Wednesday, July 24, 2013

MEMIC and Success

It's not often that there's a positive story to tell in workers' compensation. We are usually consumed with what's wrong, cost pressures, political turmoil and what not.

Every once in a while, though, there is a story about something going right.

MEMIC is one of those stories.

Maine Employers Mutual Insurance Co. was established through state legislative action on Nov. 13, 1992, to replace Maine’s workers’ compensation residual market pool.

Unlike other state funds, MEMIC does not enjoy tax-exempt status, contradicting the argument by some standard market carriers, who believe the resulting exemption from federal income taxes provides the funds an unfair competitive advantage that allows them to build up their surpluses.

Despite being subject to income taxes, MEMIC has grown a $350 million surplus, and continues to serve as a guaranteed fund in Maine, with approximately 96% of its 2012 premiums from Maine accounts. MEMIC also controls about a 62% share of the commercial market in Maine.

The company's 2012 combined ratio, after dividend amounting to more than 10% of premium, was 96.3%.

In addition, the company has grown aggressively outside of Maine.

In 2012, MEMIC reported direct written premiums of $202 million. Subsidiaries, MEMIC Indemnity Co., which was formed in New Hampshire in 1999, and the Vermont-domiciled MEMIC Casualty Co., accounting for business income from Connecticut, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania and Vermont.

In April, the company opened an office in Tampa with the goal of driving up new business in Florida.

The company focuses on the hospitality industry, light manufacturing, colleges and schools, and health care.

Michael Bourque, senior vice president for external affairs, tells WorkCompCentral, "We are not a traditional state fund.”

No kidding.

“We’ve taken the experience we’ve had here in terms of injury prevention and service and made that model come outside of Maine. While we’re not going to have anywhere near the dominant market share we have in Maine, we know that for a certain percentage in almost every market, service is going to matter,” said Bourque.

That's the key - service. Pricing may matter to employers that wrongfully focus on the premium bill once a year, but account service is what makes the difference for employers over the long term.

Much of the industry has lost the touch for proper account service and that may indeed be where MEMIC's competitive advantage lies. Slipping out of the bureaucratic state fund role and into a competitive mindset of a mutual insurance company, where the policy holders are also essentially the share holders, seems to have made a difference for this company.

I like business success stories, particularly in our industry. We don't get to read or hear many. It's gratifying to know that there is an insurance company that meets its obligations and does so efficiently in an insurance environment so many others find challenging.

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