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BackgroundThe "hard market" in the insurance industry during the mid 1980's caused serious problems for many members of the American Feed Industry Association (AFIA). Many companies experienced reduced liability coverage availability and were left in the undesirable situation of operating without coverage or paying excessive premiums. As a result of reduced capacity and escalating premiums in the liability insurance market, AFIA formed a Liability Insurance Task Force. The Task Force recommended that the following actions be taken: improve feed industry loss experience; create a data base of loss experience; develop materials to educate insurance underwriters; support tort reform; and to explore alternative risk transfer methods. The Task Force retained risk management consultants to conduct a feasibility study of forming an association sponsored captive insurance company. The feasibility study concluded that a captive insurance company insuring product and general liability and excess auto liability risks would provide significant benefits to members of the association and the feed industry. The feasibility study indicated that of the 61 feed industry companies responding to the survey, over 63 million dollars was paid for Primary Product and General Liability coverage over a seven year period while claims for 33 million dollars were paid out. The study further indicated that the Umbrella Liability premiums paid were in excess of 40 million dollars while less than 5 million dollars in claims were paid out. Upon examination of the results of the study, the project was strongly endorsed by the members of AFIA. The AFIA Board of Directors accepted the Liability Insurance Task Force recommendation to proceed with the formation of the insurance company. On July 1, 1987, the American Feed Industry Insurance Company Risk Retention Group, Inc. (AFIIC) was licensed as a casualty insurance company under the laws of Iowa and began operations as a Risk Retention Group. The objectives of AFIIC are to: provide an affordable and stable liability insurance market for feed manufacturing companies; develop underwriting expertise unique to the feed industry for proper evaluation and pricing of each risk; develop claims defense and settlement expertise for consistent and fair resolution of claims; and develop loss prevention programs for the exposures faced by insured companies. AFIIC is governed by a Board of Directors, elected by the shareholders, who oversee the management of the Company. The day to day operations and administration of AFIIC are handled by our staff of experienced professionals.
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