PROPERTY
POOL
GENERAL ASSESSMENT FORMULA
FOR THE
PURMS JOINT
SELF-INSURANCE AGREEMENT
Amended and Restated as of November 21, 2002
Overview of Assessment Formulas for PURMS Risk Pools
The “Assessment Formulas” Sections of the
PURMS Joint Self-Insurance Agreement (“SIA”) set forth the formulas for
assessing the Members of each Risk Pool for the Operational Costs the Fund
incurs in operating their respective Risk Pools, including without limitation,
Coverage Payments (all Risk Pools), Defense Costs (Liability Pool), Property
Claim Costs (Property Pool), Direct H&W Claims Costs and Shared H&W
Costs (H&W Pool), and the Direct and Shared Administrative Expenses of all
Risk Pools.
The Liability Pool is governed by two
Assessment Formulas, one for General Assessments and one for Premium
Assessments. The two current formulas
for the Liability Pool are:
(a)
The Liability General Assessment Formula (with Annual
Assessment Limit) (SIA § VIII); and
(b) The
Liability Premium Assessment Formula (with Added-Risk Pass
Through, and without Annual Assessment Limit) (SIA § IX).
The Liability General Assessment Formula
was first adopted by the Members of the Fund on December 20. 1976, has been
amended from time to time, and was unanimously re-adopted on March 30, 1995.
The Liability Premium Assessment Formula (with Added-Risk Pass Through and
without Annual Assessment Limit) was unanimously re-adopted by the Board at its
General Meeting on December
9, 1994, effective January 1, 1995.
The Property Pool is also governed by two
Assessment Formulas, one for General Assessments and one for Premium
Assessments. The two current formulas
for the Property Pool are:
(a)
The Property General Assessment Formula (with Annual
Assessment Limit) (SIA § XII); and
(b) The
Property Premium Assessment Formula (without Annual Assessment Limit) (SIA
§ XIII).
The Property General Assessment and the
Property Premium Assessment Formulas were unanimously adopted by the Members of
the Fund, effective February 27, 1997, and were both amended and restated
and unanimously adopted by the Board, effective as of November 21, 2002.
The Assessment of Members of the H&W
Pool is governed by a single Assessment Formula called the H&W General
Assessment Formula (SIA, § XV). This Formula covers both the self-insured
portion of the H&W Pool’s Operational Costs as well as the cost of Stop
Loss Insurance. The H&W General Assessment Formula was unanimously adopted
by the Members of the Fund on March 16, 2000, effective April 1,
2000, and was amended and restated and unanimously re-adopted by the Members as
of December 7,
2001.
These Formulas, as amended
from time to time pursuant to § I, § 5.2, are specifically
incorporated into the Interlocal Agreement and shall be deemed a part of that
Agreement as if fully set forth therein.
PROPERTY POOL GENERAL ASSESSMENT
FORMULA
1.
Definitions for Property Pool General Assessment
Formula. The Definitions set forth in the
"Definitions" Section of the SIA (§ II) apply to the interpretation
of the Fund's Assessment Formulas, except as may be modified specifically or by
necessary implication by the Definitions set forth below, some of which are
specific to this Property General Assessment Formula Section.
1.1.
Annual Assessment Limit – shall mean the limit on the total amount of
Property General Assessments the Fund may levy on an individual Member of the
Property Pool in any calendar year, as provided in § I, ¶ 13.8, and subject the
Additional Discretionary General Assessments provided for therein.
1.2.
Assessment Limit Overage – shall mean the amount by which a Member's Assessment
Share of a Property General Assessment exceeds the amount of such Assessment
the Member is required to pay after application of the Annual Assessment Limit,
in accordance with § XII, ¶ 4.
1.3.
Assessment Share – shall mean the amount of money a Member
becomes obligated to pay to the Fund as a result of an Assessment.
1.4.
Assigned Deductible – shall mean the Deductible a Member of the
Property Pool chooses to assign to an Item of Insured Property that is not
otherwise subject to a Mandatory Deductible, as reflected in the Schedule of
Values maintained by the Administrator (see § X, ¶ 7.1.1), or the
Deductible otherwise established as an Assigned Deductible for a Member's
Insured Property pursuant to § X, ¶ 7.2.2).
1.5.
Assigned Insured Value – shall mean the Insured Value listed for an
Item of Insured Property on the Schedule of Values, as established by Annual
Appraisal pursuant to § X, ¶ 14.
1.6.
“Basic Per Capita” Component – shall mean the Formula Component consisting
of the 10% portion of a Property General Assessment amount that is allocated
equally among all Members of the Property Pool for purposes of calculating a
Member's Assessment Share of a Property General Assessment, as provided in §
XII, ¶ 2.1.
1.7.
Blended Risk Based Rate – shall mean the number resulting from the
weighted average of applying each applicable Specific Risk Based Rate to the Total Insured Value of a Member’s Insured Property in each
Category of Risk associated with an applicable Specific Risk Based Rate.
1.8.
Category of Insured Property – depending upon the context, shall mean the
grouping of Insured Property that is subject to a particular Specific Risk
Based Rate, or the grouping of Insured Property that is subject to a particular
Excess Property Insurance Retention that exceeds the Property Coverage Limit.
1.9.
Category of Risk – depending upon the context, shall mean or
refer to the Peril(s) associated with a particular Specific Risk Based Rate, or
the Perils associated with a particular Excess Property Insurance Retention
that exceeds the Property Coverage Limit.
1.10.
Deductible – in the context of the Property Coverage,
shall mean either an Assigned Deductible or a Mandatory Deductible, as
determined in accordance with § X, ¶¶ 7.1 and 7.2, respectively, of the General
Property Coverage Section of the SIA.
1.11.
Direct Physical Loss or Damage – shall mean the physical destruction of or
damage to Insured Property as a result of an Insured Peril(s) (see
definition of "Property Loss", § X, ¶ 1.42, and terms of
"Property Coverage" set forth in § X, ¶ 4).
1.12.
Exempted Category – shall mean either an Exempted Category of
Insured Property or an Exempted Category of Risk.
1.13.
Exempt Category of Insured Property – shall mean any Category of Insured Property
that has been exempted from application of the Specific Risk Based Rate(s)
associated therewith for purposes of determining a Member’s “Blended Risk Based
Rate” under § XII, ¶ 2.3.3(a), in connection with calculating a Member’s
allocation of the 70% Risk Based Component of the Property General Assessment
Formula (see, § XII, ¶ 2.3) or the 90% Risk Based Component of the
Property Premium Assessment Formula (see, § XIII, ¶ 2.2).
1.14.
Exempt Category of Risk – shall mean any Category of Risk that has
been exempted from application of the Specific Risk Based Rate(s) associated
therewith for purposes of determining a Member’s “Blended Risk Based Rate”
under § XII, ¶ 2.3.3(a), in connection with calculating a Member’s allocation
of the 70% Risk Based Component of the Property General Assessment Formula (see,
§ XII, ¶ 2.3) or the 90% Risk Based Component of the Property Premium
Assessment Formula (see, § XIII, ¶ 2.2).
1.15.
Excess Property Insurance Retention – shall mean the amount of the self-insured
retention or deductible imposed under the Excess Property Policy for a Property
Loss to a particular Category of Insured Property, or from a Peril in a
particular Category of Risk, before the Excess Property Insurance attaches and
begins to provide Excess Property Coverage for such Loss. (See § XII, ¶
2.2.1.)
1.16.
Gross Revenues – for purposes of determining application of
the Annual Assessment Limit under the Property General Assessment Formula in §
XII, ¶ 4, shall mean the annual total of revenue dollars received by a Member
from sales of electricity, water, gas and/or sewer Services, less the amount of
any municipal urban taxes that the Member collects from Customers and remits to
the taxing authority.
1.17.
Insured Location – shall mean a geographic location at
which a Member maintains one or more Items of Insured Property.
1.18.
Insured Perils – shall mean Perils that are not otherwise
Excluded from the General Property Coverage (see, § X).
1.19.
Insured Property – shall mean property identified to the Member
in the Schedule of Values maintained by the Administrator or property subject
to one of the exceptions thereto set forth in § X, ¶¶ 3.2.1 and 12.1.1 or in ¶
3.2.2, and shall include all Autos identified for Coverage under § XI.
1.20.
Insured Value – shall mean the value assigned to an Item of
Insured Property listed in the Schedule of Values established pursuant to
Annual Appraisals (see § X, ¶ 3.1 and ¶ 14), or the value otherwise
assigned to an Item of Insured Property by the Administrator in accordance with
§ X, ¶ 3.1, which shall be used as the basis for determining Members'
Assessment Shares under the Property General Assessment and Premium Assessment
Formulas.
1.21.
Item of Insured Property – shall mean and refer to each separate
listing of Insured Property on the Schedule of Values which is subject to an
Assigned Insured Value, whether such listing reflects a single piece of Insured
Property or multiple pieces of like-kind property.
1.22.
Mandatory Deductible – shall mean the Automatic Mandatory
Deductible applied to those Categories of Risk for which the Excess Property
Carrier has established Excess Property Insurance Retentions that do or, under
certain circumstances, could exceed the amount of the Property Coverage Limit,
as provided in § X, ¶ 7.2.1, or a Discretionary Mandatory Deductible
established pursuant to the procedures in § X, ¶ 7.2.2.
1.23.
Mothballed Equipment – shall mean machinery or equipment that a
Member has inactivated or taken out of service for a period of time: (a) which
constitutes Partially Exempt Insured Property, as provided in § XII, ¶ 2.3.5;
(b) with respect to which the Member is exempted from Assessment under the 70%
“Risk Based” Component of the Property General Assessment Formula for the
Specific Risk Based Rate(s) associated with the Exempt Categories of Risk, as
provided in § XII, ¶ 2.3.3(a); and (c) which is excluded from General Property
Coverage for Loss resulting from the Peril(s) within the associated Exempt
Category of Risk, as provided in § X, ¶ 9.4.
1.24.
Partially Exempt Insured Property – shall mean Insured Property that has been
established as “Partially Exempt Insured Property” pursuant to written notice
to the Administrator, as provided in § XII, ¶ 2.5.3(a), which is exempted from Assessment
under the 70% “Risk Based” Component of the Property General Assessment Formula
for the Specific Risk Based Rate(s) associated with the applicable Exempt
Category of Insured Property or Exempt Category of Risk, as provided in § XII,
¶¶ 2.5.3(b) and 2.3.3(a), and which is excluded from General Property Coverage
for Loss resulting to Property in the Exempt Category of Property and/or from
the Peril(s) within the associated Exempt Category of Risk, as provided in §
XII, ¶ 2.5.3(c) and § X, ¶ 9.4.
1.25.
Perils – shall mean any of the types of acts or
events that can result in Direct Physical Loss or Damage to Insured Property.
“Perils” generally shall mean “Insured Perils” (unless such Peril(s) are
Excluded because they relate to an Exempt Category of Risk or are otherwise
Excluded).
1.26.
Property Coverage Limit – shall mean the maximum amount the Fund may
be required to pay, including Property Claim Costs, for all Covered Property
Claims filed by one or more Members arising from one Property Loss, as provided
in § X, ¶ 4, less applicable Assigned or Mandatory Deductibles, and
subject to the provisions of § X, ¶ 4.3.1 which provide for Automatic Extended
Property Coverage when the applicable Excess Property Insurance Retention
exceeds the amount of the Property Coverage Limit.
1.27.
Property Deductible Credits – shall mean the credits a Member is allocated
under the Property General Assessment Formula according to rates set forth in
the current ISO Commercial Lines Manual or successor manuals (which shall be
available for inspection at the Administrator's offices), based upon the levels
of Deductibles applicable to a Member's Insured Property determined in
accordance with § X, ¶ 7.
1.28.
Property Pool Operation Costs – shall mean Property Claim Costs, Property
Coverage Payments and the Property Pool's allocation of Direct and Shared
Administrative Expenses.
1.29.
Relative Insured Value Component – shall mean the Formula Component
consisting of the 20% portion of a Property General Assessment that is
allocated among all Members of the Property Pool based on the Members’ relative
Retention Adjusted Insured Values for purposes of calculating a Member's
Assessment Share of a Property General Assessment, as provided in § XII, ¶ 2.2.
1.30.
Retention Adjusted Insured Values – shall mean the Insured Values of a Member
after those values have been adjusted by application of the Valuation Cap, as
provided in § XII, ¶ 2.2.1, and such Retention Adjusted Insured Values shall be
the Values used for purposes of calculating each Property Pool Member’s
Assessment Share of the 20% “Relative Insured Value” Component of the Property
General Assessment Formula. (See § XII, ¶ 2.2.2).
1.31.
Risk Adjusted Insured Value – shall mean the number resulting from
application of the applicable Blended Risk Based Rate to the Total Insured
Value of a Member’s Insured Property, as provided in § XII, ¶ 2.3.3, and the
Risk Adjusted Insured Value of each Member’s Insured Property shall be the
Value used for purposes of calculating each Property Pool Member’s Assessment
Share of the 70% “Risk Based” Component of the Property General Assessment
Formula. (See § XII, ¶ 2.3.4).
1.32.
Risk Based Component – depending upon the context, shall mean
either: (a) the Formula Component consisting of the 70% portion of a Property
General Assessment amount that is allocated among all Members of the Property
Pool based on the relative relationship of each Member’s Risk Adjusted Insured
Value for purposes of calculating a Member's Assessment Share of a Property
General Assessment, as provided in § XII, ¶ 2.3; or (b) the Formula Component
consisting of the 90% portion of a Property Premium Assessment amount that is
allocated among all Members of the Property Pool based on the relative
relationship of each Member’s Coverage Limit Adjusted Insured Value, calculated
as provided in § XIII, ¶ 2.3. for purposes of calculating a Member's Assessment
Share of a Property Premium Assessment, as provided in § XIII, ¶ 2.3.
1.33.
Risk Based Rates – shall mean the property insurance rates, or
coverage or classification codes for the various Categories of Insured Property
or Categories of Risk, including information regarding the relative relationship
of such rates, obtained from the Excess Property Carrier (or otherwise from the
property insurance industry, as provided in § XII, ¶¶ 2.3.1 and 2.3.2), used by
the Excess Carrier to calculate the premium for the Excess Property Insurance.
These are the rates that are used to calculate the relative Risk Adjusted
Insured Value of each Member’s Insured Property for purposes of allocating
among Property Pool Members the 70% Risk Based Component of the Property
General Assessment Formula, and the 90% Risk Based Component of the Property
Premium Assessment Formula. (See § XII, ¶ 2.3.4.)
1.34.
Specific Risk Based Rate – shall mean a Risk Based Rate applicable to a
specific Category of Risk, as determined under § XII, ¶¶ 2.3.1 or 2.3.2. Such
Specific Risk Based Rates shall be used for determining each Member’s Risk
Adjusted Insured Value for purposes of allocating the 70% Risk Based Component
of the Property General Assessment Formula, or the 90% Risk Based Component of
the Property Premium Assessment Formula, among Property Pool Members.
1.35.
Valuation Cap – shall mean the maximum Insured Value for an
Item of Insured Property that will be used in calculating a Member’s Retention
Adjusted Insured Values for purposes of determining such Member’s Assessment
Share of the 20% “Relative Insured Value” Component of the Property General
Assessment Formula. (See § XII, ¶ 2.2.1.)
2.
Statement of Property General Assessment Formula. The Property General Assessment Formula has
three (3) Formula Components that shall be applied as provided in this § XII. A
Member's Assessment Share of any Property General Assessment shall be the total
of the allocations to a Member under each of the three Formula Components.
The “Basic Per Capita” Component allocates 10% of the total
Assessment needed among the Members of the Property Pool equally, as provided
in ¶ 2.1 below.
The “Relative Insured Value” Component allocates 20% of the
total Assessment needed among Members based on the percentage that the total of
each Member’s “Retention Adjusted Insured Values” bears to the total of the
Retention Adjusted Insured Values for all Members (as provide in ¶ 2.2 below).
The “Risked Based” Component allocates 70% of the total
General Assessment among Members based on the percentage that each Member’s
Risk Adjusted Insured Value bears to the total of the Risk Adjusted Insured
Values of all Members (as provide in ¶ 2.3 below).
The Insured Values for applying these last two Formula
Components shall be those identified to the Insured Property listed for each
Member in the Schedule of Values at the time of the Assessment
2.1.
“Basic Per Capita” Component at 10%. Ten percent (10%) of the amount of the
Property General Assessment to be levied will be allocated equally among all
Members of the Property Pool.
Example of “Basic Per Capita” Component Calculation: Assume a Property General Assessment amount
of $778,098. 10% times that amount
yields $77,810, which will be divided in equal shares among all Property Pool
Members. Assume the Property Pool is
composed of 13 Members. $77,810 (10% of
the Property General Assessment amount) divided by a hypothetical 13 total
Property Pool Members yields an allocation of $5,985.
2.2.
“Relative Insured Value” Component at 20%. Twenty percent (20%) of the amount of the Property
General Assessment to be levied will be allocated among Members based on the
relative relationship of the total of each Member's Retention Adjusted Insured
Values to the total Retention Adjusted Insured Values of all Insured Property
of all Property Pool Members at the time of the Assessment. The Retention Adjusted Insured Values of
Member’s Insured Property shall be determined in accordance with ¶ 2.2.1 below.
2.2.1.
Application of Valuation Cap to Determine Retention
Adjusted Insured Values. For purposes of applying the 20% “Relative Insured
Value” Component:
2.2.1(a)
The Valuation
Cap shall be applied to the Assigned Insured Value of each Item of Insured
Property separately listed for each Member in the Schedule of Values at each
Insured Location in order to determine the Retention Adjusted Insured Value of
each such Item of Insured Property.
2.2.1(b)
For Insured
Property with an Assigned Insured Value of less than the amount of the Property
Coverage Limit, the Retention Adjusted Insured Value shall be equal to the
amount of the Assigned Insured Value.
2.2.1(c)
For Insured
Property with an Assigned Insured Value greater than the amount of the Property
Coverage Limit, and provided that the Excess Property Insurance Retention
applicable to such Property is set at the same amount as the Property Coverage
Limit, the Retention Adjusted Insured Value shall be equal to the amount of the
Property Coverage Limit.
2.2.1(d)
For Insured
Property with an Assigned Insured Value greater than the amount of the Property
Coverage Limit, if the Excess Property Insurance Retention applicable to such
Property is set at a specific dollar amount which is greater than the Property
Coverage Limit, the Retention Adjusted Insured Value shall be equal to the
amount of the applicable Excess Property Insurance Retention or the amount of
the Assigned Insured Value, whichever is less.
2.2.1(e)
For Insured
Property with an Assigned Insured Value greater than the amount of the Property
Coverage Limit, if the Excess Property Insurance Retention applicable to such
Property is stated as a specific dollar amount that exceeds the amount of the
Property Coverage Limit or some percentage of an Insured Location’s Total
Insured Value (“TIV”), whichever is greater, then the Retention Adjusted
Insured Value for such Property shall be either such stated specific dollar
amount or the amount of the stated percentage of the Insured Location’s TIV
(measured by the total of the Assigned Insured Values for such Location on the
Schedule of Values), whichever is greater; provided, however, that if the Assigned
Insured Value of the Item of Insured Property is less than this resulting
greater amount, then the Retention Adjusted Insured Value for such Property
shall be its Assigned Insured Value.
2.2.2. Calculation of a Member’s Allocation Under 20%
“Relative Insured Value” Component.
The total of a Member’s Retention Adjusted Insured Values for all Insured
Property shall be compared to the total of the Retention Adjusted Insured
Values for all Members of the Property Pool, and the resulting ratio multiplied
times 20% of the General Assessment amount needed by the Property Pool shall be
such Member’s allocation under the “Relative Insured Value” Component of the
Property General Assessment Formula.
Examples of Application of Valuation Cap to Determine
Retention Adjusted Insured Values:
Example 1: Application of Valuation Cap
Where The Applicable Excess Property Insurance Retention for an Item of Insured
Property is Equal to the Amount of the Property Coverage Limit. Assume that
the Property Pool’s Property Coverage Limit is $250,000. Further, assume that
Member A’s substation at Insured Location A has two power transformers with
Assigned Insured Values of $500,000 each, and that the Assigned Insured Values
of the rest of the Insured Property at Location A totals $1,000,000, with no
single Item of this other Insured Property having an Insured Value that exceeds
the $250,000 Property Coverage Limit. Also, assume that the Excess Property
Insurance Retention applicable to the two transformers is the same amount as
the Property Pool’s Property Coverage Limit of $250,000. In the absence of
application of the Valuation Cap, there would be a total Assigned Insured Value
at Location A of $2,000,000 for purposes of applying the “Relative Insured
Value” Component of the General Assessment Formula. However, because the Excess
Property Insurance Retention applicable to the two transformers is equal to the
Property Coverage Limit, the Valuation Cap will be applied so that only the
Insured Value of a transformer up to the $250,000 Property Coverage Limit is
considered in calculating Member A’s Assessment Share of the 20% “Relative
Insured Value” Component of the Property General Assessment Formula. After
application of the Valuation Cap, the “Retention Adjusted Insured Value” of
each of the $500,000 transformers is $250,000. Thus, the “Retention Adjusted
Insured Value” of the Insured Property at Location A would be $1,500,000 rather
than $2,000,000 (i.e., the $250,000 Retention Adjusted Insured Value for each
of the two transformers, plus the $1,000,000 for the rest of the Insured
Property at Location A).
Example 2: Application of Valuation Cap
Where The Applicable Excess Property Insurance Retention for an Item of Insured Property Exceeds the Amount of the
Property Coverage Limit. Assume that the Property Pool’s Property Coverage
Limit is $250,000. Further, assume that Member B’s power plant at Insured
Location B has an internal combustion engine/generator with an Assigned Insured
Value of $900,000, and that the Assigned Insured Values of the rest of the
Insured Property at Location B totaled $1,100,000, with no single Item of this
other Insured Property having an Assigned Insured Value that exceeds the
$250,000 Property Coverage Limit. Also, assume that the Excess Property
Insurance Retention applicable to the engine/generator is $500,000, $250,000
greater than the Property Pool’s Property Coverage Limit of $250,000. In the
absence of application of the Valuation Cap, there would be a total Insured
Value at Location B of $2,000,000 for purposes of applying the “Relative
Insured Value” Component of the General Assessment Formula. However, because
the Excess Property Insurance Retention applicable to each of the two
transformers is $500,000, exceeding the Property Coverage Limit, and thereby exposing
the Property Pool to additional risk for the Automatic Extended Property
Coverage provided in such circumstances under § X, ¶ 4.3.1, the Valuation Cap
will be applied so that only the Insured Value of the engine/generator up to
the applicable $500,000 Excess Property Insurance Retention is considered in
calculating Member B’s Assessment Share of the 20% “Relative Insured Value”
Component of the Property General Assessment Formula. After application of the
Valuation Cap, the “Retention Adjusted Insured Value” of the $900,000
engine/generator is $500,000. Thus, the “Retention Adjusted Insured Value” of
the Insured Property at Location B would be $1,600,000 rather than $2,000,000
(i.e., $500,000 Retention Adjusted Insured Value for the engine/generator, and
$1,100,000 for the rest of the Insured Property at Location B).
Example of “Relative Insured Value”
Component Calculation Based on Retention Adjusted Insured Values: Assume a
Property General Assessment amount of $778,098, a total Retention Adjusted Insured
Value for the Insured Property of all Members of $225,509,634, and a Retention
Adjusted Insured Value for Insured Property for Member A of $25,171,507. The ratio of the Retention Adjusted Insured
Value of Member A's Insured Property to the total for all Members is 12%
($25,171,507 ¸
$225,509,634 = 12%). The 20% Relative
Insured Value Component times the Property General Assessment amount of
$778,098 is $155,620. Therefore, Member
A's 12% share of the Property General Assessment amount allocable to the 20%
Relative Insured Value component is $18,674 (12% ´ $155,620).
2.3.
“Risk Based” Component at 70%. Seventy percent (70%) of the Property General
Assessment will be allocated among Members based on the percentage each
Member's Risk Adjusted Insured Value bears to the total of the Risk Adjusted
Insured Values of all Insured Property of all Property Pool Members at the time
of the Assessment. The Risk Adjusted Insured Value of Member’s Insured Property
shall be determined in accordance with ¶¶ 2.3.1 – 2.3.3 below.
2.3.1.
Initial Determination of Risk Based Rates. Based
upon information obtained from the Property Pool’s Excess Property Carrier, the
Administrative Committee has determined the Specific Risk Based Rates for the
defined Categories of Risk applied by the Excess Property Carrier to the
Property Pool and its Members for purposes of calculating the Excess Premium
for Policy Year 2002. These Risk Based Rates shall be used in the Property
General Assessment Formula for purposes of determining each Member’s Blended
Risk Based Rate (see, ¶ 2.3.3(a) below), which is then used to determine
the Risk Adjusted Insured Value of each Member’s Insured Property (see,
¶ 2.3.3(b) below), in order to calculate each Member’s Assessment Share of the
70% “Risk Based” Component of that Assessment Formula, subject to adjustment
from time to time as provided in ¶ 2.3.3 below.
2.3.2.
Subsequent Adjustment of Risk Based Rates. From
time to time, at its discretion, and at minimum every 5 years, the
Administrative Committee shall: (a) attempt to determine the General and
Specific Risk Based Rates then being applied by the Property Excess Carrier to
the Property Pool and its Members; and (b) in the absence of such information,
attempt to determine the Risk Based Rates then being applied by a credible
source in the excess property insurance industry. The Administrative Committee,
to the extent it can acquire such information, shall compare it to the Risk
Based Rates then being used for the Property General and Premium Assessment
Formulas and determine whether to recommend to the Board that the existing Risk
Based Rates, or the relative relationship among them, be revised.
2.3.3. Application of Risk Based Rates to Determine the
Risk Adjusted Insured Value of Each Member’s Insured Property.
2.3.3(a)
Application
of Risk Based Rates to the Assigned Insured Values for Each Member’s Insured
Property to Determine Each Member’s Blended Risk Based Rate. Excluding Assigned Insured Values relating to
Insured Property that is excluded from application of the Property General
Assessment Formula under ¶ 2.4 below, and excluding the Specific Risk Based
Rates applicable to Partially Exempt Insured Property under ¶ 2.5 below, each
Specific Risk Based Rate applicable to a Member’s Insured Property shall be
applied to the Assigned Insured Values of all Items of Insured Property that
fall within the Category of Insured Property or Category of Risk associated
with such Specific Risk Based Rate, and the weighted average of the total
thereof shall be deemed such Member’s “Blended Risk Based Rate” for purposes of
determining the “Risk Adjusted Insured Value” of such Member’s Insured Property
(see, ¶ 2.3.3(b) below).
2.3.3(b)
Application
of Each Member’s Blended Risk Based Rate to the Total of Each Member’s Assigned
Insured Values to Determine the Risk Adjusted Insured Value for Each Member’s
Insured Property. Each Member’s
Blended Risk Based Rate shall then be applied to the total of each Member’s
Assigned Insured Values and the result shall be deemed such Member’s “Risk
Adjusted Insured Value” for purposes of calculating such Member’s Allocation of
the 70% Risk Based Component of the Property General Assessment Formula.
2.3.4. Calculation of a Member’s Allocation Under 70% Risk
Based Component. Each Member’s Risk
Adjusted Insured Value shall be compared to the total of the Risk Adjusted
Insured Values for all Members of the Property Pool, and the resulting ratio
multiplied times 70% of the General Assessment amount needed by the Property
Pool shall be such Member’s allocation under the 70% Risk Based Component of
the Property General Assessment Formula.
2.3.5. Partially Exempt Insured Property, Including
“Mothballed Equipment”.
2.3.5(a)
Notice re
Establishing Insured Property as “Partially Exempt Insured Property”. At any time, a Member may provide the
Administrator with written notice that the Member wishes to designate certain
Insured Property as “Partially Exempt Insured Property” with respect to one or
more Categories of Insured Property or Categories of Risk. Such notice shall
specifically identify the Insured Property being designated as Partially Exempt
Insured Property, the Assigned Insured Value for such Property, and the
specific Category of Insured Property or Category of Risk from which such
Property shall be deemed exempt for purposes of this sub-¶ 2.3.5. The
identified Insured Property shall be deemed Partially Exempt Insured Property
effective as of the date the written notice is received by the Administrator,
or at any later date specified in the notice. Insured Property that satisfies
the definition of “Mothballed Equipment” shall be deemed and treated as
Partially Exempt Insured Property.
2.3.5(b)
“Partially
Exempt Insured Property” Is Exempt from Assessment for the Specific Risk Based
Rates Applicable to the Exempt Categories of Insured Property or Exempt
Categories of Risk. From the effective date of the notice, such Partially
Exempt Insured Property shall not be subject to application of the Specific
Rick Based Rate(s) applicable to the exempt Categories of Insured Property or
exempt Categories of Risk for purposes of determining a Member’s “Blended Risk
Based Rate” (see, ¶ 2.3.3(a) above).
2.3.5(c)
Partially
Exempt Insured Property is Subject to General Property Coverage Exclusion in §
X, ¶ 9.4. Insured Property that has
become Partially Exempt Insured Property shall, from the effective date
thereof, be subject to General Property Coverage Exclusion § X, ¶ 9.4, entitled
“Exclusion re Losses to Partially Exempt Insured Property”.
2.3.5(d)
Removal of
Insured Property From Partially Exempt Insured Property Status. At any time, a Member may remove Insured Property
from the status of Partially Exempt Insured Property by providing written
notice of the same to the Administrator. The removal of such Property from
Partially Exempt Insured Property status shall become effective as of the date
the written notice is received by the Administrator, or at any later date
specified in the notice. The provisions of § X, ¶ 3.2.2 entitled “80% Coverage
for Property Inadvertently Omitted from Schedule of Values” shall not apply to
Property Losses to Partially Exempt Insured Property.
2.3.5(e)
Limitation
on Re-Designation of Insured Property as Partially Exempt Insured Property. Insured Property that has been removed from
Partially Exempt Insured Property status shall not be re-designated as
Partially Exempt Insured Property for a period of 365 days from the effective
date of the removal. (See also, § X, ¶ ___.)
Example of “Risk Based”
Component Calculation Based on a Member’s Risk Adjusted Insured Value: Assume a Property General Assessment amount
of $778,098, a total of the Risk Adjusted Insured Values for the Insured
Property of all Members of $225,509,634, and a Risk Adjusted Insured Value for
Insured Property for Member A of $17,137,320. The ratio of the Risk Adjusted
Insured Value of Member A's Insured Property to the total for all Members is
7.6% ($17,137,320 ¸
$225,509,634 = 7.6%). The 70% Risk Based
Component times the Property General Assessment amount of $778,098 is
$544,669. Therefore, Member A's 7.6%
share of the Property General Assessment amount allocable to the 70% Risk Based
Component is $41,394 (7.6% ´ $544,669).
Example of Calculation of a
Member’s Assessment Share Based on the Total of the Three Formula Components:
Based on the sum of the amounts resulting from the calculations in the Examples
for each of the three Formula Components above, Member A's Assessment Share of
the $778,098 Property General Assessment amount is $ 66,053 ($5,985 under the
10% Basic Per Capita Component, + $18,674 under the 20% Relative Insured Value
Component, + $41,394 under the 70% Risk Based Component = $66,053), unless the
Annual Assessment Limit applied in accordance with ¶ 3 below yields a lesser
amount.
2.4.
Exclusion of Insured Values from Application of
Property General Assessment Formula for Insured Prop