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SCHEDULE A <br /> <br /> 3 <br /> <br /> 7 <br /> <br /> 9 <br /> <br />11 <br /> <br />13 <br /> <br />17 <br /> <br />~ETHODOLOGY FOR CALCULATING TOTAL PURE PREMIUM <br /> <br /> ?he Actuary should consider the loss experience and <br />exposures of the Participants as well as the experience of <br />cther California cities, other public agencies, and other <br />risks, as appropriate. The Actuary should consider, as <br />appropriate, the experience of the great many claims for small <br />amounts, tke less frequent claims for large amounts, and the <br />highly infrequent claims for very large amounts. <br /> <br /> The Actuary should estimate the frequency and average cost <br />of claims, unless it is more appropriate to deal directly with <br />~he loss rate itself. Additional analyses should be~considered <br />when appropriate. <br /> <br />19 In particular the Actuary should use models of the loss <br /> process whenever doing so would improve the accuracy of the <br />21 result in a meaningful way. <br /> <br />23 The Actuary should clearly state the assumptions regarding <br /> loss development, the trend in frequency of claims and the <br />25 average cost per claim, the payout of losses, ~he interest rate <br /> to be earned on the Pure Premiums, and other appropriate <br />27 factors that underlie the calculations. <br /> <br />29 The Actuary should consider the impact of changes in the <br /> claim environment, including, but not limited 5o, what the data <br />31 indicates about loss cost inflation; changes in the cost of <br /> living (e.g., CPI); changes in the observed frequency of <br />33 claims; changes in litigation, rates; changes in court <br /> precedents; changes in the legislative environment; and changes <br />35 in exposures or hazards. <br /> <br />37 The Actuary shall recommend a Total Pure Premium that meets <br /> the criteria set forth in Article IV, Section 4.4(e) of this <br />39 Agreement. <br /> <br />SA-1 <br /> <br /> <br />