Comments on risk retention group insurance

 
 
 There has been some effort by NBFAA to promote an insurance risk retention
group to offer errors and omissions coverage.  A lot of alarm companies
have asked lots of questions about the possibility.  Karen Izzo has put
together a number of questions that you should be asking about the
proposed program that is enlightening.  Her comments are:

Hi Ken!
A flurry in the alarm industry regarding insurance availability and
pricing has recently given rise to an increased number of questions.  I
have been asked by the brokers and alarm companies we service to compile a
list questions that should be considered when contemplating the purchase
of insurance coverage through a Risk Retention Group.  I promised you I
would provide this list to you as well.  Hopefully the questions may
provide some clarity in this apparent haze.
Question: I recently completed a survey for alarm association members.
The association members may have the ability to participate in a Risk
Retention Group at potentially lower premiums.  Please provide a list of
questions I should consider regarding a Risk Retention Group.

Answer:
Why is it being offered?
Is this merely being considered as another revenue source for the
association?
Has the association explained that the theory of a Risk Retention Group
means the policyholders agree to accept a portion of the risk?
Has the association explained that risk retention groups may be
assessable?
Has the association explained that the term assessable means that the
policyholders may be charged or assessed additional premium based upon
adverse loss experience of the group?
If the new program is assessable, how can the program administrator assure
profitability?
Is the association looking at this venture as a means of providing more
comprehensive coverage to its members?
Will an association official attest that coverage is at least as
comprehensive as that available in the current marketplace and provide a
legal opinion on coverage based upon review by qualified coverage counsel?
   Would all association members automatically qualify and be guaranteed
coverage?
Since the profitability of the group depends on the program administration
(selection and pricing), has the association provided the experience of
the insurance program administrator?
Has the proposed program a
  Would pricing in the new Risk Retention Group be lower than the previous
program administered?
What were the results of that program?
Was the previous program profitable?
Does the program still exist?
  Would the same people be reviewing submissions for acceptability?
Will the same pricing guidelines exist as those of the old program?
Will the same underwriting guidelines exist with respect to contract
requirements?
  Did the insurance company providing the coverage for the previous
program terminate the program with the proposed program administrator?
If no longer in existence, what happened to the prior program?
If it is still in existence, will it be a competing program?
Feel free to contact me if you need any additional information Ken.

Best regards,
Karen Karen J. Izzo, President
Izzo Insurance Services, Inc.(Exclusive Administrator of the Gold Shield
Advantage Security Insurance Program)
7234 W. North AvenueElmwood Park, IL
Phone800/ 800-1704 Toll Free708/ 452-1777 FaxE-mail:
kizzo@izzoinsurance.comInquiries:  info@izzoinsurance.com
Website:  www.izzoinsurance.com