Workers' compensation insurance solutions: joining a reciprocal insurance company.

• Author: Houston, Paul
• Position: INSURANCE ESSENTIALS

The Alaska Timber Insurance Exchange (ATIE) is a unique workers' compensation solution designed to save money for Alaska businesses that traditionally have higher than average workers' compensation rates and are committed to employee safety. Some examples of these types of high-hazard industries would be mining, logging, and construction.

The ATIE was started by the Alaska Loggers Association in 1980 with a goal of providing an affordable source of workers' compensation insurance for its members. As the logging industry diminished, the ATIE opened its membership to other industries facing similar high-hazard workplace exposures. The ATIE is a reciprocal insurance exchange which is owned by its policyholders. As a licensed insurance company, ATIE is subject to all of the insurance laws of the State of Alaska, which provides safety to its membership. In addition, the company pays dividends to its policyholders. As owners of the company, they share in the investment and operating profits of the operation. The ATIE has paid out dividends of more than $13 million to its members in the last ten years--$1.6 million was paid on March 6 this year. While the dividends are not guaranteed, they have been consistently paid over the life of the program.

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Conrad Houston Insurance began working with ATIE in 2010 as a result of our search for cost saving workers' compensation insurance solutions for our clients. While the program has been around for a while, we discovered it was highly underutilized. We suspect that might be in part due to the lower commission paid by the company to brokers, which are, on average, 50 percent less than the industry norm. Of course the lower commission is just another part of the cost saving efforts of the company.

In discussions with of our clients and prospective clients, we have heard many of the same complaints over the years:

* "I rarely, if ever, have any claims. It seems like I should get some money back!"

* "I feel like I am totally out of the loop on claims administration."

* "I feel like I am working with this huge mega company. I want to talk to someone in charge."

It appeared to us that the ATIE had an answer for many of these complaints. In the ATIE program, if you have few or no claims, you get to share in that success financially. Some members have received dividends of more than 60 percent. In fact the average dividend over the last ten years has been 30 percent. These are significant...