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 Membership |
Premium Development
To develop member premium, each member’s previous five-year loss history is collected and the data is then trended and developed by Affinity’s actuarial service provider. The
actuary then produces what
it believes a member’s predictable losses will be, plus what should be allocated for shock losses above $100,000, which becomes the member’s loss fund for a given year. 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
its premium for each year. The intent of the Affinity 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 shock losses. Because each member is expected to pay
its own
losses,
up to a
reasonable
level, a
member
can be
billed
additional
premium
up to a
predetermined
amount
should
its losses exceed expected levels.
Membership Criteria
Because each member of Affinity 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 Affinity
group
- Recommend
other quality
companies to Affinity
- One-Time Cash Capitalization of $36,000
- Minimum
annual casualty
premium of $250,000
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