School Board Captive Venture is industry first
Pennsylvania School Boards Association has become the first non-profit school board association in the US to run its own captive. SBIC of PA has been formed from the merger of assets and liabilities of PSBA's Bermuda-based School Boards Insurance Company with the association's newly established Pennsylvania Insurance Corporation.
The new entity will enable the PSBA Insurance Trust to continue providing Pennsylvania school districts with risk management services, endorsed insurance products and legal liability and unemployment compensation insurance programmes. The Pennsylvania Department of Insurance has approved the Pennsylvania School Boards Association's application for a license to operate School Boards Insurance Company of Pennsylvania, effective 1 January 2006.
According to the department, the new entity will enable the PSBA Insurance Trust to continue to provide Pennsylvania school districts with risk management services, insurance products and legal liability and unemployment compensation insurance programs "This is an historic achievement for PSBA and our members," said Thomas Gentzel, executive director of PSBA. "In addition to becoming the first association to operate an insurance company, PSBA has accomplished a rare feat in bringing business and jobs back onshore to the commonwealth." Previously SBIC performed all operations and services for school districts through its Bermuda offices.
The new corporation will operate exclusively in Pennsylvania. "Bringing the SBIC corporation on-shore allows the association to have more control over the delivery of insurance services and programmes to our members," said Wayne Smith, PSBA assistant executive director for insurance services and president of SBIC of PA. "PSBA has a long history of providing insurance services to its members. This new corporation will enhance our success and offer new opportunities in the future." PSBA's efforts to provide insurance services for its members began in 1971 with the formation of the Pennsylvania School Boards Association Insurance Trust.
Over the years, the Insurance Trust offered risk management and other services, as well as endorsed insurance products from various insurers, to PSBA members. The trust also provided members with legal liability and unemployment compensation insurance programs. In 1978, the Insurance Trust formed SBIC as a captive insurance company in Bermuda. Initially, this entity assumed the risk relative to the Insurance Trust's unemployment compensation programme.
In the ensuing years, the corporation provided reinsurance programs to PSBA members in the areas of workers' compensation, general liability, professional liability and property and casualty programmes. With the Insurance Department's approval, the merger of SBIC into SBIC of PA will begin immediately and take several months to complete. During this time, PSBA members will not experience any changes in coverage or services.
