Poolman Announces Unprecedented $2.5 Million Premium Credit to State and Local Governments
Posted on 5/21/2007
FOR IMMEDIATE RELEASE
Contact: Cecily Fong
May 21, 2007
Bismarck, ND - North Dakota Insurance Commissioner Jim Poolman today announced the State Fire and Tornado Fund, a state-run commercial property insurance program administered by his department that insures around $7.3 billion worth of property, will, for the first time ever, give a 50% premium credit to all of its policyholders for the new policy year effective July 1, 2007. The Fund provides building and other property coverage for the state and its political subdivisions for fire, theft, weather damage and vandalism.
Poolman said, "As a result of lower number of claims, less severe claims and efficient administration, the Fund is in an incredibly strong financial position. This is a direct savings of $2.5 million to state and local governments that will ultimately alleviate some of the burden on property tax payers."
In 2001, the Fund, which was hit by $4.95 million in catastrophic storm-related and vandalism claims, has recovered well in the last several years. In addition, the Fund limits its exposure by purchasing reinsurance which transfers all or part of the Fund's risk to another insurance company for claims in excess of $1 million dollars up to $100 million dollars.
The Fund, which is required by law to maintain a minimum surplus balance of $12 million, currently has a balance as of March 31, 2007 of $26.4 million which is $13.3 million more than in 2002. In addition, the Fund earns investment income in addition to the premiums it collects, which contributes to the Fund's fiscal health. After taking into account these earnings, in July 2007, the balance is expected to be around $31.9 million.
"As part of our administration, we have encouraged our policyholders to focus on building maintenance, improvements and other risk prevention measures that have reduced the risk of loss and damage to the property the Fund insures. In addition, we have suggested that this premium credit be used to continue these efforts to further mitigate future losses," Poolman said.