Clarification
Hi,
The "Expected Losses" paragraph of the wiki article ends with "The risk's actual loss experience will be benchmarked against its expected risk class experience to determine the experience modification."
Does "its expected risk class experience" refer to the quantity just calculated in the paragraph, i.e. E = Payroll/100 * ELR ?
Which means that E is the expected losses for all hypothetical risks that would be in this class, if they had the same amount of Payroll. Am I understanding the general idea correctly here?
Comments
Yes, the "expected risk class experience" is the ELR for the class multiplied by payroll/100. Your third sentence is correct.