Talking Self-Insurance with James A. Kinder

The Self-Insurance Institute of America, Inc. (SIIA) is the only national association dedicated to protecting and promoting the self-insurance and alternative risk transfer industry. It was founded in 1981 by James A. Kinder and now has members from across the nation and around the world.

Kinder, who stepped down as SIIA’s CEO at the end of 2007, recently shared with the TPAA his thoughts on the SIIA’s past, its future and how the self-funded industry in general will evolve in the coming years.

BP: What led you to found SIIA?
JK: I owned an insurance and association management-consulting firm and was president of Design Professionals Administration Corp., a highly specialized TPA for professional and trade associations. My associates and I had concerns about the self-insurance industry and felt we needed a united voice against adverse legislation being considered as a result of ERISA. We brought together several other professionals from the self-insurance market and agreed we needed an industry trade association. With this in mind, SIIA was born and I was asked to head up the effort through my consulting company, Kinder & Associates, Inc. From day one, SIIA has been the only trade association to represent the entire industry and virtually all disciplines within it.

BP: Elaborate on your background and what were you doing professionally at the time SIIA was founded.
JK: I entered the insurance industry in 1964 as a trainee with Pacific Indemnity Company, now part of Chubb. After that, I headed up the Los Angeles Special Risk Department and Association Division for Alexander & Alexander, now AON. In 1972, Wally Jeffs and I formed Association Administrators & Consultants, a brokerage and TPA operation that designed and administered association programs for design professionals. I started Kinder & Associates, Inc. (K&A) in 1978 to assist associations in creating their own programs, which, unlike “sponsored” programs, they would own directly. I also served as president of Design Professionals Administration Corp., which was owned by architects and engineers, and that set the stage for creating a start-up association. From the beginning, I served as the chief staff person for SIIA and provided staff and services under a contract between SIIA and K&A. K&A formed not only SIIA, but also the South Carolina Captive Insurance Association, Montana Captive Insurance Association, Captive Insurance Council of the District of Columbia and the American Risk Retention Association, to name a few.

BP: Who else was involved with SIIA in the beginning?
JK: Bob Markwith, Ken Deyhle and George Kadonada, all from US Benefits (now HCC Life Insurance Company); Ben Davenport, Ken Stoudt and Diana Hilmer, all from TPAs; and Steve Stucky, a former stop-loss MGU. They were truly among the founding fathers of the self-funding business as we know it today.

BP: Who did you target for membership in the beginning?
JK: We concentrated on the founding members’ circle of business associates, namely TPAs and those involved in the stop-loss/excess market. Today, SIIA has members from virtually all fields and areas of risk management, including benefits, workers’ comp and property casualty. We have Fortune 100 firms as well as local manufacturers, retail and service companies, stop-loss/excess insurers, MGUs, major TPAs, captive insurance companies and a host of service providers. SIIA is truly a melting pot for the entire self-insurance and alternative risk transfer market and we are growing every day. We’re also moving toward the global risk market and have attracted many international companies.

BP: Tell us about SIIA’s goals and responsibilities in the early days.
JK: The same as today, to provide a united voice for the self-insurance and alternative risk transfer market. Our mission has remained constant: to protect and promote self-insurance and alternative risk transfer. In the beginning, we only had a handful of people to draw from but they all supported the same vision of creating an association to represent an entire industry as opposed to a single discipline within the industry. We have evolved into the largest and most respected trade association in our industry and in fact, to our knowledge, the only association of its kind.

BP: What do you consider the most important milestones in SIIA’s history?
JK: The day in Philadelphia when SIIA was conceived! Since then, we have had milestone after milestone, including numerous legislative and legal undertakings where SIIA has always prevailed. Listing all SIIA victories would be an article in itself, but the most recent ones are featured on our website at www.siia.org.

BP: Tell us about some difficult situations that SIIA has faced—both the organization itself and in terms of political/legislative issues you have dealt with?
JK: For any start-up organization, the most difficult part is producing the capital needed to advance your interests. This challenge never really goes away because as you grow, the need for capital grows too. Politically and legislatively, on the health care side is the constant threat to the employer-based system. We all remember Hillary Care in the mid ‘90s; this created a challenge not only for SIIA but for everyone in the health care arena. SIIA led the battle relative to self-insurance and joined forces with others who had similar concerns to defeat Hillary Care. It appears this battle may once again surface but suffice it to say we will prevail in that debate as well.

BP: What do you consider to be the most important issues facing self-funding today, particularly on the health benefits side?
JK: The deterioration of the employer-based system is clearly the most important issue, along with making sure ERISA and its broad preemption provisions remain as they are.

BP: What is SIIA doing to help with those situations?
JK: We have a very aggressive legislative staff in our Washington, D.C. office. We increased the number of lobbyists and are taking a very proactive role in several industry coalitions dedicated to preserving the employer-based system and keeping government out of the private sector. On the ART side, we are aggressively working to expand and modernize the Liability Risk Retention Act and defeating IRS regulations that would have a major negative effect on captive insurance companies.

BP: You’ve been involved with self-funding for 39 years and counting! What are your predictions for the industry for the next 39 years?
JK: The self-insurance and alternative risk transfer mechanism to fund corporate risk, and in some cases even personal lines (wind-tidal surge), will continue to grow and dominate the market, with traditional insurance serving as the private backstop for catastrophic risk—be it health care or any other form of risk. Insurers’ product lines will change to meet the needs of the self-insured/ART user. Known liabilities will continue to be funded on a direct basis with unknown high-end cat losses backed by the commercial market, both on a domestic and global basis.

BP: How do you see SIIA evolving to meet the needs of the self-funded industry?
JK: SIIA must continue to build its membership base and expand its educational offerings both domestically and internationally. Its members will need to continue to involve their clients and business associates to support SIIA activities. Like the industry, SIIA will undergo change by re-engineering its organizational structure and expanding its educational programs, legislative and political clout and all-important industry professional networking opportunities. SIIA will meet these needs through a dedicated support staff and volunteer professionals who are willing to share and give back to the industry.

BP: Do you have any retirement plans you’d like to share with us?
JK: I don’t think the term “retirement” should be used. Yes, I am stepping down as CEO of SIIA to make room for the next generation of leaders, but I am not stepping out of the industry into a life of fishing or golfing. There is a lot of work and opportunities ahead, but instead of dedicating every waking moment to them, I am going to pick and choose projects to get involved in. I would enjoy serving as a director of a few innovative companies in the self-insurance/ART community. Spending time as a mentor for the next generation of SIIA staff and the self-insurance/ART market are on my agenda. I would also like to spend more time with my family and friends, touring this great country in my motor coach and stopping along the way to really smell the roses. Retirement? I don’t think so.

BP: Is there anything else you’d like our readers to know?
JK: Yes, I want to thank you for asking me to participate in this column. Organizations like yours play a critical role in today’s ever-changing environment and just as membership in SIIA is critical to the self-insurance/ART community, so is the development of products and services like what you’re doing to help the community compete. The more people who become involved in the process, the stronger our industry and individual players become. I stand ready to do my part whenever and wherever I can.