To illustrate, assume that rates for auto liability insurance are calculated based on losses that occurred in the most recent three-year period. The insurer's past experience indicates that 25 percent of loss are paid in the year the accident occurs, 50 percent are paid in the second year, and 25% are paid in the third year. The exhibit shows the losses for each year in the three-year period, with Year 1 being the earliest year and year 3, the most recent year. See the exhibit "Hypothetical Auto liability loss Experience at Year 3 End.earliest