CSA Fund Issues Dividend; Makes the World a Better Place for Members

By Jim Moody, CAE
CSA President

Most of you are aware that CSA offers a self-insured fund for workers' comp insurance in Georgia. It’s a unique program that sends all of its profits back to Fund members as dividends.

I wish we could expand our program to other states, but Georgia state law prohibits the Fund from crossing state lines (except when simply delivering materials). We’ve looked at ways to start new Funds in other states, but today’s market realities are quite different than the ones that existed when our Georgia Fund began. Although it’s technically possible to do it, every one of our trusted advisors tells us it would be foolish to try.

But, for those of you in Georgia, this remains a financially lucrative opportunity.

The Trustees of our Fund met last week and declared dividend for 2016 of just a hair under $800,000. That money will go out in May and will be prorated by the premium paid in the years for which dividend is declared (typically the prior three to five years). It’s a complicated formula that I’d be happy to explain to anyone who wants to know the details, but reading about it would be even less interesting than watching paint dry. The bottom line is that our Fund members are in line for a pretty good return on their workers' comp investment.

If you don’t live in Georgia, you still benefit from the Fund. The Fund pays CSA a management fee each year as proscribed in an agreement between the Fund Trustees and the CSA Board of Directors. Ultimately, this allows CSA to provide services it otherwise could not afford to provide and allows us to maintain a “break even” mentality on our educational events, thus keeping the cost lower to everyone.

The Fund operates a bit differently than a regular insurance company does. Yes, we have the same obligations to pay claims and take care of injured workers in the same way you’d expect from any other insurer, but the mentality is different. Fund members are owners of the company, not just clients. The relationship means that our members are typically more helpful in sharing information and doing things to help people get back to work. It also means we guard every penny. You aren’t dealing with a vast bureaucracy where people are simply pushing paper that doesn’t matter to them. We have one claims adjuster, and she gets to know all our Fund members and their injured workers. That relationship makes a difference in ensuring that injured workers get the best care and return to work as quickly as is reasonable.

Our loss ratio typically is below 50 percent (meaning that for every premium dollar we take in, we spend less than half on claims). The market average is in the high 60s, and the generally accepted line for profitability is 70 percent. We’ve had several years below 30 percent, which is somewhat unheard of. We attribute it to three things:

  • Our Fund members focus more on safety because they have skin in the game. That means higher dividend, but more importantly it means safer employees.
  • We have a full-time safety expert, Victor Shell, on staff to help all of our members improve safety.
  • We have the best claims handling you’ll find anywhere in the country. Sandy Brooks, our adjuster, is appropriately aggressive. She knows how to get workers back on the job and claims closed.

Because we have been so fortunate with our losses, we’ve had the luxury to be very conservative. By that, I mean that when a claim comes in, we put the highest dollar amount we think that claim could possibly cost us in reserve. The easiest way for a small Fund like ours to get into trouble is by under-reserving. Then on top of that, our actuary adds an additional amount for “just in case.” Beyond that, we have millions in surplus, just in case we have an unusually bad year. And on top of that, we are ourselves insured against shock losses. In the report to our Trustees last week, both our actuary and auditor said we were in amazing financial shape -- amazing good. A recent audit by the Georgia Department of Insurance also found no material deficits.

So, we have a Fund that is financially strong and continues to generate strong dividends for Fund members. Our up-front rates are also very competitive – we believe we have to provide the right price to you without factoring in the dividend.

If you have Georgia operations and are not a member of the Fund (there aren’t many of you, but there are still a couple lost lambs we want in the fold), ask yourself, "What kind of return am I getting on my workers' comp?" Do you know your adjuster? When you have injuries, does your insurer work with you and listen to you, or are you kept out of the loop? For us, it’s not about making money. We measure our success in whether we make you stronger and more profitable. Isn’t that the kind of company you want taking care of you and your employees?

Many thanks to our Fund Trustees for their wise guidance. The serve without compensation or nice trips (unless you count a trip to downtown Tyrone as nice, in which case you need to get out more). Trustees include:

  • Hubert Lang, Lang Building Supplies, Brunswick
  • Billy Badger, Howard Lumber, Evans
  • Tahl Barrett, Short & Paulk Supply, Tifton
  • Stephanie Dyson, Georgia Hardwoods, Buford
  • Jerry Bigham, Maner Building Suppy, Augusta
  • Chuck Bankston, Bankston Lumber, Barnesville