Summary of Assessment Procedure
The ICRB charges its member insurance companies for its operating expenses each year. The legal authority to assess is found in Indiana Code § 27-7-2-9, Apportionment of costs - Review – Decision, which begins “The charges and expenses incident to the establishment and operation of the bureau shall be borne equitably and without discrimination among the members of the bureau.”
The ICRB charges its members based on each member’s proportional share of premium writings. Here’s the process using the 2015 year as an example:
The assessment ratio is calculated using one quarter of the approved 2012 ICRB Budget divided by the most current direct written premium available. For the 2015 year, the first three quarters were calculated using 2013 premium and then the fourth quarter switched over to using 2014 premium as this information became available by the time the fourth quarter assessment was being prepared.
A spreadsheet is created listing each carrier’s premium, the total premium for all carriers, a nine digit assessment ratio and a column to calculate the assessment amount. The individual carrier’s premium is multiplied by the assessment ratio to calculate its share of the assessment.
The assessment spreadsheet is merged into a function within the MAS90 accounting system to produce invoices for each carrier.
Summary of Reapportionment Procedure
Reapportionment occurs in the second quarter of each year.
The purpose of the reapportionment process is to reconcile direct written premium with actual operating expenses for a particular year. A simple way to view this process is that reapportionment is an even-up process; it matches premium to expenses for a certain period of time.
The process begins with identifying exactly how much each carrier paid, its actual direct written premium for the year and then a calculation to determine what it should have paid. The ratio used to determine each carrier’s share of expenses is derived by taking the actual operating expenses total and dividing it by the direct written premium total for Indiana. This nine digit ratio is then applied to each carrier's direct written premium. Carriers that paid more than their share are given a credit and carriers that paid less than their share will be billed the additional amount.
Reapportionment is completed each April for two years in arrears (for instance, April 1, 2017 reapportionment will be completed for the 2015 year). The process compares what each carrier paid in 2015 to what they actually should have paid in 2015.
The total operating expense is taken from the ICRB Financial Statements and Independent Auditors Report for the appropriate year. The item line is the Total Management and General Expenses amount minus interest earned and the revenue collected from the minimum assessment of member carriers.
If a carrier overpaid, the credit is applied to the 2nd quarter assessment and if a credit balance still remains, a check is issued to the carrier in the month of June.
Note: In past years, carriers had the option of reporting premium by individual company or in a group format. The ICRB assessed carriers according to their reporting method. Beginning with 1999 premium, all direct written premium is being reported to the ICRB on an individual company basis.
ICRB $250 Minimum Assessment
The minimum assessment was discontinued in 2015. See Circular 2015-04 for details.