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While the most innovative and conscientious insurance providers continue to forge new and cost effective solutions that improve the competitiveness for the corporate sector, there are precious few nonprofit specific risk transfer products that make a difference. But resourceful insurance providers occasionally create opportunities for nonprofits that make the for-profit enterprises envious. One such relatively unknown and underutilized product, not available to for-profit enterprises, is a pure risk transfer of unemployment liabilities from the nonprofit employer to the provider. Though not a traditional insurance product since unemployment compensation is technically a social insurance tax, it is an exclusive method of transferring the entire responsibility of unemployment compensation to a third party by means of a guaranteed service contract.
First Nonprofit Companies, Inc. (FNC) is one of the nation’s largest and certainly the fastest growing provider of alternative methods of financing unemployment costs. As a wholly-owned subsidiary of the PANO-endorsed First Nonprofit Mutual Insurance Company, FNC also manages the First Nonprofit Unemployment Savings Program in which many PANO members participate. Its Bonded Service Contract is specifically designed to assume the risk for unemployment compensation for large nonprofit employers. The benefits to the nonprofit are numerous, while the cost is mostly a function of their own specific past unemployment and funding experience. Benefits include:
Ø Payment of all unemployment benefit charges
Ø All surety and financial obligations insured by First Nonprofit Mutual Insurance Company
Ø Complete budgetary certainty
Ø Precise allocation to each source of benefit cost
Ø Improved revenue utilization
Ø All-inclusive, customized program fee
Ø Local, professional third party administration of claims
Ø Comprehensive loss reporting
Ø Issue specific supervisory training
Ø Unemployment hearing representation
Ø Savings as high as 40-50%
More importantly, funding and fee flexibility allow FNC to design the Bonded Service Contract to specifically meet the unique needs of any nonprofit that has experienced unusual unemployment activity in the recent past or expects a change in employment levels in the future. For example, in some cases, a large nonprofit may wish to share a portion of the annual projected unemployment cost but because of funding limitations need precise capitation of the liability. Also, for the nonprofit confident of funding a precise layer of liability, First Nonprofit Companies provides Unemployment Benefit Excess Loss Insurance with a working attachment point chosen by the employer.
In this time of significant change and rapidly expanding unemployment compensation risk, large Pennsylvania nonprofits need every advantage to insure the on-going integrity of their mission. FNP’s Bonded Service Contract is an ideal method of specifically meeting the unique needs, risk strategies and financial limitations of most large nonprofit organizations.
For more information or a free estimate, call Mr. Randall Stevenson 800-526-4352, ext.7885, in FNP’s Unemployment Insurance Division.
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