|
|
|
|
Maritime Insurance Company-a Risk Retention Group (MIC) Background For years the insurance industry has gone through cycles where underwriters lower rates to attract customers and increase their premium income. With that increased income comes increased risk exposure and results usually in increased claims and loss ratios and expenses that go along with claims settlements. Rates are increased to catch up with the claims spiral and clients are stuck with higher rates, restrictions in coverage or in many cases, coverages are no longer available at any price. Business owners, large and small are faced with the unpleasant surprises associated with these wild swings and budgeting from year-to-year is difficult when insurance rates jump or dive in a seemingly illogical way. The Marine Trades Association (MTA) was formed by and large to investigate the feasibility of creating an insurance company for business involved in the marine industry. MTA has evaluated the need and opportunities of establishing an insurance program that would be less subject to the high and low pricing cycles of the standard market, and would provide maximum available benefit to the marine industry. Membership in the MTA would be necessary but the fee is modest compared to the benefits derived. The most important philosophy is that marine industry members with good loss histories and a commitment to controlling their loss costs should have a reliable source of liability insurance and one that reflects their experience. The following provides preliminary information on the Maritime Insurance Company-a proposed Risk Retention Group. A more detailled circular is available upon request. Copies of the Offering Circular must be completely reviewed before investing in and becoming an insured in the MIC. Q
Will the MIC be a real insurance company? A Yes. A US State Department of Insurance will issue a certificate authorizing the MIC to operate as an insurance company. The MTA has studied proposals from several different states to determine the US domicile most favourable to the MIC. In addition, by being domiciled and admitted in the USA, certain State Guaranty funds may provide additional protection for policyholders. Q
What type of coverage will the MIC offer? A
The MIC will offer Liability insurance including Protection
& Indemnity insurance with Excess
or Umbrella coverage also available. Property, crime, fidelity and hull &
machinery coverage may
also be offered through MIC’s service company. Other coverages can be considered
if the need and interest exists. Q
Why do you call it a Risk Retention Group? A A risk retention group is an insurance company authorized under the Federal Risk Retention Act. MIC will be established as a US domiciled non-assessable Stock Company. You will not have assessments to policyholders like some mutuals and some association groups. All of the insureds must be in the same line of business, i.e. marine related businesses. Q
What types of policies, deductibles, limits, etc. will be offered? A Variations in deductibles, self-insured retentions (SIRs), limits of insurance, and the like can be tailored to the insured. Standard policies will be offered through the MIC, and will be similar to policies used in the standard market. Q
Why will the MIC only insure individuals and/or companies involved the
marine industry? A There are a number of reasons. Federal law requires that Insureds be in the same general lines of business. The MIC will be an insurer of and for our industry. Since members are involved in the marine trades, the MIC will be able to offer special loss prevention guidance to members, based on industry experience. Many MTA members have extensive experience in the business. All of this and more means the MIC can offer unique advantages to meet your insurance needs. Q
How can a new insurance company provide coverage comparable to coverage
provided by the old companies? A Most of the risk is reinsured though “A-rated (AM Best)” billion dollar reinsurance companies. Insurers typically use reinsurance to limit and spread risk. Reinsurance agreements allow one insurance company to assume some of the risk of another company. The MIC will transfer a major portion of all risks. This will provide MIC with the financial strength of a larger insurance company because it will be backed by large “A-rated” reinsurers. Q To start an insurance company requires millions. How is this company to be capitalized? A Capital contributions from insureds will aid in capitalizing MIC and irrevocable Letters of Credit from your bank can be used for part of the payment. The rest is taken care of by reinsurance. Q
How will my premiums compare? A If you are correctly classified, have a good loss history, and are committed to controlling your loss costs, MIC should be able to offer comparable or competitive premium rates. Future premiums can reflect positive claims experience for the group and overall lower insurance costs in the long run. The MIC is not a short-term quick fix for escalating premiums. Members who remain committed to controlling losses and paying their fair share will benefit from a stable, competitive insurance resource that they have direct control over. Q
What other benefits can I expect? A Members will benefit from centralized legal defense counsel and future loss prevention activities. Members will also have a voice in insurance decisions affecting them. Q
How is investment income to be handled? A Investment income is the driving force in most insurance companies. In a risk retention group, that income belongs to the insured members. The Bylaws of the MIC will enable the Board of Directors to determine how the income is handled. Q
Do I have to purchase all of my coverages from the MIC? A No. You may purchase whatever insurance you need the MIC to provide and obtain other insurance elsewhere. Q
How will the MIC be operated? A MIC will be managed by an outside service firm under the direction of the Officers and Directors of the MIC. The service firm will manage the day-to-day affairs of the RRG, obtain underwriting information, offer quotations, issue policies and manage claims. Q
Can I use my own agent or broker to place business with the MIC? A
Properly licensed agents and brokers may apply to be producers for the
MIC or you may deal directly with the MIC if you wish.
|
|
Send mail to
mail@marinetrades.com with
questions or comments about this web site. Some services are provided by outside
service organizations. The Marine Trades Association Inc. is a member service
organization and is not an insurance company, agent or broker. This website is
not to be considered a solicitation to purchase insurance or a solicitation to
invest in any scheme. The proposals on this website are for information purposes
only and are void where prohibited by law. Specific insurance questions should
be directed to Association Insurance Managers, a fictitious name of ORM Inc., a
Florida Corporation (305) 743-7711 or to their website
www.offshorerisk.com . |
