Masonry Magazine August 1974 Page. 7
Underwriters Rate MCAA Members Preferred Risks
Declare 22% Dividend
By Walter T. Derk
MCAA Insurance Consultant
It is perhaps an open secret that knowledgable insurance company underwriters consider active members of national trade associations, including members of MCAA, above average insurance risks. The propriety of doing so has just been confirmed by declaration of a 22% net dividend on Workmen's Compensation premium and 10% on General Insurance premium for member-participants in the MCAA/CNA Casualty & Property Insurance Program.
This dividend affects those members enrolled prior to November 1, 1973; their checks will be in the mail shortly, the amount being pro-rata of premiums paid into the Compensation and General Insurance funds during the policy term ended November 1, 1973.
An MCAA Casualty and Property Insurance Dividend Trust Fund has been established to deposit the remittance from CNA, verify and calculate individual refunds, then issue, sign and mail the dividend checks.
It bears repeating here that no person or organization connected with the Association or the Trust Fund receives any portion of the dividend refund; all expenses connected therewith are borne by Fred. S. James & Co. as Administrator of the national program.
We are exceedingly proud that MCAA has taken the position that dividends earned by its members shall not be used as a source of additional revenue. Clearly another important membership benefit.
Establishment of "Manual Rates"
All contractors engaged in masonry construction combine to establish the Workmen's Compensation and General Liability "manual" rates in each state, based upon units of exposure and losses reported to the respective rating bureaus. The manual is just that, a book setting forth standard rates prior to application of any individual experience modificaton factors. The book rate also applies to new firms having no prior premium-loss history or those generating too little premium to qualify for experience rating.
A basic premise of the Casualty and Property Program is that MCAA members tend to be a cut above the overall industry average, that they are inclined to be better informed about such matters as labor relations, material handling, scaffolding, other equipment, work methods, safety rules, O.S.H.A. enforcement, legislation jurisdiction, cost trends and the like.
This is all-important to underwriters, who like to find a degree of control and interest in minimizing that most significant factor affecting premium.. losses.
Initial Dividend Pool Results
The first accounting for the policy year in question shows loss ratios of 42% for Workmen's Compensation and 49% for General Insurance Lines, both better than expected and well within the liberal break-even point.
To our way of thinking, the primary objective here is to provide broad (in many cases, broader) coverage, improved local and national service and highly competitive "going-in" premium levels.
Dividend availability is a happy plus, but, of course, future dividends cannot be guaranteed, either under law or the dictates of common sense. They depend upon you and your ability to achieve better than average results.
However, this dividend program is a one-way street. down. Unlike retrospective rating plans, there is no penalty; dividends cannot be charged back once paid.
Value of Pooled Loss Data
One of the principal virtues of the Association Program, dollars aside for a moment, is that it permits us for the first time to learn more from each other. A member in Nebraska may experience a wall collapse (which can now be insured under an Installation Floater policy) because of insufficient bracing. With nationwide exposure to more than 125 member-firms doing similar work, CNA and the Association's Safety Committee may be able to make recommendations to prevent a repeat in Florida.
The insurance carrier will have such data, centralized in the home office, to make practical study of pooled loss data for the benefit of all. An exciting prospect, we feel.
Safety and Insurance Committees
Adding to the kudos already heaped upon Bill Dentinger as Chairman of the MCAA Safety Committee, we also would like to publicly acknowledge the solid accomplishments of that hard-working committee, and to thank Chairman Don Leonard of the recently-expanded Insurance Committee for widening the availability of the CNA Casualty & Property Program across the country. With that added depth and expertise on the part of independent insurance professionals dedicated to the concept of association marketing, it looks like a banner year ahead.
Anyone interested in the MCAA Casualty & Property Dividend Program can contact either CNA at (312) 822-5414 or Walter T. Derk at (312) 346-3000. We'll do the rest.