Companies linking up to insure themselves - San Francisco Business Times:

llrx-royce.blogspot.com
Under this model, groups of similar businesses joinforces -- under the auspices of a risk-managemeny company -- to pool resources and self-insure againsft comp-related risks, in effecyt forming the equivalent of a mutuaol insurance company. This allows medium-sized businessez to cover themselves the way giant enterprises have long donein California. More than 25 such groupsd have formed in California since January after the approach wonregulatory approval.
One of the largesty is Compensation Risk Managers of a unitof Hamilton, Bermuda-based It managesz six industry programs in the Golden for auto dealers, bankers, contractors, health-care companies such as skille d nursing facilities and hospitals, plastifc manufacturers and vintners. Thousands of companies are members, includiny nearly 700 in one restaurant industrugroup alone, but exact numbers aren'tt available. The CRM-managed winery group got off the ground inAugusr 2005, with four core including Sonoma's and Healdsburg's , according to David Ferrari-Carano's controller. It's now up to 23 wineriezs with roughly $2 millionn in annual workers' comp premiums.
"It has exceeded The group is performing very saidPeggy Phelan, Cline Cellars' director of operations and a founding boarrd member of the winery Among the biggest benefits are rate which takes participants outside of the workers ' comp industry's notorious boom-bust cycle, and having an equity interest in the group' s performance. "That's been a real plus," Phelamn said, since any surplus premiums not used to pay claim belong to theparticipatinh companies. That provides a strong incentive to implementsafety programs, she since all members see regular reports on the group's performance and any laggardds soon become obvious.
The winery group's boarxd reviews any comp claimover $10,000, to make sure that all participant s are maintaining strong safety The model only works if all member s of the group meet high underwritinyg standards -- a weak link can creatd losses for the entire group sinced members can be held liable for others ' claims. That's why professional risk-management services are neededf to safely embark on such a project and why currenrt group board members can acceptt or reject any potential new Losing steam?
As of earluy December, CRM had operations in three states, California, New York and including managing self-insured groups that include an estimatedc 425 individual companies in the six California industry Its services are sold through independengt brokers, and must follow guidelines from the state Departmenft of Industrial Relations, which regulates self-insured groupxs and individual self-insured companies through its Self Insurances Plans unit. CRM Holdings, which operates the California unit, recently purchased , a San Francisco-basec workers' comp carrier, giving it anothee finger in thelocal workers' comp pie.
after that acquisition, publicly tradedx CRM Holdings has 250 saidChet Walczyk, its COO, including 80 full-time employees employed by Majestic. For the fiscal year endefd Sept. 30, CRM managed $72.3 millio in aggregate premium revenuein California, up from $64 millio n the prior year, but just a drop in the bucket in the state'zs $21.4 billion comp market, as of year-end 2005. The companhy expects to have managed premiujm totals ofabout $200 million for California and New York in but isn't breaking out the California But it gained 130 new employerd members last fiscal year, and saw its Californiaq premium revenue under management jump 55 percent.
Other management companies in this nicheinclude , , CHSI and , accordint to Mark Johnson, who heads the DIR's self insurancee program. Other industry niches served by self-insured groups include beverags distributors, farmers, private truckers, credit unions, golf nonprofit organizations andindependent Still, group self-insurance is becoming a harded sell for some potential Bay Area participants. Several localk brokers contacted by the Business Times said interes t in this approachis waning, given perceivedr liability risks and the dramatix recent rate drops offered by traditional workers' comp insurers.
"There's interest, but not as much as there a year ortwo ago, said Pete vice president at the Fremont-based brokerage. Even so, Alexandetr said he represents 20 auto dealefr clients ina self-insured groupo and all of them have elected to renew. "It'ds still the most competitive product out he said. "It gives businesds owners controlover claims, and also the potentialp to receive dividends" from premiums that aren'yt paid out in James Carter, area president and partner at Burlingame'sa brokerage, said the model workds best for organizations whose annual comp premiumd are more than $50,000 but less than abouy $1.2 million.
Those with larger exposures are typicallyy better off seekingindividual self-insurance options. But group self-insurance can be a great way for well-managed employers in that rangs to control their risks and reapthe rewards, he said -- so much so that companiesa that exit the traditional workers' comp "roller coaster" in this way rarely