Spring 2000
DSAA National Insurance Program - Update
David Crosby, AAI
DSAA National Insurance Program Manager
The DSAA National Insurance Program, now in its third year of operation, has undergone several changes since its beginning. As the managing agent for the program, J. Smith Lanier & Co. made a firm commitment to the DSAA to always provide the best insurance product, through a financially stable insurance carrier, at the lowest possible cost.
Based on that commitment, the first major change came when we switched insurance carriers from Scottsdale Insurance Company, an excess and surplus lines insurer, to Audubon Insurance Company, an A+ rated standard insurer. We elected to do this to give us more control in the rating and underwriting process and as a result allow us to provide quotes in a more timely fashion.
The second and most recent change in the program, voted in by the DSAA Board of Directors at the December meeting, has to do with the deductible on Comprehensive and Collision. We now only offer a $1,000 deductible for both coverages. Prior to this we offered deductibles as low as $250. Here is why this change became necessary.
As of December 1999, the loss ratio for the DSAA Insurance Program has climbed to an alarming 72%. For those of you who are not sure what that really means, let me explain. A loss ration is a measure of profitability used by all insurance companies. It is calculated by dividing the losses incurred by the premium earned. Example: losses of $35,000 divided by an earned premium of $100,000 equals a 35% loss ratio. Typically, anything over a 55% loss ratio means the insurance company is losing money. Now this may come as a shock to some of you but insurance companies are not non-profit organizations ... they are in business to make a profit just like any other company.
Back to the deductible change. How will increasing the deductible to $1,000 help reduce the loss ratio? It is simple ... each school will now be self-insuring the small losses - the minor fender-bender, the broken windshield, etc. This will reduce the frequency of reported claims and in turn reduce the dollars being paid out by your insurance company. As an end result, we should see a reduction in the loss ratio.
“OK, so what’s in it for me?” you might ask. Well, there are several benefits. First, you’ll get a reduction in premium for the higher deductibles. Secondly, you’ll save yourself the time (and aggravation?) of having to report the claim and dealing with a claims adjuster. And, most importantly, you will be doing your part in keeping the DSAA National Insurance Program alive and well for years to come.