New Retailers Mutual will let us grow
by Larry Meyer
MRA Chairman and CEO

As you’ll read in this month’s cover story, steps are underway to convert Retailers Fund, MRA’s self-insured workers’ compensation program, into an insurance company, to be known as Retailers Mutual Insurance Company.

I’ve been looking forward to such a change for a long time. I am absolutely convinced it is the best action to take to benefit MRA members—both present and future.

Participants, understandably, may have questions about the change. Is it risky? Is it necessary?

Compared to the risks we assumed when we began Retailers Fund in 1981, the risks of making this change are minimal and the gains to be had are real and important to the continued growth of Retailers Fund.

We started Retailers Fund back in 1981 because we suspected that retailers were paying too much for work comp insurance; the evidence certainly pointed in that direction. We thought we could do better for our members with our own program.

Back then we assumed both business and financial risks. Could we successfully run a work comp insurance plan? Could we fund it adequately and steer clear of large claims in the early days?

On both counts, we could and we did. Within 18 months we were returning the excess premium to participants in the form of dividends, a tradition of success that we’ve managed to continue without fail for the past 24 years. Retailers Fund has paid more than $20 million back to participants in its history.

Over time, however, the regulatory climate for self-insured funds has become increasingly constraining. State regulation keeps us from insuring businesses narrowly defined as non-retail—even though the businesses are MRA members.

Take as just one example Cracker Barrel, which is both restaurant and gift shop. The business earns substantial revenue from the gift shop, but state regulation ultimately led to the seemingly arbitrary conclusion that since Cracker Barrel is a restaurant we can’t insure them—even though Retailers Fund has the restaurant classification among its approved classifications.

In our view, these regulations haven’t reduced the exposure to Retailers Fund at all, just our ability to grow.

For a while now, Retailers Fund has been in a relatively steady state, growing slowly. There’s a danger—slight, but real—that the program could decline in the long term because of the difficulty in adding new business.

As an insurance company, we will be free to offer work comp insurance to whatever business we feel is a safe risk.

We aren’t planning to go after all kinds of businesses—we’re still Michigan Retailers and we’re here to serve our members. But now we’ll be able to offer one of our best member benefits to more of our current and future members.

What we did back in 1981 had its risks, but we assumed those risks and it paid off for our members and our organization. What we want to do now also involves some risk and some questions, but the big one—can we run a workers’ comp insurance plan?—has been answered.

Our history shows that we know what we’re doing. We understand how to underwrite, how to bill, how to adjudicate and pay claims.

As Retailers Mutual, we plan to do things the way we always have—why change a successful strategy? But we will be relieved of the burden of a constraining regulatory environment that defined too narrowly who we are and with whom we can do business.

The change is essential to our growth, which benefits both the program and its participants. It will allow even more business owners to look forward to those dividend checks from their work comp insurer.