How much do you pay annually in Workman’s Compensation, General and Property Liability insurance premiums? Is it twenty-five thousand, fifty thousand, a hundred thousand dollars or more? Chances are, most of you would be elated to pay this much for insurance. A quick survey of CFA Board of Director members found that, on average, their companies were each paying over $250,000 per year in premiums.

What would it be worth to you if you could save 30%, 40%, or more on those premiums? Certainly the price of membership in CFA – several times over! You can implement improvements, risk management, and a host of other strategies to reduce your premiums but it is doubtful you will still save that much money. One of the problems with insurance companies is that they must spread varied risks of a huge pool of customers. So even when you reduce your risks, you don’t get the full benefit of your improvements. Insurance companies must cover catastrophic losses such as hurricanes; they have shareholders who demand huge profits; and then there are all those edifices to construct and maintain.

Many CFA member companies are too small to create your own self-insurance pool, but a trade association with all its members involved in the same type of business, is well-suited for this type of venture. The CFA is in the early stages of determining what it would take to form its own “captive” or self-insurance pool. Large corporations, municipal governments, schools, hospitals, and other organizations have been doing this for decades. It’s the only way to control their costs. It is not as common, however, in the construction industry. One organization that has taken the step is the Concrete Sawing and Drilling Association, a group similar in size, scope, and risk to the CFA. They are in their 6th year of self-insurance and their participating members are saving between 30% and 70% off their insurance premiums. This could be just the edge needed to separate your business from the competition. In addition, their association generates income from the administration of the effort helping to keep dues under control.

The details of the program are far more complicated than can be explained in this short article. Reinsurers, overlays, complexities of Workman’s Compensation in multiple states, and hundreds of other questions must be addressed. These questions, and the details, are the responsibility of a paid consultant. It could take 6 months or even several years before it is implemented and it would be a members-only program. If the decision is to proceed following a half-day question and answer session following the board meeting this spring, a feasibility study will be commissioned. During this study, the insurers, reinsurers, and a host of other details will be worked out.

If you want to be kept abreast of these developments, or would like to serve on the task group charged with the development of the program, contact CFA offices? The task group met during the CFA Spring Meeting in Coralville, Iowa and voted unanimously to proceed to the next step in furthering the process of creating this program.