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“Should Our Nonprofit Corporation Join A Self Insurance Pool”
Presented by:
David G. Pilkington
Vice President, – Brown & Brown Insurance –
WC Program Manager
CTD PresentationMarch, 5, 2008
Benefits of Self Insurance Pooling
• Cost of insurance spread among members of pool or fund
• Group purchasing allows for greater leverage when negotiating coverages, terms, conditions and pricing with insurance carriers
• Cost savings over traditional insurance purchasing process from the lack of need to develop excessive surplus and removal of much of insurance carriers profits.
• Ability to purchase all lines of insurance coverages from one provider with a single expiration date
Benefits of Self Insurance Pooling
• Pool or Fund is actually owned by the members
• Specialized service providers dedicated to the membership
• Shared limits on property created by a “spread of risk” model
• Greater predictability of loss from shared exposures and common data
About Public Risk Underwriters
• Public entity and nonprofit insurance program specialists located in Lake Mary, FL
• Created and administered the Preferred Governmental Insurance Trust (PGIT) comprised of 600 Florida public entities purchasing workers compensation, property and casualty insurance coverages
About Public Risk Underwriters
• Originated and spearheaded Florida Statue 624.4625 which allows for not-for-profit corporations to form a self insurance fund for the purpose of pooling and spreading liabilities of its group members.
• Currently in the final stages of implementing the Nonprofit Community Insurance Fund (NCIF) for Florida’s governmentally funded not-for-profit corporations
Synopsis of Florida Statue 624.4625
• Annual normal premiums in excess of $5,000,000
• Two or more not-for-profit corporations organized under the State of Florida may form a self-insurance fund for the purpose of pooling and spreading liabilities of its group members
Synopsis of Florida Statue 624.4625
• Participating members must receive at least 75% of its revenues from local, state or federal government sources or a combination of such sources
• Utilization of qualified actuary to determine rates using accepted actuarial principles and submits to the insurance office certification that rates are sound and not inadequate
Synopsis of Florida Statue 624.4625
• Maintains a continuing program of excess insurance coverage and reserve evaluation to protect the financial stability of the fund
• Fund retains a per loss maximum of $350,000
Synopsis of Florida Statue 624.4625
• Submits annually to insurance office an audited fiscal year-end financial statement
• Has a governing body comprised entirely of officials from participating not-for-profit corporations
Synopsis of Florida Statue 624.4625
• Uses knowledgeable persons or business entities (with a minimum of 5 years experience in self insurance funding) to administer or service the fund in the areas of:
– Claims administration and adjusting
– Underwriting
– Loss control and risk management
– Financial audit
– Legal representation
– Policy administration
– Education and training
Potential Eligible Nonprofit Classes
• Alcohol and Drug Abuse Centers
• Associations for Retarded Citizens
• Children and Family Services
• Community Action Agencies
• Hospices
• Mental Health Organizations
• Rehabilitation Organizations
• Social and Recreational Services
• Vocational Training
• Head Start Programs
Coverage Available in Self Insurance Fund
• Property / Inland Marine / Equipment Breakdown
• General Liability
• Automobile Liability and Physical Damage
• Directors and Officers
• Workers Compensation
• Professional Liability
• Crime / Bond
• Excess Flood
Key Factors to Consider When Evaluating Self Insurance Fund
• Retention levels maintained
• Financial rating and stability of excess carriers.
• Excess of loss versus reinsurance.
• Educational, training and loss control capabilities
• Assessable or non-assessable?
Key Factors to Consider When Evaluating Self Insurance Fund
• Exit or liability run off costs.
• Premium allocation methods among membership.
• Fund’s “spread of risk”.
• Flexibility of coverage design and product offerings.
• Online technology capabilities.
• Deviation potential on Rates.
Contact InformationBill Kelly
Public Risk Underwriters
Executive Vice President
David Pilkington
Brown & Brown Insurance
Vice President – WC Program Administrator
