LP Gas, March 2010

L I A B I L I T Y I N S U R A N C E wanted us to have on our radar screen The goals of the Lockton program are to Mitigate the risk of wildly fl uctuating premiums during insurance market cycles Collect industry loss data previously unavailable to NPGA Integrate the industrys safest practices into the design of the program Create some degree of exclusivity for the associations safest members Reward responsible members with lower premiums Base rates on member claim experience rather than conditions in the general insurance market Lockton plans to begin marketing the plan at the Southeastern Convention International Propane Expo on April 10 12 in Atlanta Dorweiler declined to say how much will be spent on promotions which the NPGA will not pay for Pooling purchasing power Insurance woes are nothing new to the propane industry A half dozen committees or task forces have reviewed insurance concerns since the earliest days of NPGAs predecessor organization in the 1940s Group studies in 2002 and 2005 concluded that there was inadequate support for a self funded accreditation program or a captive insurance option A similar conclusion was reached in the mid 1980s but an independent group of propane marketers formed a risk retention group that operated for about fi ve years before it folded The Lockton deal has been planned and debated within NPGAs Member Services Committee since 2006 in response to renewed marketer complaints about high premium prices and limited coverage options After rejecting the idea to create a self funded insurance program under the NPGA the group became intrigued with the affi nity model Randall Doyle chief fi nancial offi cer for Blossman Gas has been pushing it for four years The current Member Services Committee chairman is convinced the new offering will provide pricing stability that small marketers have been unable to generate on their own The propane industry has struggled for years with this question of how we can stop the wild price spikes in certain market cycles This is what this program is intended to do Doyle says noting that a marketers cost for insurance can range from 2 to 6 cents per gallon When you become part of an affi nity program your premiums are driven more by the claims and loss experience of the group than the general fi nancial market Both are still at play but it helps smooth out the price spikes we historically see every 10 15 years A 2006 policies and procedures guide by the American Society of Association Executives claims 48 percent of trade associations offer members an affi nity liability insurance program Lockton Affi nity services about 90 such plans from a wide range of industries nationwide Our experience offers a good road map for what we are trying to do provide stability benchmark develop competitive pricing over the long haul and create a resource base to improve loss data Those were lots of the same objectives as were laid out for us by the Member Services Committee Dorweiler says That experience was a major factor in choosing the type of plan and broker to implement it according to Doyle Were not blazing new territory here so it made sense for that reason This is not a new concept Lots of other associations have affi nity insurance programs in place he says The more I dug into it and talked to other associations one question kept nagging at me If they can all do it why cant we Its one of the reasons I kept working on this NPGA estimates that 48 percent of marketer members sell 1 million gallons or less annually These are small guys who have to go out and negotiate rates on their own An NPGA sponsored affi nity program puts the negotiations with underwriters in the hands of Lockton That will make a big difference Doyle says Adds Dorweiler In general an affi nity plan works for Continued on page 44 Continued from page 41 Visit us at Booth T 12 April 10 12 Southeastern Convention International Propane Expo Atlanta When it comes to installing or removing any size residential propane storage tank the EZTC 206 from Renaldo Sales makes it easy More stability Greater power Unmatched traction Requires just one operator Get more information at www renaldo org Renaldo Sales Service Inc North Collins NY 800 424 5564 Manufactured and Distributed in the USA 42 LPGas March 2010 www LPGasmagazine com