Calculating Member Dividends

Members earn dividends when the amount of premium paid in a year exceeds the cost of claims and operating expenses.

Class A members dividends are calculated as follows:

Total Surplus Funds for Class A for a given fund year are divided equally (50%/50%) into two funds to calculate members’ earned dividends:

  • Fund for Social Distribution (FSD)
  • Fund for Incentive Distribution (FID)

The FSD are distributed to each Class A Member proportionate to that Member’s premium. For example, a Class A Member whose net premium represents ten percent (10%) of the total net premium of Class A Members would receive ten percent (10%) of the FSD.

A Class A Member will be eligible to receive a share of the FID if the Member has positively contributed to the Surplus Funds in that year. A Member’s Surplus Contribution is calculated as follows:

  • Member’s Surplus Contribution = Member’s Premium – Member’s individual claim experience (paid losses and reserves) – Member’s share of claim handling costs – Member’s pro-rata share (based on member’s premium to total Class A premium) of group expenses, net of investment income.
  • If the Class A Member’s Surplus Contribution is positive, the Member is eligible to receive a share of the FID. An eligible Class A Member will receive a share of the FID in the proportion that the Class A Member’s Surplus Contribution bears to the total of all eligible Class A Members’ Surplus Contributions.
  • In the event of a shortfall in funds for Class A, all Class A Members will be assessed a share of the shortfall proportionate to their net premium.


Policies are calculated using current Massachusetts rates and reduced by a deviation approved for use by the Commonwealth of Massachusetts Division of Insurance. This deviation is above and beyond the premium discount and other pricing benefits afforded by ISCC and has ranged from 10% – 20% since 1995.