NAC616B.522. “Expected annual incurred cost of claims” defined.

“Expected annual incurred cost of claims” means the result of a calculation in which the estimated aggregate payroll for all of the members of an association for the first 12 months of self-insurance is multiplied by the sum of their annual claims expenditures for those claims initiated during a period of 3 years ending 1 year before the date on which the association’s election to be self-insured is made plus an estimate of the additional costs, including future costs which are due or may become due, which will be paid in settlement of those claims, divided by the aggregate payroll for all of the members of the association for the same 3-year period. The term also includes an estimate of the association’s cost of administering the claims arising from its program of self-insurance.

     (Added to NAC by Comm’r of Insurance, eff. 3-22-96)