The STICO Mutual Insurance Company, a Risk Retention Group is a policyholder owned insurance company that has been in operation since 1988.  Originally formed as an association captive, STICO Mutual converted to a risk retention group in 2002 in order to obtain authorized insurer status in all states where STICO Mutual is registered.

Formation of the STICO Mutual Insurance Company was based upon the need for reliable, dependable coverage. The premiums charged are based upon actual risk assessment and claims history. A claims policy has been implemented that enables quick, efficient and knowledgeable response by the company in the event of a claim.  STICO Mutual continues to stay true to its initial objectives:

• To ensure long-term availability of liability insurance and warranty insurance for the Policyholders.

• To build up its reserves and surplus so that premiums can be stabilized or reduced, dividends are paid and/or higher and broader coverage limits can be provided.

• To provide retrospective coverage to the initial Policyholders for those years in which coverage was otherwise available.

• To provide an accurate and fair premium rate structure based upon reliable loss history.

• To maintain a tough, yet consistent claims policy that utilizes a knowledgeable claims-handling team.

STICO Mutual is one of over 4,000 captives worldwide. There currently are over 800 captives domiciled in the United States.  These captives, together with other self-insurance mechanisms represent over $100 billion in annual premiums or over 25% of the total corporate insurance premiums paid.

Insurance is basically a risk financing transaction. Premiums paid by you represent deposits at an insurance company from which future claims may be paid. Insurance companies charge a substantial operating expense load (20-30%) of each premium dollar to hold your premium in the event of a claim.

If you understand that insurance is a financing mechanism, you would likely agree that you would eventually pay for your own claims plus insurance company expenses.  If you are fortunate to avoid claims, the remaining 70-80% of your premium, after expenses, becomes the insurance companies profit.

The recognition that insurance is essentially a financing mechanism is one of the primary factors in the formation of captives. A captive succeeds through improving the efficiency of its operations over the standard insurance company. Equally important in the success of a captive is to select risks that offer reduced probability of loss.  This is accomplished by selecting a class of business (in this case, STICO Mutual manufacturers or petroleum equipment contractors) that innately has a strong risk management program in place or can easily adopt such a program.

Finally, a captive needs to be responsive to claims that may be reported and to provide knowledgeable management of the claims process.

The key to STICO’s past success has been cost control, and selective underwriting combined with knowledgeable, responsive claims handling.  Our future is dependent on building upon this successful formula.

STICO’s Member Insureds who have paid premiums have received needed coverage at the lowest net premium cost.  They have created an alternative insurance mechanism that has provided stable premium rates and reliable, long-term products and completed operations liability coverage, including pollution liability. Over the past 15 years, various carriers have entered the general liability and pollution liability arena, but have lacked a long-term commitment to the tank and equipment industry.

For more information on Risk Retention Groups, please feel free to visit the “Education Center” of the leading industry trade publication, Risk Retention Reporter.