NPGA gathers information for proposed insurance program

The National Propane Gas Association is on a mission, a fact-finding mission.

Brian Richesson

In May, NPGA mailed surveys to member companies seeking information that will help further a proposed association-endorsed commercial liability insurance program. More than 110 surveys were returned in different levels of completeness.

“It’s a good number to at least get a picture of the industry,” says Gary France, chairman of NPGA’s Member Services Committee, which has been exploring such a program since early 2007. NPGA’s Executive Committee and its board of directors approved the initiative, and the committee has started to develop the details.

Insurance option

As proposed, the program would provide NPGA members the option of purchasing liability insurance through the association. The industry has been working with insurance giant Lockton to find a carrier.

For France, owner of Wisconsin-based France Propane Service Inc., implementing such a program comes down to stability in an industry perceived unfavorably by insurance companies. With this venture, NPGA hopes to improve the situation.

“One of the things we’re trying to do is at least have stability, so you aren’t worrying every year whether you’re going to be renewed or what the rates are going to be,” he says.

NPGA will have the responsibility of selling members on that stability, of getting enough members to buy into the program to make it work. The program must be attractive enough, through lower premiums, to draw retailers from their current plans. But will that be possible, given that NPGA and Lockton hope to generate their own revenue from the project?

In addition, some propane retailers have had trouble getting insurance based on past business practices. The new program would not guarantee coverage to all retailers, who would still have to be screened.

Creating a profile

Lockton plans to use information from the surveys to formulate a profile of the propane industry regarding past premiums paid, claims incurred and relevant exposure data such as payroll levels and gallons sold. Insurers would use these details to formulate rates.

“It gives Lockton a better idea for presenting to potential insurance companies” and obtaining a carrier, France says.

There is no clear timetable on implementing the program, the chairman adds. The next step involves Lockton formulating a proposal from information gathered in the surveys.

Several factors also may pose challenges, such as the up-and-down cycle of the insurance business and a lack of available data from the industry that would help improve rates. It also is unclear whether the survey information received will be enough to obtain a carrier for the program. After all, it has been more than 18 months and a carrier has yet to be found.

“Having enough information available,” remains a challenge, France says. “Lockton is capable of doing something for us if they have the right information. Until information is received and presented to insurance carriers, we don’t have much more than a theory at this point.”

Conflicting interests?

Also worth noting is the effect such a program would have on insurance companies that are dues-paying NPGA members. NPGA says many of its insurance member companies responded to the bid request, and a couple were selected to make presentations to the Member Services Committee.

“Whatever we do, we’re trying to be favorable to all members,” France adds.

NPGA cites member retention as an ongoing concern and says it is continually seeking benefits that will add value to membership. Just what benefits members will receive from this plan remain to be seen.

The Member Services Committee was scheduled to reconvene Oct. 5 as part of NPGA’s board of directors’ meeting in Milwaukee, and the longstanding, sometimes-contentious issue could be revisited.