Insurance marketplace in transition.Virtually every association that has a demographic base conducive con·du·cive adj. Tending to cause or bring about; contributive: working conditions not conducive to productivity. See Synonyms at favorable. to program development already has an insurance program or has had one. According to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. the fourth ASAE/Risk Management Services association-sponsored insurance program survey, conducted earlier this year, few associations are beginning sponsored-program operations anew a·new adv. 1. Once more; again. 2. In a new and different way, form, or manner. [Middle English : a, of (from Old English of; see of) + new , but many are expanding or improving their existing offerings and becoming more involved in the program management, marketing, or delivery of the programs that bear their most important asset: their good names. In fact, results from the 1996 survey indicate that future program growth will lie primarily with associations that already sponsor some form of program expanding and improving their existing offerings. Associations are becoming more involved through initiation initiation, the transition and attendant ceremonies, such as ordeals and rites, involved in passing from one state or status to another, often from childhood to adulthood. It was among the most important social institutions of early humans. of their own agency operations or more meaningful partnerships with administrators, brokers, and underwriters. By becoming more involved in the programs they sponsor, associations are attempting to increase the member-service value of those programs, and these associations are reaping significantly higher fee-income benefits as a result. More than 20 percent of the income that associations receive from sponsored programs comes in the form of agency commissions. If we include the income realized through captive captive said of naturally wild or feral animals kept in captivity for educational and scientific investigation with no attempt being made to domesticate them. , risk retention, and self-insurance self-insurance, n the setting aside of funds by an individual or organization to meet anticipated dental care expenses or dental care claims, and accumulation of a fund to absorb fluctuations in the amount of expenses and claims. operations, this grows to more than 40 percent. A good source of nondues revenue The 1996 survey indicates that the average annual revenue to an association is now more than $400,000 for a property/casualty program and nearly $263,000 for a life/health program. Even after their increased expenses, associations now realize average profits of $140,000 on property/casualty and $112,000 on life/ health programs. (See chart, "Program Revenues and Net Revenues.") These pure-profit figures are becoming more important as association executives feel increased pressures to find new income streams to supplement dues structures. The good news is that the market potential for sponsored insurance programs is enormous. Consider this: Associations are involved in the distribution of approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 8 percent of property/casualty insurance and 10 percent of life/health insurance. This represents association program premiums of approximately 40 billion. Intermediary Intermediary See: Financial intermediary intermediary See financial intermediary. commissions of 20 percent would produce a total of $8 billion. As association-sponsored programs assume a greater percentage of total industry premium -- and most experts agree that this will be the case -- these income figures will, of course, increase. Increased involvement and risk Past surveys indicate that about one third of all associations have at least one sponsored program -- either a life/health- or property/ casualty-related program. In this maturing market, we find that more than half of these associations have increased their involvement and now sponsor both life/health and property/casualty offerings for their memberships. Moreover, 43 percent of all associations with sponsored property/casualty programs are now involved in agency operations (either on their own or as a joint venture with an existing agent or administrator) or participate in a captive insurance Captive insurance companies are limited purpose insurance companies established with the specific objective of financing risks emanating from their parent group or groups, they sometimes also insure risks of the parent company's customers. company, risk retention group, or self-insurance program. This increased involvement usually results in a greater business risk and risk of the association's reputation. It's it's 1. Contraction of it is. 2. Contraction of it has. See Usage Note at its. it's it is or it has it's be ~have very important for an association to carefully evaluate the risk associated with more aggressive program involvement before proceeding. Likewise, increased involvement may present additional tax implications that associations will want to consider. (See sidebar (1) A Windows Vista desktop panel that holds mini applications (gadgets) such as a calendar, calculator, stock ticker and Vonage phone dialer. It is the Windows counterpart to the Dashboard in the Mac. See Windows Vista and gadget. , " Tax Implications for Sponsored Programs.") Survey results The 1996 survey revealed some interesting facts and trends about association-sponsored programs. Increased property/casualty premium volume. The 1993 survey reported an average premium volume of $7 million for property/casualty programs. The 1996 survey reported an average of almost $7.8 million. Increased association involvement. A clear trend toward becoming more aggressively involved in program management and delivery exists among associations with both property/casualty and life/health sponsored programs. Today, more than 43 percent of all association groups with sponsored property/ casualty programs either have their own agency, a joint-venture-agency arrangement, a captive insurance company, a risk retention group, or a self-insurance plan for their members; 38 percent simply sponsor the programs of a commercial insurer An individual or company who, through a contractual agreement, undertakes to compensate specified losses, liability, or damages incurred by another individual. An insurer is frequently an insurance company and is also known as an underwriter. ; and another 19 percent sponsor the programs brought to them by an existing agent or broker. (See chart, "Simple Versus Complex Sponsorship.") As for life/health programs, 26 percent of respondents In the context of marketing research, a representative sample drawn from a larger population of people from whom information is collected and used to develop or confirm marketing strategy. indicated that they either owned an agency or participated in a self-insurance plan. Forty-eight percent sponsored an insurance carrier's program, and 26 percent sponsored the program of an agent or broker. Program maturity. The oldest property and casualty program reported began in 1906, and the oldest life/health program began in 1932. However, the year most often cited as the year of program initiation for both property/casualty and life/health was 1986. This was a difficult insurance year, particularly within the property/ casualty market, for which coverage was hard to come by and insurers weren't were·n't Contraction of were not. weren't were not easy to find. Associations responded by doing all they could to assist with sponsored-insurance initiatives. (See chart, "Percentage of Programs Started by Year.") In the 1996 survey, few survey respondents indicated an interest in starting either life/health or property/casualty programs. While the interest in new property/casualty programs was slightly higher than for life/ health programs, it too was much lower than in prior years. We take this as confirmation of what many industry experts believe -- the association-sponsored insurance program marketplace is quite mature and may even be approaching the saturation point saturation point n. 1. Chemistry The point at which a substance will receive no more of another substance in solution. 2. The point at which no more can be absorbed or assimilated. . Exclusivity. Most associations with sponsored programs continue to restrict participation to their active members. This was true for 64 percent of property/casualty and 80 percent of life/health programs. Member participation. Based on the median, 23 percent of the members of associations sponsoring property/casualty programs participated in those programs. This is virtually unchanged since the 1993 survey. Interestingly enough, however, the median participation rate for life/ health programs has decreased from 15 percent to 10 percent. This may indicate that a number of association groups have had difficulty with their sponsored health program -- particularly with rising premium rates. New member development. Associations with sponsored property/ casualty programs report that they continue to attract new member -- 69 percent in 1993 and 62, percent in this 1996 report. Conversely con·verse 1 intr.v. con·versed, con·vers·ing, con·vers·es 1. To engage in a spoken exchange of thoughts, ideas, or feelings; talk. See Synonyms at speak. 2. , while 62 percent of the associations with life/health programs indicated that they attracted new members in 1993, only 49 percent indicated that they did so in 1996. (See chart, "Percentage of Programs Cited as Attracting New Members: 1993. Versus 1996.") This could be the result of association groups having problems with rate increases in their sponsored group health operations. Personnel equirements. In previous surveys, respondents indicated that only about one fourth of one staff person's time was needed to administer To give an oath, as to administer the oath of office to the president at the inauguration. To direct the transactions of business or government. Immigration laws are administered largely by the Immigration and Naturalization Service. the sponsored programs. More than likely this was because most programs were still in the form of pure sponsorship of the operations of an existing insurance carrier, broker, or administrator. With associations becoming more involved in the operations of their sponsored programs, personnel involvement has risen. Associations now report that their programs require about one half of one staff member's time. Marketing alternatives. The most effective promotion techniques reported by sponsors of both property/ casualty and life/health programs was direct mail. The second/most-effective method was conferences, with trade publications and telemarketing telemarketing, the practice of selling goods or services to customers by means of the telephone or of surveying consumer preferences in telephone conversations. in a virtual dead heat for third. Broadcast fax was, by far, the least effective marketing technique. A winning partnership This most recent survey was the first in which we asked about satisfaction with insurance industry partners -- agents, brokers, insurers, claims administrators, captive managers, and the like. We found that most associations were quite pleased with their program partners, awarding grades ranging from A to B. In turn, these partnership arrangements allow insurance industry participants to realize continuity in their relationships with associations. This means that they can effectively invest in automation and service efficiencies that will increase future income and client service potential. We are convinced that this survey clearly reflects a marketplace in transition. Not only will the associations that become more aggressively involved in their program management be able to produce better benefits for their members and realize increased fee income, but the insurance industry partners willing to invest in the future and allow associations a reasonable degree of control and involvement will be able to develop long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. , profitable, and growing operations. HIGHLIGHTS * The market potential for sponsored insurance programs is enormous. * Future program growth lies primarily with associations that already sponsor some form of program expanding and improving their existing offerings. *By becoming more involved in the programs they sponsor, associations are attempting to increase the member-service value of those programs, and they are reaping significantly higher fee-income benefits as a result. Get the Full Survey This article is based on a survey of association-sponsored insurance programs conducted by ASAE ASAE American Society of Association Executives ASAE American Society of Agricultural Engineers (Society for Engineering in Agricultural, Food, and Biological Systems) ASAE Alkali-Sulfite-Anthraquinone-Ethanol and Aon Specialty Group's Risk Management Services, Washington Washington, town, England Washington, town (1991 pop. 48,856), Sunderland metropolitan district, NE England. Washington was designated one of the new towns in 1964 to alleviate overpopulation in the Tyneside-Wearside area. , D.C. A new ASAE resource, Association Insurance Program Guide and Survey Report, includes the full results of the 1996 survey. The cost is $83 for ASAE members and $99 for nonmembers, plus $6.25 shipping. Add sales tax sales tax, levy on the sale of goods or services, generally calculated as a percentage of the selling price, and sometimes called a purchase tax. It is usually collected in the form of an extra charge by the retailer, who remits the tax to the government. for books shipped to Washington, D.C., addresses. To order, request product AMR (1) (Adaptive Multi-Rate) A variable rate speech codec selected by the 3GPP for the 3G evolution of the GSM cellphone system (WCDMA). Using the Algebraic CELP (ACELP) compression technology, AMR provides toll quality sound at transmission rates from 4.75 to 12. 213712 from ASAE's Member Services Center by phone, (202) 626-2748; fax, (202) 408-9634; or e-mail, books@asae.asaenet.org See .org. (networking) org - The top-level domain for organisations or individuals that don't fit any other top-level domain (national, com, edu, or gov). Though many have .org domains, it was never intended to be limited to non-profit organisations. RFC 1591. . Edgar W. Armstrong is managing director and Paul Paul, 1901–64, king of the Hellenes (1947–64), brother and successor of George II. He married (1938) Princess Frederika of Brunswick. During Paul's reign Greece followed a pro-Western policy, and the Cyprus question was temporarily resolved. A. Buse and John W. Weisner are consultants for Aon Specialty Group's Risk Management Services, Washington, D.C. |
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