Our actuarial department calculates rate level indications periodically by state, coverage, territory and other breakdowns. Although the entire process is complicated, it boils down to calculating a projected loss ratio in some future time period divided by a permissible (target) loss ratio. Recall, Loss Ratio = Losses/Premium.

If the permissible loss ratio is 81% and the projected loss ratio is 77%, by how much should the premium rates change in order to achieve the permissible loss ratio? Please write a few sentences explaining your choice and what it represents.