As featured in the December 1999 issue of:
When the insurance industry wouldn't serve some of them, and the hard market inflated the other half's premiums by 200 percent, in the mid-1980s a group of nonprofit executive directors from CalACT (California Association for Coordinated Transportation) decided to take control. They got a $60,000 grant, formed a steering committee and studied the feasibility of forming an insurance pool.
headquartered in Oakland, California, NonProfits' United Vehicle
Insurance Pool (nee Paratransit Insurance Corporation) is the state's
oldest transportation self-insurance pool for nonprofits. It covers 285
members, ranging from senior centers to churches, art groups to health
clinics – a far cry from its humble beginnings of seventy-three mostly
paratransit agencies. After more than a decade of growth and
development, this insurance alternative goes far beyond coverage alone.
"I do not run an insurance company," Shari Deutsch, executive director of NonProfits' United, states emphatically. "We're not a traditional insurance company in any sense of the word."
Indeed, the organization is governed by the California Corporations Code – which was amended to allow private nonprofits to pool – not the Department of Insurance. But Deutsch is talking about more than just regulations.
Created out of an unfriendly insurance market, the pool has become a true service organization. "Aside from providing affordable, steady insurance for our members," Deutsch explains, "one of our primary missions is to offer safety, risk management and loss control services. We have no agenda other than serving our members."
Therein lies the effectiveness of NonProfits' United. "If our members don't need us," she continues, "we simply cease to exist."
Owned and operated by its membership, a central staff covers day-to-day activities and an eleven-member elected board of directors makes all major decisions about coverage, pricing and services. One at-large position on the board adds outside expertise. Representing a balance of both large and small agencies, the group meets quarterly to discuss changes and additions, assuring "unprecedented member control and an ongoing commitment to member services."
Any California 501(c)(3) organization that owns or leases at least one vehicle can apply for membership. Although staff underwriters determine eligibility case by case, based on loss history, the corporation's literature states that "most agencies should be eligible for membership."
The typical NonProfits' United member has a small budget, under $1 million. With few employees and a lack of experience in the field, it looks to the pool staff to act as its risk managers. And to give each member a reason to stay with the pool, Deutsch and her team work to meet those needs with competitive coverage and unsurpassed benefits.
"One of the things that's very difficult for a nonprofit to deal with is cyclical pricing," says Deutsch. They're usually on fairly small budgets or fixed incomes."
NonProfits' United can keep its premiums steady, avoiding market swings, in part by self-insuring the first $100,000 of every claim. "That way, when we buy excess insurance, we're not buying dollar-one coverage," explains Deutsch. "We're able to spend less than an organization that goes out independently to the commercial insurance market because we retain a substantial amount of the risk."
Members pay a premium to the pool that covers funds for the self-insured liabilities, a portion of the excess liability premium, administrative costs and a small surplus. "We've been able to maintain enough of a surplus so that if rates were to go up in the excess market, or we have a bad year, it won't affect premiums," says Deutsch.
Keeping prices competitive is also vital. "If we're not able to provide our members with a good price, they're going to go elsewhere," she adds.
The pool's auto liability coverage includes bodily injury/property damage combined single limit from $1 million to $10 million per occurrence; uninsured/underinsured motorist bodily injury to $1 million or $2 million per occurrence; vehicle medical payments at $5,000 per person/$35,000 per occurrence; non-owned auto liability as excess above personal auto to the limit of liability; and hired auto. Auto physical damage coverage features comprehensive and collision coverage at actual cash value; $500 deductible per occurrence; and uninsured/underinsured motorists collision deductible waiver. Members can use uninsured motorists property damage as an auto liability endorsement if they opt against auto physical damage, and rental reimbursement coverage is also an option.
To keep the pool viable for the long term, NonProfits' United provides personalized safety and loss control services, considered the heart of the program by many members.
Dennis Studebaker, member services director, spearheads these efforts. As former director of Volunteer Wheels in Santa Rosa, California, he understands how nonprofit transportation systems work and what the agencies need. He provides training, information and on-site safety visits in response to the demands of member organizations.
"We listen carefully," he says. "We get to know them personally as much as possible. By understanding the issues and concerns our members face, and by listening to what they say, we are able to adjust our services to meet their needs. We make every effort to be responsive to every single request that comes in, going the extra mile to answer questions, deal with complaints and incorporate suggestions."
Each member receives a safety manual, The Safety Zone, specifically written for nonprofit transportation programs, as well as a monthly newsletter, Safety Focus, that highlights a unique risk management technique in each issue. The pool staff is also available to provide information for members with specific questions concerning safety, legislation or any other aspect of their program.
In addition, Studebaker has coordinated a series of management seminars that address transportation industry issues such as driver hiring. Each year the pool offers a three-day instructor training course to create in-house teachers for member organizations. These individuals return to their agencies to coach drivers in defensive driving, passenger assistance techniques and behind the wheel skills (collision avoidance). The pool also offers individual training in each of these fields for any member driver. And all of these services are provided as complimentary benefits of membership.
In keeping with a responsive tune, if any member develops a unique problem, Studebaker will devise a customized program to fit that need. He also makes personal visits to member locations to evaluate on-site loss control liabilities. If he sees something askew, or if loss results have begun a downward trend, he'll make recommendations to rectify the matter, and offer a hand in implementation.
To stay on track, the team closely monitors satisfaction results. "We always ask for written evaluations after each seminar and training program," states Studebaker. "We send out a claims questionnaire after each claim closes. We ask members face-to-face for their feedback. And we periodically conduct surveys and focus groups to address specific issues."
Among its particularly successful programs is NonProfits' United's rear crossview mirror purchase program. By evaluating losses, Studebaker discovered many members were having accidents backing up. He also discovered that installing rear crossview mirrors on certain types of vehicles could reduce such accidents by 85 percent.
Given this potential for successful mitigation, NonProfits' United has not only spread the word to its members about the product, but has also offered to purchase the mirrors for any member company that wishes to incorporate them. Similarly, the pool refunds members that install electronic backing sensors, up to the cost of the mirrors. Participating agencies have seen an average 80 percent drop in related accidents.
In its most recent showpiece program, last year NonProfits' United initiated The Excellence in Safety Awards, what Deutsch calls "a founding goal of the organization."
"This organization was created to support nonprofits," she notes. "And part of what we do is figuring out what our members need. One of the things they need, given budget situations, is money."
So in 1998, the board authorized the return of up to $1 million over a three-year period to qualified members based on safety records. Deutsch explains that because of the diverse nature of the pool, "from the senior center down the street with one van to a Head Start program with forty vehicles," she had to specifically tailor a distribution method for the money.
First, the board examines the size of the surplus they have at the end of the year. One-third of that amount will be granted to the membership. The remaining two-thirds covers unforeseeable events and enables the awards program to continue.
Eligibility for the award is based on current membership and losses for the policy year ending thirty-six months back – to allow claims to develop. If an agency's pool loss ratio is under 40 percent and its losses since that policy year have been reasonably good – under 70 percent aggregate – it qualifies for the award. The money is granted proportionally, based on the premium the member paid in that policy year and its corresponding losses.
In its first two years, over half of the pool's membership earned The Excellence in Safety Award, a number that Deutsch is very proud of. Although the quantitative results of the award, given the three-year evaluation period, is not yet known, she has heard much positive feedback from the members that received it. "They say, 'This is one of the reasons we're with a pool. I'm not going to get things like this from my insurance company.'"
As Deutsch notes, the members are the only reason NonProfits' United exists. Its growth is a reflection of their success, and the positive reviews it generates from those it serves.
"NonProfits' United is not big business," says Leslie Orsburn, director of development for Kare Youth League, in Arcadia, California. "Nobody's making a huge profit out of this. If everyone maintains a good driving record, it's going to benefit the whole pool. I am a part of it because I can trust them."
The statistics spell success: Before it used NonProfits' United's loss control services, Alameda County Food Bank suffered an average pool loss ratio of 36 percent. That number is now down to 13 percent. Similarly, East San Gabriel Valley Transportation Services fell from 360 percent to 57 percent; and Galt Community Concilio dropped from 153 percent to 31 percent.
This year, as a result of the loss mitigation efforts they have taken with the help of the pool's staff, Galt Community Concilio was among The Excellence in Safety Award winners. In addition to financing an employee barbecue, "we were able to give bonuses to employees who had not had accidents," says June Gilmore, vice president of the NonProfits' United board of directors and director of transportation for South County Transit of the Galt Community Concilio. "For every minor incident, I decreased their bonuses by twenty-five bucks. That let them know, the safer you are, the better. It really helped our employee morale."
When Manuel Palmarin, transportation services manager for East San Gabriel Valley Transportation Services, first started the job, he investigated other insurance options. "NonProfits' United always came out the lowest, plus they provide those residual services after the sale."
In particular, Palmarin has been very impressed with the helpful knowledge base the pool offers. "It's just like talking to a neighbor down the street," he says. "If I need information, they know the resources. If I need to talk to somebody, they provide me with a list."
Roger Caldwell, treasurer and secretary of the NonProfits' United board and CEO of MAAC Project in San Diego, has been with the pool from just about the start. He agrees that the organization now "provides better information and more information."
By working together with its members, Deutsch says, NonProfits' United has been able to protect them, provide the coverage and services they need and improve their bottom lines.
"This isn't difficult for us because we really enjoy helping these organizations succeed at their challenging task of providing social services to those in need, often on a shoestring budget," says Studebaker. "We see ourselves as a major source of support for them."
The appreciation its members feel for those efforts is best phrased by Gilmore: "The pool has been a godsend for nonprofit agencies because we've been able to take control of our destiny."
Reprinted by permission from Risk Management,