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Downstream prepares for next step

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March 5, 2015

As member participation in Downstream Data Coverage grows, the association is preparing for the next phase in its development: converting it to a Captive Risk Retention Group Program.

“Of all the reasons NAID got involved with professional liability coverage, creating a captive insurance program was always the end game,” said NAID CEO Bob Johnson.

Congress approved the formation of captive risk retention programs in the 1980s to help businesses economically deal with a unique shared risk. It provides the industry a way to improve policy language, develop loss control systems, and lower rates to reflect the resulting lower claims.

“It’s not self-insurance,” cautioned Johnson. “The program will still maintain the solid backing of Lloyds of London. It simply means the industry has more control over premiums and policy language.”

Johnson is confident that the program will convert in the not-too-distant future based on the current level of interest in the program.

“We don’t know if it will be in six months or a year, but it should be somewhere within that timeframe,” said Johnson.

Johnson also said that early adopters will save more.

“Those supporting the program now are the ones who are ultimately making the captive possible,” said Johnson. “It is only right they would get a larger initial premium discount once the program converts.”

To learn more, email Johnson at rjohnson@naidonline.org. Currently Downstream Data Coverage is only offered to NAID certified members in the U.S. Options for members outside the U.S. are being explored.