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 the member’s individual loss history. The following is a brief outline:
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 produces what it believes a member's predictable losses will be, plus what should be allocated for shock losses above $150,000. Operating costs for the program such as excess reinsurance, policy issuance, claims service, and brokerage, are also calculated and allocated to 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 most of its ultimate losses while allowing for risk sharing and risk shifting amongst the entire membership primarily for shock losses. Because each member is expected to pay their own losses, subject to certain formula limits, a member can be billed addition premium up to a predetermined amount should their losses exceed expected levels.
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:
- Management Commitment to Safety
- Financially Strong Company
- Loss Experience Better than Average for Industry Group
- Regular Attendance and Participation in Board Meetings
- Business Philosophy Compatible with National Contractors Insurance Ltd.
- One Time Cash Contribution to Capitalization of $25,000
- Minimum Annual Casualty Premium of $400,000
- Regular Attendance and Participation in Risk Control Workshops