Review of Example Self-Insurance Premium Allocation By Risk Management And Tort Defense : a Report 1992

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The advantage of a methodology which blends experience and exposure bases is that it minimizes random fluctuations and more equitably distributes costs.
PROBLEMS WITH PRESENT FUNDING An independent actuary from Tillinghast was retained in November 1991 to evaluate the status of the self-insurance fund. The total estimated funding requirements for FY92 and prior losses are provided as follows: On a discounted basis, the expected value of losses for FY92 and prior years is $15,102,203. With a pro
...jected fund balance of approximately $2,500,000 at fiscal year end, it is estimated that the self -insurance fund will have an unfunded liability of $12,500,000.
• Estimates for loss occurrences in FY94 , and FY95 are respectively $3.97 million and $4.47 million. These funding requirements include costs for projected occurrences and loss adjustment expenses during these years, but do not include administrative costs.
The following chart provides a summary of unfunded liability, fund balance, and legal expense costs since FY 86.


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