Premium Development

Presidio has developed an experience rated formula to be used in calculating a member’s premium for each year. It is primarily based on a member’s expected loss history. The following is a brief outline

The intent of the formula is that each member pays a premium to fund for its ultimate losses but it allows for risk sharing and risk shifting amongst the entire membership for shock losses.

To develop a member premium, each member’s previous five-year loss history is collected and the data is then trended and developed by Presidio’s actuarial firm. They then produce what they believe a member’s predictable losses will be plus what should be reserved for shock losses (losses above $100,000), which become the member’s loss fund

Next, the fixed costs of the program such as excess reinsurance, fronting costs, claims service, etc. are calculated for each member.

Finally, the contributions of that member to the loss fund and fixed costs are added together, producing their premium for each year

In addition to premium charges, a member can be assessed up to a predetermined amount if his expected losses exceed his contribution for the year.

Membership Criteria

Because each member of Presidio is an owner, the following criteria has been established to ensure the quality of membership and long-term strength of the company:

1. Management commitment to safety
2. Financially strong company
3. Loss experience better than average for industry group
4. Regular attendance and participation in Board Meetings
5. Business philosophy compatible with Presidio group
6. Recommend other quality companies to Presidio
7. One-Time Cash Capitalization of $36,000
8. Minimum annual casualty premium of $100,000