| Summer 2008
Texas Mutual Pays $150M in Policyholder Dividends
Dividends reward loyal customers who control their claim costs
By David Wylie
Editor
If your employees can't seem to get excited about safety, Sally Casas of San Miguel Electric has a suggestion.
"We have a cash incentive program. If any of our crews go one quarter without a lost-time injury, every member gets a monetary reward. It's really helped raise awareness of safety,” said Casas.
San Miguel Electric funds the incentive program by dipping into the $525,049 in dividends Texas Mutual has awarded the company during the past six years.
“It's a small price to pay,” added Casas. “Our employees are more aware of their surroundings and how they do their jobs. We've definitely seen a reduction in workplace accidents.”
"We have a cash incentive program. If any of our crews go one quarter without a lost-time injury, every member gets a monetary reward. It's really helped raise awareness of safety.”
—Sally Casas
San Miguel Electric
San Miguel Electric is one of approximately 38,000 policyholders who earned a share of Texas Mutual's $150 million 2008 dividend plan. Policyholders who focused on safety and controlled their claim costs improved their chances of qualifying.
The 2008 dividend plan included an annual component and a retention component. The annual component rewarded policyholders who had good loss ratios on their policy that expired in 2007.
The retention component rewarded policyholders for up to five consecutive years of good loss ratios with Texas Mutual. Policyholders' dividend earning potential increased each year, peaking in the fifth year.
San Miguel Electric earned its first annual component payment in 2003. The $9,486 check was nice, but it was modest compared with the $135,532 check the company earned in 2007, thanks to the retention component.
“Texas Mutual has proven that it will reward loyal customers,” said Casas. “Our employees work hard to stay safe on the job. It's so gratifying to see our dividends grow each year as a result.”
Casas knows that dividends are not an automatic benefit. They are the product of sound business decisions, including solid safety programs, careful claim management and a commitment to helping injured workers get well and back on the job.
The Texas Mutual website is loaded with free information that can help employers improve their chances of earning a dividend. The site offers downloadable Return-to-Work Kits for large and small businesses. Policyholders can visit the multimedia resource center to get DVDs, videos, pamphlets and other tools to improve their safety program.
Like San Miguel Electric, Fred Haas Interests in Houston appreciates its employees' role in helping the company control its loss ratio and earn dividends. Missy Bartell, vice president of Fred Haas Interests, said the company used its first dividend check to offset its premium. A couple of years ago, Bartell had another idea.
"We used some of the dividend earnings to fund a 401(k) for our employees. The company matched the funds, and that was an incentive for our employees to keep our claims low."
—Missy Bartell
VP Fred Haas Interests
“We used some of the dividend earnings to fund a 401(k) for our employees,” said Bartell. “The company matched the funds, and that was an incentive for our employees to keep our claims low. Every time we get a dividend, I have to stop and high-five myself. Texas Mutual has been great for us.”
As pleased as employers are with Texas Mutual's dividend plan, it traditionally had one gap: It left new policyholders on the outside looking in.
Texas Mutual remedied that last year when it launched the early-qualifier dividend, shortening the time that first-year policyholders must wait before they are eligible for a dividend. Texas Mutual plans to mail early-qualifier dividend checks in November.
“We want our early qualifiers to take a minute to pat themselves on the back for their performance,” said Ken Lauber, Texas Mutual vice president of field operations.
“But, we also encourage them to remember the long-term goal. If they continue to focus on safety and claim cost control, they improve their chances of increasing their dividend through their fifth year with us.”
Texas Mutual has paid more than $595 million in dividends to qualifying policyholders since 1999. It has paid about $42 million more in dividends to members of its safety groups. Many policyholders have qualified for dividends under both plans.
Texas Mutual cannot guarantee future dividends, but it is committed to rewarding loyal policyholders when financial conditions allow.
“They've returned more than $121,000 to our company over the past seven years,” said Paul Workman of Workman Commercial Construction. “That's money we've used to grow our safety programs, train our people and improve our bottom line.”
“We have a great relationship with Texas Mutual,” added Workman. “We look forward to being with them for a long time to come.”
Workman isn't alone. Eighty-two percent of Texas Mutual policyholders chose to renew with us in 2007.
Texas Mutual Insurance Company encourages employers to consider its dividend program when their policy expires. Employers can review their personal dividend history by visiting texasmutual.com, clicking on dividend reports and entering their Texas Mutual® online username and password.
For details about the 2008 dividend plan, policyholders should ask their agent, visit the News & Publications section at texasmutual.com or call (800) 859-5995.
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