Underwriting is the process of reviewing each member's specific risk exposures, determining acceptability for coverage, and calculating the appropriate premium for that coverage based upon this review. The underwriting standards for the TML Pool are established by the Board of Directors and are directed toward identification of loss exposures and subsequent loss control.

The TML Pool enlists the services of independent actuaries to promulgate base rates that are specifically tailored to the exposures and loss histories of the Pool members. Since we write the coverage for a large number of the cities, towns, and related entities in Tennessee, our rate structure is certainly credible for the exposures rated. The Pool's experience modifications are calculated in conjunction with the annual actuarial studies. This is also the reason the TML Pool does not subscribe to the NCCI Workers Compensation Rates nor the Experience Modification Rating.

Although pool members share the risk, each entity is underwritten and rated based upon that particular entity's exposures and experience. The Base Rates are the starting point for the premium calculation. Your Exposures are what you have insured (number of police officers, types and values of vehicles owned, buildings owned, etc.). Your Experience is your loss ratio (premiums paid versus losses incurred) for the past three years. Your Premium is then calculated by multiplying the Base Rate x Your Exposures x Your Experience. This is a simplified version of the formula which includes other factors such as deductible credits, review of loss control recommendations for compliance, etc.