Management Services - Underwriting

One of the objectives of the Association is to maintain an appropriate level of funds, having regard to the likely exposure to claims, by underwriting each Member as equitably as possible.

The Managers recommend to the Directors the total estimated premium (described as "Call") income that is necessary each year to maintain funds to pay for anticipated claims, reinsurance costs and administrative expenses of the Association. It is then the responsibility of the Managers to achieve an equitable distribution of that cost between Members by underwriting each member individually. The Managers ensure, when fixing each Member's Call, that proper account is taken of the individual characteristics of each Member's business, including claims record, internal systems, management and potential to bring claims.

As the Association operates at cost, surplus funds are returned to, and deficits have to be met by, the Members. However, the Association has set aside substantial reserves in excess of estimated claims over the years, with a view to avoiding the possibility of a supplementary Call.

The Association's underwriting philosophy is to adopt a measured approach and to avoid sharp fluctuations in Calls from year to year.