Safety group dividend program gives profits back to habitational insureds

Habitational insurance programs are no different than any insurance program — safety, loss control and risk management practices are essential to its success. One habitational property insurance program offers rewards in the form of dividend payments to its insureds for attaining such success.

Northumberland, Penn.-based Keystone Insurers Group operates a unique habitational properties program for insureds that includes a safety group dividend plan, something the company claims is a one-of-a-kind in the habitational property market. Safety dividend plans are not commonplace in insurance programs, says Joseph P. Joyce, Keystone’s vice president, Property & Casualty, but they do exist. But he says, Keystone’s program “to my knowledge is the only one in the habitational industry.”

The safety group dividend plan provides apartment and residential condominium owners with the opportunity to participate in the profits of the program, if the program is successful. “It’s strictly based on the profits of the program,” Joyce said. “If the program earns a profit for the insurance carrier then a portion of the profits are paid as dividends to our insureds.” The habitational dividend program will pay up to a 20 percent dividend.

Keystone’s habitational program is underwritten by Mercer Mutual Insurance Group, and is available exclusively to Keystone agency members located in Pennsylvania.

Keystone launched the program back in 2001, a time when the habitational class of business became very hard. “At that point, just having a market was something, and the fact that we were able to produce a dividend plan in addition to that was very unique,” Joyce added.

While the program has continued to grow in a softer market, growth is not the main objective, Joyce noted. “One of the things we focus on very much is the profitability side,” he said noting that the loss ratio for the program for the most recent six years, 2002-2006, is 20.8 percent. “That’s what the safety group is all about … to give them profitable results and to have our insureds participate in those profits.”

To assist insureds with maintaining the program’s profitability, Joyce says Keystone regularly writes safety and loss control articles for trade publications or industry associations, as well as provides individual risk management activities with each individual risk.

Another good feature of the safety group, Joyce added, is peer pressure.

“The individual accounts that are written in the group want to see the group perform profitably, so they talk about it amongst themselves as well,” he said. Plus, the insured doesn’t bear any of the risk, Joyce added. “It’s not like a captive where an insured is bearing some of the risk. … But if the program is profitable they do participate in the profits.”

And the icing on the cake for agents comes when the insurer issues the dividend checks. “Our agents will deliver those checks personally so it gives them another opportunity to enhance their relationship with the insured,” Joyce said. “That’s always a nice thing.”