The Northern Communities Insurance Exchange—NORCIX—is the self-insurance component of the NCIP, owned by the NWTAC Member Communities.
NORCIX is a reciprocal insurance exchange—an association of members who pool their resources to share the risk of providing themselves with insurance. NORCIX operating capital is provided by the members’ annual insurance payments.
NORCIX was formed in 2003 because the cost of commercial insurance became more than the cost of members insuring themselves through a reciprocal exchange.
NORCIX has been very successful in controlling insurance costs. Since it was created, insurance rates have not risen above 2001 rate levels.
The NORCIX fund insures members for the first $1,000,000 of all Property, General Liability, Auto Liability losses and 100 % of all Auto Physical Damage losses. The $1 million deductible is the ‘self insured’ portion of accidental losses. The funds that are not paid in losses claims stay in the Reciprocal to allow for growth. Commercial insurance is purchased in excess of the ‘self-insured’ layer.
There are two parts to the NORCIX Fund:
Restricted Reserve Fund
- A portion of the fund is set aside to meet future financial obligations without imposing significant premium increases
- $5 million is set aside to pay claims under a worst case scenario of three consecutive adverse loss years
- All claims will first be paid from the fund of current year premiums
Premium Stabilization Fund
The Fund ensures member rates remain stable. The amount of the fund is determined by total NORCIX reserves.
- Fund is calculated each year by using NORCIX net assets from the prior year’s financial statements, less the Restricted Reserve Fund
- Provides premium credits to members for good overall claims experience
- Funds the loss prevention program
- Pays for the appraisal program and other benefits to members
- Used to absorb increases in purchased insurance costs