Risk-Sharing SDPAA Celebrates 27th Successful Year
For the South Dakota Public Assurance Alliance (SDPAA), 2013 ended on a very positive note both financially and the numbers of members. Cash and investments of the SDPAA exceed $29 million at the end of 2013 (unaudited). Total membership for the same period of time stands at 405. With these numbers the SDPAA is one of the largest public entityowned risk sharing pools of its kind in South Dakota.
Although Hagan Benefits, Inc., of Sioux Falls, has provided the marketing services to the SDPAA since its inception in 1987, it wasn’t until the beginning of 2005 when Hagan Benefits was also given the opportunity to perform the administrative services for the liability and property pool. Member equity at the end of 2004 was slightly less than $1.3 million. Today that member equity is at $14.5 million. Cash and investments, during that same period, have grown from about $16 million to the current $29 million.
During the first year of operation of the SDPAA, Hagan Benefits signed up 65 members in the new-founded risk sharing pool. Those numbers have continued to grow and at the end of 2013 the membership stood at 405 members. The membership includes 168 cities; 53 counties; 74 townships; 64 conservation districts; and, 46 special district entities.
Although the program began strictly providing liability coverages for local government entities in South Dakota, in 1995, eight years after its beginning, the SDPAA added property as an additional coverage that could be obtained through the pool. Both the liability and property programs have been very successful. However, by providing extremely broad coverages to its members also means it has had to deal with many claims and some of those individual claims have reached into the millions of dollars. The SDPAA has protected the assets of the membership by purchasing reinsurance for major claims. The Pool has a retention of $500,000 on any liability claim and $250,000 on any property claim. Individual claims larger than the retention are then collected from reinsurance carriers. Claims Associates of Sioux Falls handles all claims on behalf of the SDPAA. 46
With the introduction of property coverage to the pool, the SDPAA also determined there was a need for loss control specialists to assist the membership in their loss control efforts. Safety Benefits, Inc., of Mitchell and Sioux Falls, was retained to provide those services. In addition, Safety Benefits also provides professional services in the area of valuation of individual properties and structures for the membership. All of the services of Safety Benefits are provided at no additional cost to the members.
As the SDPAA entered its 28th year of business, the rates established for 2014 are basically the same as they were when the program started in 1987. Pretty amazing when you consider what has occurred in the rest of our economy during that same period of time. In addition to stable rates, the SDPAA provides various credits to its members at renewal. Those credits include renewal credit, loss control and loss ratio credits and it can include a law enforcement credit if that coverage is carried by your entity.
During 2013 the SDPAA Board of Directors added the position of Executive Director. Serving in that capacity is Judy Payne, email jpayne.sdpaa@sdmunicipalleague.org and phone number is 605-224-8654.
If you have underwriting, administrative or marketing questions, you may contact Hagan Benefits at 877-2731712. Although the Hagan Benefits contracts with the SDPAA are not being extended after December 31, 2014, the personnel at Hagan will continue to provide you the same great service for which you have become accustomed during calendar year 2014. Gary Drewes, Marketing Director South Dakota Public Assurance Alliance
SOUTH DAKOTA MUNICIPALITIES
