INTERMODAL INSURANCE COMPANY FORMED

New Risk Retention Group pledges to provide the best insurance rates to the best intermodal drivers

WASHINGTON , D.C. , Jan. 15, 2004 – Driven by the necessity to obtain affordable liability insurance in an industry threatened by the exodus of traditional commercial insurance carriers, five California intermodal trucking companies have recently joined forces to found the Intermodal Insurance Company (IIC), a Risk Retention Group (RRG).

IIC is the first insurance company of its type to specialize in the intermodal industry, which primarily transports cargo containers from and to ships and railroads. In preparation for starting up operations, it was also the first company to conduct an actuarial study of this specific market segment. Domiciled in Washington , D.C. , IIC is initially doing business in California , but plans to expand to port and rail centers throughout the country in the future.

Risk Retention Groups came into being in 1986 when Congress enacted the Liability Risk Retention Act (LRRA), which allows firms to have greater control of their liability insurance programs by retaining the risk themselves through direct ownership of their own insurance company. Each member company of IIC is a stockholder and plays an active role on committees that guide the decision-making process as the company grows.

“In the face of the growing liability insurance crisis, our quest to find the financial protection we needed led us to an alternative solution to traditional insurance,” said Intermodal Insurance Company President Ron Guss of Intermodal West, Inc., Pico Rivera , who is serving a two-year term at the company's helm. 

“Since we know the intermodal trucking business better than any commercial insurance company could, we felt we were uniquely suited to establish our own company in accordance with the Act,” he said.  “We were very pleased with the cooperation we received in the District of Columbia , where officials were flexible and quick to respond to filing deadlines and other essential details. Now our goal is simply to provide the best liability insurance rates to the best drivers.”

Two years in the making, the new company was organized as a captive insurer in the District of Columbia under the Captive Insurance Act of 2000, and has been capitalized by the founding California insured/member intermodal trucking companies.
Captive insurance companies are considered by most industry experts to be superior risk management tools because business owners are able to provide for the insurance needs of their businesses in a more cost-effective manner.

“The establishment of a Risk Retention Group for the intermodal freight industry is an ideal application of the Liability Risk Retention Act because it will serve a special niche within the transportation niche,” said Michael Rogers, president of Risk Services, LLC of Sarasota, Fla., whose company will provide captive management services to Intermodal.

“I believe reinsurers are more comfortable with the nuances of intermodal trucking than are the traditional insurance companies that don't distinguish intermodal haulers from other transporters,” he said. By contrast, Rogers said those insured by Intermodal will pay premiums based upon the safety performance of other intermodal companies only. “Unfortunately, if it has wheels, the traditional insurance companies tend not to want to touch it.”

“The timing is right for this company to come into being,” said Guss. “We recruited the best talent in the insurance business to form Intermodal and created business partnerships that will ensure our success, such as entering into an agreement with one of the top reinsurers in the world.”

IIC l will issue occurrence-based commercial automobile liability insurance policies to member/owners with a $1 million combined single limit and contractual trailer interchange. It has protected its exposure to losses by purchasing excess insurance from approved reinsurers who will limit the company's net retention to no more than $250,000 per occurrence.  It hopes to insure up 2,000 power units in its first year of business. Ideal fleet sizes range from 20 to 250.

To be insured by IIC, members must meet eligibility requirements in accordance with its published guideline and provide a capital and surplus contribution through a purchase of company stock that represents at least 33 percent of their annualized first year's premiums. Exceptional terms are available for a prospective insured to finance the premium and capital requirements.

Despite the initial capital investment required in the first year, prospects considering the IIC should still expect to pay several hundred dollars less per power unit than they currently do for liability insurance and trailer interchange. However, in the second year, with the capital contribution satisfied, the net cost will be 20 to 25 percent below average standard trucking insurance rates. Additionally, Guss believes they are certainly better off paying their premiums to a company they own, where they can anticipate building equity as they maintain high safety standards that will help minimize loss.

Guss believes the new venture will have a distinct advantage over traditional insurance companies because its owners live and breathe intermodal trucking, which is the only business Intermodal is mandated to serve.  “In effect, we can be much more responsive to our insured because they are us ,” he said .  “Together, we have a unique opportunity to set a new standard of excellence as we all share in the success of the company. We're looking forward to securing more members from around the nation who have the best safety records.”

He is confident that his fellow company owners will be more attuned to good quality loss control and claims management activities because of the financial incentive that comes with the partnership.  However, to underscore the new company's commitment to safety and reducing liability claims, the insured truckers will participate in comprehensive safety training programs, including a safety performance evaluation using the same criteria as a Dept. of Transportation safety audit.

Joining Guss as company officers and founders are Vice President J. Thomas Avery of Avery & Avery International, Inc., Walnut, and Secretary/Treasurer William A. Cornell, Jr. of the James Brooks Company, Inc., Firant.  The other founding board members in the intermodal industry are C. M. Suh of Calko Transport Co. Inc., Compton, and Asdrubal Gröshel of Tristar Express, N.C., Inc., Oakland. 

Claims services are provided by Southland Claims Service, Inc. of Garden Grove , Calif. Located in Los Angeles , T. Zack Cooper, Sr., vice president, Transportation, J. Gregory Brown & Co., is the exclusive agent and retail-marketing associate.  The Actuary is Milliman USA, Inc. of Dallas , Texas . Safe Performance, Inc. of Hermosa Beach , Calif. and Trukspect, Inc. of Monterey Park , Calif. will provide loss control. Headquartered in Oakbrook Terrace , Ill. , Casualty and Surety of Illinois is the program underwriter and policy issuer. The program consultant is Jay Ginnow, vice president, Bliss & Glennon, Redondo Beach , Calif.   The defense consul is Hosp, Gilbert, Bergsten & Phillips of Pasadena , Calif.   Legal consul in Washington , D.C. is Arthur D. Perschetz of Muldoon, Murphy & Faucette, LLP. Cooper, Ginnow and B. Troy Winch of Risk Services, LLC are also members of the Intermodal Board of Directors.

For more information, contact Cooper at (213) 243-4412.

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