{
  "tool_id": "art-255-compute-lcm-rate-derivation",
  "note": "LCM rate derivation. User supplies own loss costs (NEVER ISO advisory rates). Vector 1: standard LCM with 35% total loading. Vector 2: with current_rate for rate change computation.",
  "vectors": [
    {
      "name": "standard_lcm_derivation",
      "description": "User-supplied loss cost $120/unit. LAE 12%, fixed expenses 8%, variable expenses 10%, profit 5%. Total loading 35%. LCM = 1/(1-0.35) = 1.5385. Indicated rate = $184.62. User-supplied data only -- no ISO/Verisk rates.",
      "policy_parameters": {
        "pure_loss_cost": 120,
        "lae_pct": 0.12,
        "fixed_expense_pct": 0.08,
        "variable_exp_pct": 0.1,
        "profit_pct": 0.05
      },
      "output_payload": {
        "indicated_rate": 184.62,
        "lcm": 1.5385,
        "lcm_denominator": 0.65,
        "denominator_valid": true,
        "credibility_weighted_loss_cost": 120,
        "pure_loss_cost": 120,
        "complement_loss_cost": 120,
        "credibility_z": 1,
        "total_loading": 0.35,
        "lae_pct": 0.12,
        "fixed_expense_pct": 0.08,
        "variable_exp_pct": 0.1,
        "profit_pct": 0.05,
        "pure_loss_cost_loaded": 184.62,
        "current_rate": null,
        "rate_change_pct": null,
        "rate_change_direction": null,
        "issues": [],
        "table_version": "LCM-DECOMPOSITION-MATH-V1.0-2025",
        "table_source": "Actuarial Standard of Practice No. 25 (Premium Calculations); Willis Towers Watson Rate Adequacy methodology; user-supplied loss costs only — no ISO/Verisk advisory rates embedded.",
        "proprietary_data_notice": "USER-SUPPLIED LOSS COSTS ONLY. This kernel performs LCM decomposition arithmetic exclusively. It does not embed, store, or redistribute ISO/Verisk advisory loss costs or any proprietary rate-bureau filing. Ensure your pure_loss_cost input is approved and non-proprietary.",
        "regulatory_basis": "ASOP 25 (Premium Calculations); state rate filing regulations (SERFF). LCM formula: rate = loss_cost × LCM; LCM = 1 / (1 - LAE% - fixed_exp% - variable_exp% - profit%). Rate adequacy review required by qualified actuary.",
        "pii_note": "ZERO PII: aggregate rate components only. No policyholder, premium, or personal data enters this kernel.",
        "not_legal_advice": "Not legal or actuarial advice. Rate filings require certification by a qualified actuary and approval by the applicable state insurance department."
      },
      "golden_hash": "1cdd8498897b1e20c1fce5bbc8e47264ace2cafce5ce5ae82cc7bb3b617aa0d3"
    },
    {
      "name": "lcm_with_rate_change_decrease",
      "description": "Same LCM inputs with current filed rate $200. Indicated rate $184.62 is 7.69% below current rate. rate_change_direction=DECREASE. Covers off-balance analysis path.",
      "policy_parameters": {
        "pure_loss_cost": 120,
        "lae_pct": 0.12,
        "fixed_expense_pct": 0.08,
        "variable_exp_pct": 0.1,
        "profit_pct": 0.05,
        "current_rate": 200
      },
      "output_payload": {
        "indicated_rate": 184.62,
        "lcm": 1.5385,
        "lcm_denominator": 0.65,
        "denominator_valid": true,
        "credibility_weighted_loss_cost": 120,
        "pure_loss_cost": 120,
        "complement_loss_cost": 120,
        "credibility_z": 1,
        "total_loading": 0.35,
        "lae_pct": 0.12,
        "fixed_expense_pct": 0.08,
        "variable_exp_pct": 0.1,
        "profit_pct": 0.05,
        "pure_loss_cost_loaded": 184.62,
        "current_rate": 200,
        "rate_change_pct": -7.69,
        "rate_change_direction": "DECREASE",
        "issues": [],
        "table_version": "LCM-DECOMPOSITION-MATH-V1.0-2025",
        "table_source": "Actuarial Standard of Practice No. 25 (Premium Calculations); Willis Towers Watson Rate Adequacy methodology; user-supplied loss costs only — no ISO/Verisk advisory rates embedded.",
        "proprietary_data_notice": "USER-SUPPLIED LOSS COSTS ONLY. This kernel performs LCM decomposition arithmetic exclusively. It does not embed, store, or redistribute ISO/Verisk advisory loss costs or any proprietary rate-bureau filing. Ensure your pure_loss_cost input is approved and non-proprietary.",
        "regulatory_basis": "ASOP 25 (Premium Calculations); state rate filing regulations (SERFF). LCM formula: rate = loss_cost × LCM; LCM = 1 / (1 - LAE% - fixed_exp% - variable_exp% - profit%). Rate adequacy review required by qualified actuary.",
        "pii_note": "ZERO PII: aggregate rate components only. No policyholder, premium, or personal data enters this kernel.",
        "not_legal_advice": "Not legal or actuarial advice. Rate filings require certification by a qualified actuary and approval by the applicable state insurance department."
      },
      "golden_hash": "f4ee3bac42f2a527f874a225dd547ad5180e4819a5fe4a5a46fcc92e87599f1e"
    }
  ]
}