Risk Rate Calculation

The risk rate premiums are calculated based on a combination of several factors to include agencies/universities experience and exposures pursuant to NMAC 1.6.2,  Risk Management Premium Rating Rule for Certain Risks.  The experience premium is driven by losses for 5 prior fiscal years. The experience data is generated from the P&C Insurance System, Inc (PCIS) and is claims driven for both Workers’ Compensation and Property & Casualty claims. The exposure data is compiled from the yearly exposure survey which is sent out in the early spring to each of our insured entities.  The exposure data is comprised of payroll, equipment, FTE’s, hospital beds, buildings, contents, etc.  The importance of having current and up to date data cannot be emphasized enough as this affords the actuary the ability to assess the most accurate premium as correlated to the exposure or insurable losses that exist. As the premium rule currently reads the exposure percentage is as follows:

Workers Compensation	10% exposure, 90% experience
General Liability	30% exposure, 70% experience
Law Enforcement	30% exposure, 70% experience
Medical Malpractice	30% exposure, 70% experience
Civil Rights	30% exposure, 70% experience
Auto Liability	30% exposure, 70% experience

*These types of coverage’s are weighted more heavily to the claims experience as opposed to the exposure as they are driven by the liability of the insured and typically involve a third party or involves on the job accidents (workers’ compensation)*

Auto Physical Damage	70% exposure, 30% experience
Blanket Property	70% exposure, 30% experience
Fine Arts	70% exposure, 30% experience
Boiler & Machinery	70% exposure, 30% experience

*These types of coverage’s are weighted more heavily to exposures due to the fact that losses resulting from these coverage’s are first party (our insured) in nature and thus impacts the premium for exposures more significantly than the actual claims experience*