Membership
Fortis Insurance Ltd. (Fortis) 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:
Premium Development
To develop a member premium, each member’s previous five-year loss history is collected and the data is then trended and developed by Fortis’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 $100,000. Operating costs for the program, such as excess reinsurance, policy issuance, claims service, brokerage, and administration, are 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 Fortis 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 additional premium up to a predetermined amount should their losses exceed expected levels.
Membership Criteria
Because each member of Fortis 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 Fortis
- One Time Cash Contribution to Capitalization of $36,000
- Minimum Annual Casualty Premium of $250,000