Association Purchasing Groups

ASSOCIATION
PURCHASING GROUPS

FDL 46 Years Experience

U.S. Licensed Broker

· BENEFITS OF AN RPG
A key benefit for an Industry Association and its members is the ability to provide new and better membership services. This may include; Group Health, Group Life, Retirement Planning Services, and Property and Casualty Insurance on a GROUP basis, and even access to personal lines insurance.

A recent survey of one Association sponsored Property and Casualty insurance program identified that the Association; (1) produced over $120,000 of income from the programs they were sponsoring; (2) this required less than $10,000 in administration related expenses to the Association, and (3) required less than 25 percent of one staff members time.

· RPG STRUCTURE

A Risk Retention Purchasing Group, formed and operated by an Industry Association, operates like any other group of “LIKE KIND” members that join together for a designated mutual purpose. In the case of an organized Purchasing Group, the intent is to BUY GROUP Insurance coverage that can be offered to members of the Industry Association.

· INDUSTRY ASSOCIATION QUALIFICATIONS

In the past, larger Associations have mostly sponsored Life/Health and Property/Casualty programs. TODAY no Association should consider itself too small or not qualified to sponsor an insurance program for members. The classification of the members and their insurance needs are often more indicative of the potential for a successfully sponsored insurance program. The size and/or number of members alone may suggest which program should be developed. By example, there is an Association of fewer than 50 members, that has over $120 million a year in premium in their insurance programs. There are other member groups where the average members premium for LIABILITY INSURANCE is less than $2,000. Size does not matter.

· OPPORTUNITY

A recent survey of Associations, (some 35,000 nationwide) identify that over seventy percent (70%) DO NOT sponsor or support any kind of insurance program for members.

In the future, Association sponsored or supported insurance programs will have to be made available for the Association to remain competitive with other Associations in their same industry. An organized Purchasing Group allows Industry Associations to exercise greater control over membership by providing membership benefits on a GROUP basis.

· ADVANTAGES

An Association organized Purchasing Group is able to respond to the needs of its members. And, the insurance coverage can be tailored to the specific needs of each member. Organizing a Purchasing Group is easy and requires very little start-up capital. A Purchasing Group program can be operational in days and in a couple of weeks operating NATIONWIDE, if that is the purpose of the Association.

· INCOME SOURCE

While most industry Associations are formed as not-for-profit entities, this should not mean that the Association does not need income to stay in business. Because most Association executives are reluctant to raise dues, the additional Association income from sponsored or supported insurance programs is a perfect way to generate additional income and attract new members.

F. Darrell Lindsey
U.S. Licensed Broker
Captive/RRG/RPG Manager

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