Trade Associations Seen as Good Risk for Self-Insurance

Article excerpt

Self-insured groups formed by trade associations are considered a good risk because members are familiar with each other and they know the risks their industry faces.

An example of a well-run self-insured group is the Oklahoma Automobile Dealers Self-Insured Association, according to Michael Clingman, administrator of the Oklahoma Workers Compensation Court.

More than 70 percent of the 250 automobile dealers in Oklahoma belong to the self-insurance group, which was formed in 1984.

The automobile dealers formed their sel-insured group because of economics, said Steve Rankin, executive vice president of the Oklahoma Automobile Dealers Association.

"It's been a very profitable group for the dealers," Rankin said. "They're able to control the amount of reinsurance and some of the things they'd have no control over if they decided to go with another company.

"The dealers really take an interest in making sure their shops are safe."

If an employee suffers a minor injury on the job, the employers would rather pay the medical bills out of their pockets than hurt their experience level - one of two factors considered in workers compensation insurance, Rankin said.

The automobile dealers group has paid back between 15 percent and 20 percent of premiums in annual dividends, said Chris Sturm, the manager for the group, but it does not offer an up-front discount.

Lousy self-insurance groups may not be lousy because of their financial results, but because they are structurally weak and without strong management, Clingman said.

The auto dealers' self-insurance group is strong in part because every member knows every other member, he said.

"I think that this particular group is a rather homogeneous group by its nature - it is in an industry that has not seen a great swing in profitabilty or losses - it's a rather stable group pf employers," Sturm said. "They have been loss-conscious and have placed a great emphasis on loss control."

Members of the automobile dealers association, Sturm said, probably go to all the conventions and know each other personally. …