The Canadian Rental Association and Group Insurance Solutions are very pleased to announce that the CRA “Protected Self-Insurance” Program (PSIP) has continued to perform well, resulting in another member-owned surplus of $447,205 which will be returned to the participants of the CRA Insurance Program. This follows the return of $660,369 of member-owned surplus in late 2009.
“Protected Self-insurance” vs. Traditional Insurance:
If this were a traditional program, all participants’ premiums would stay with the insurer that would be responsible for paying claims. The insurer would also keep all of the remaining premiums, regardless of how low claims were during the years. Under the PSIP model, when claims are low there is an opportunity for a return of premium.
The CRA PSIP retains a large portion of all the premiums paid each year. Low levels of claims have been experienced since the PSIP was established on June 1, 2006. The preventative measures that the rental dealers have made to reduce losses have helped keep claims low. The positive Program results allowed members to establish the required $1,000,000 member-owned reserve that may be needed to pay potentially large claims that may have occurred but have not been reported until after the end of the term. (Note: Third party claimants have two years after an incident to report a claim.)
PSIP Program Reserve:
The $1,000,000 reserve is maintained to ensure that the Program has enough funds to pay for two $500,000 claims (pool deductible) that may have been incurred but were not reported (IBNR). This $1,000,000 IBNR reserve is only needed once. The $447,205 surplus is above the IBNR reserve and is now available to be returned to the members of the PSIP.
How Premium Returns are Calculated:
The calculations are simple: Returns are payable to those properties participating in the Program at the time of the premium return, based on the percentage of the total Program premiums paid by the property in the previous three policy years compared to the total premium for the period. This percentage will be applied against the total amount of return premium.
Essentially, the longer a property has participated on the program, the greater its percentage of entitled premium return. A rental dealer that has been a CRA Insurance Program member since June 1, 2007 will receive an average return premium of approximately 14% of annual premiums.
Date of Return of Premium:
Cheques will be distributed by the end of March 2011.
Additional amounts will be returned in future to then-qualifying properties as future surpluses are accumulated.
Western Financial Group Insurance Solutions
Justin Friesen ext. 7211
Steve Baker ext. 7219
Ken Fingler ext. 7279