Rating and Cost
The Association’s general overheads are proportionately shared
among the Membership. However, for underwriting purposes,
each individual Member is rated on its own individual loss
experience. As a result, each Member can rest assured that its
commitment and effort to reduce claims cost will be directly
reflected in the price paid for coverage. The Managers calculate
a rate, which is expressed as a percentage of payroll based on
the Members’ claims and payroll experience. Members then
declare their actual payroll to the Managers, which is applied
to the rate to produce the Advance Call that Members pay to
the Association to cover Signal’s costs. Members can make
payments monthly, quarterly or annually. The Advance Call payment system is designed to provide
Members with the cash flow benefit of a discounted rate
until such time as the final cost for the particular Membership
Year has been fully developed. Any balance due to meet
the Association’s final commitments is collected by a final
Supplementary Call assessment. As a condition of its authorization from the Department
of Labor, the Association is liable, as are all carriers and
self-insured employers, to make an annual contribution
to the DOL Special Fund Assessment. The Board of Directors has agreed that all Members should
contribute to the Association’s estimated annual Assessment.
This contribution is an annually reviewed percentage of
Advance Call set for the Association as a whole. Security
Every Member of the Association is required to secure
their financial obligations and liabilities to the Association.
Such security may be provided in the form of a letter of credit
or bond from an approved source and in an approved form
or by participation in the Signal Security Accumulation Trust
in Bermuda. The Dallas office can provide more details of
the types of security and the level of security required. << Page 4 Page 6 >>