	(b)	(c)	(d)	(e) = (b) × (d) + (c) × [ 100% − (d)]
	Actual Losses	Expected Losses	Credibility	Credible Estimate
Primary	560	14,419.48	43%	560.00 × 43% + 14,419.48 × (100% − 43%) = 8,459.90
Excess	0	16,120.07	7%	0.00 × 7% + 16,120.07 × (100% − 7%) = 14,991.67
Total	560	30,539.55		23,451.57

The Computed Experience Factor is the total Credible Estimate from column (e) above divided by the total Expected Losses from column (c) above, or 0.7679 = 23,451.57 ÷ 30,539.55.

This firm has no compensable claims in its Experience Period so it is eligible for the Compensable-Claim-Free Experience Factor. The 2012 Compensable-Claim-Free Experience Factor for a firm with $30,539.55 in expected losses is 0.6900. The firm will get the smaller of the Computed and the Compensable Claim Free Factors, 0.6900, subject to the limitations in WAC 296‑17‑865 (www.leg.wa.gov).

Since 0.6900 is within 25% of the firm's prior experience factor of 0.9000, the limitations in WAC 296‑17‑865 (www.leg.wa.gov) do not apply, so the Final Experience Factor is 0.6900.

Computed Experience Factor	23,451.57 divided by 30,539.55	equals	0.7679
Compensable-Claim-Free Experience Factor			0.6900
Prior Experience Factor			0.9000
Final Experience Factor			0.6900

The current Primary and Excess credibilities can be found in WAC 296‑17‑880 (www.leg.wa.gov), and the current Compensable-Claim-Free Experience Factors can be found in WAC 296‑17‑890 (www.leg.wa.gov).

Calculation of Expected Losses

The summary of the Expected Losses is shown in the table below.

Expected Loss Calculation Summary
0514 risk class
(a)	(b)	(c)	(d)	(e)	(f)
Fiscal Year	Employee Units (hours)	Expected Loss Rate	Expected Losses	Primary Ratio	Expected Primary Losses
2008	6,716	1.9965	13,408.49	0.472	6,328.81
2009	4,952	1.8553	9,187.45	0.472	4,336.48
2010	5,122	1.5360	7,867.39	0.472	3,713.41
Class Total	16,790		30,463.33		14,378.70
4904 risk class
(a)	(b)	(c)	(d)	(e)	(f)
Fiscal Year	Employee Units (hours)	Expected Loss Rate	Expected Losses	Primary Ratio	Expected Primary Losses
2008	960	0.0292	28.03	0.535	15.00
2009	960	0.0274	26.30	0.535	14.07
2010	960	0.0228	21.89	0.535	11.71
Class Total	2,880		76.22		40.78
All Classes	19,670		30,539.55		14,419.48

In each risk class the expected losses are calculated for each of the three years in the experience period. For Rating Year 2012 the experience period consists of the three fiscal years 2008, 2009 and 2010.

Column (b) shows the firm's hours worked in each fiscal year. Column (c) shows the 2012 Expected Loss Rates for each of the three fiscal years in the experience period.

The Expected Losses in column (d) are the result of multiplying the hours in column (b) by the rates in column (c). The firm's total Expected Losses are shown in the All Classes row of column (d).

The Rating Year 2012 primary ratios are shown in column (e). Column (f) is the result of multiplying the Expected Losses in column (d) by the Primary Ratios in column (e). The Expected Primary Losses for the firm are shown in the All Classes row of column (f).

So for the 2012 experience factor for this firm, the Expected Primary Losses are $14,491.48 (column (f)) and the Expected Excess Losses are $16,120.07 (column (d) minus column (f)).

One can find the latest Expected Loss Rates and the Primary Ratios for any class by looking them up in the Expected Loss Rate and Primary Ratio tables in WAC 296‑17‑885 (www.leg.wa.gov).

Calculation of Actual Losses

The summary of the Actual Losses is shown in the table below. There were two Medical Only claims during the experience period (fiscal years 2008 – 2010).

Actual Loss Summary
(a)	(b)	(c)	(d)	(e)	(f)
			Actual Losses
Class	Claim no.	Loss Type	Incurred	Charged	Primary
1007	1	Med Only	916	0	0
1007	2	Med Only	2,894	560	560
Total			3,810	560	560

Because Claims 1 and 2 are both Medical Only Claims the Medical Only Deduction applies. For 2012 the Medical Only Deduction is $2,330 so they are reduced by the lesser of $2,330 or the Incurred Loss Amount. Claim 1 is below $2,334, so it is reduced to zero (column (e). Claim 2 is reduced by $2,330 to $560 (column (e)).

The 2012 Primary Formula is then applied to determine the primary portion of each loss, which is shown in column (f). For each claim the charged amount (column (e)) is less than $20,112, so the Actual Primary Loss (column (f)) is equal to the charged amount (column (e)).

All three of the claims are below the Maximum Claim Value for rating year 2012, $253,784, so they are not capped at the Maximum Claim Value.

None of the claims is a fatality, so the Incurred Loss Amount is not replaced with the 2012 Average Death Value, $253,784.

So for the 2012 experience factor for this firm, the Actual Primary Losses are $560 (column (f)) and the Actual Excess Losses are $0 (column (e) minus column (f)).

The latest Medical Only Deduction and Primary Formula can be found in WAC 296‑17‑835 (www.leg.wa.gov). The latest Maximum Claim Value and Average Death Value can be found in WAC 296‑17‑880 (www.leg.wa.gov).