Premium Development

National Contractors Insurance Ltd. utilizes a time-tested experience rated formula in calculating a member’s premium for each year. It is primarily based on a member’s individual loss history.

To develop a member's premium, each member’s previous five-year loss history is collected and the data is then trended and developed by National Contractors Insurance Ltd.'s actuarial service provider. The actuary then forecasts a member's predictable losses, plus what should be allocated for severity losses above $150,000. Operating costs for the program such as excess reinsurance, policy issuance, claims service, brokerage, administration, etc. are calculated for each member. Finally, a member’s loss fund and operating costs are added together, producing their premium for each year. The intent of the National Contractors Insurance Ltd. premium calculation formula is that each member pays a premium to fund for its ultimate losses while allowing for risk sharing and risk shifting amongst the entire membership for severity losses. Because each member is expected to pay its own losses, a member can be billed an additional "A" Fund, should its frequency losses exceed expected levels.

Membership Criteria

Because each member of National Contractors Insurance Ltd. is an owner, the following criteria has been established to ensure the quality of membership and long-term strength of the company:

  1. Management Commitment to Safety
  2. Financially Strong Company
  3. Loss Experience Better than Average for Industry Group
  4. Regular Attendance and Participation in Board Meetings
  5. Business Philosophy Compatible with National Contractors Insurance Ltd.
  6. Recommend Other Quality Companies to National Contractors Insurance Ltd.
  7. One Time Cash Capitalization of $25,000
  8. Minimum Annual Casualty Premium of $300,000
  9. Regular Attendance and Participation in Risk Control Workshops