The development of premium is determined by utilizing a time-tested experience rated formula that is based primarily on a member’s individual loss history. Claims experience, exposure and premium data is collected for each member’s previous five-year history. This data is trended and developed by the actuarial service partner. The actuary produces what it believes a member’s predictable losses will be and allocates an amount for shock losses above $100,000, which then becomes the member’s loss fund for a given underwriting period. Operating costs for the program such as excess reinsurance, policy issuance, claims service, administration, etc. are calculated for each member.