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Q. How do CFSA's Self-Insurance Program and Commercial Insurance
Programs Compare?
A. Self-insurance is an alternative to commercial insurance,
and its goals, structure and services are very different from those
of commercial agencies. In a nutshell, self-insurance enables a
group of similar businesses (California's fairs) with a common goal
to form risk sharing pools into which annual fees are placed and
from which claims payments and related costs are paid. A separate
entity is typically formed to manage and administer these pools,
and the most common entity for public agencies is a not-for-profit
joint powers authority (JPA), which is what California Fair Services
Authority is.
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CFSA is member-need driven; commercial companies are profit
driven. While a client's ongoing contact with his commercial
insurer is typically limited to policy renewals or claims filings,
CFSA is constantly interacting with its members. For instance,
we send our safety and risk management experts into the fair
community year-round to conduct proactive training, certification
programs, and facility and mobile ride inspections - all at
no extra charge to pool member fairs. Our goal? To reduce preventable
accidents and by doing so, to protect the fairs' pool reserves.
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Self-insurance fees are impacted only by member activity, not
by commercial market swings or outside-the-industry catastrophes,
such as 2001's terrorist attacks, which can send commercial
policy rates sky high.
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Self-insurance pools promote greater member control, giving
pool members a voice through an elected board of directors and
other CFSA advisory committees. Pool members also have a hand
in the modification, expansion and creation of programs and
services.
For more information about self-insurance or CFSA's risk
sharing pool programs, please contact Charlie
Mitchell.
Q. What About the Cost Between Self-Insurance and Commercial
Insurance?
A. During a soft insurance market it may be possible to
find lower rates at a commercial insurance company. But remember,
you're not comparing apples to apples here. As a member of the CFSA-managed
pools, your fair has access - at no extra charge - to a variety
of value-added safety, risk management and loss control services
provided by CFSA. These are services that might otherwise be unavailable
or cost-prohibitive. In addition, history proves that over the course
of several years, self-insurance costs are traditionally less and
more stable than commercial insurance rates during the same period.
CFSA's goal is to help fairs reduce the number and severity of
accidents on their grounds. This adds up not only to better public
relations, but also fewer accident claims and less draw on pool
reserves. Although the product of several factors, of which fewer
claims is just one, it's not unusual for the fairs' risk sharing
pool annual base rates to remain unchanged year to year.
For more information about self-insurance or CFSA's risk
sharing pool programs, contact Charlie
Mitchell.
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