He said establishing the PGs enables FMCRRG to add small trucking fleets (those having from one-to-five power units) while maintaining the requirements for the RRG, which targets larger fleets (having from 40-to-200 power units).

With the addition of the six PGs, FMCRRG now insures seven PGs, including a California book of business recently rolled into a PG.

Among the other points of interest for the program:

o Truckers who join the PGs are required to make the same capital contribution to the RRG as RRG insureds–$500 per power unit.

o Underwriting criteria used to determine eligibility for the PGs is the same as that used for RRG membership.

o Claims handling and other services used for the RRG are also used for the PGs.

o There is a $1,000 deductible for both RRG and PG members.

Mr. Valuntas explained that built into pricing is a “member-specific” loss fund amount for each PG member, funded by a portion of the member's premium.

In the event of a payable claim, the member's $1,000 deductible is tapped first, followed by the loss fund.

If the claim amount exceeds the combined amount of the deductible and the loss fund, the RRG then responds.

Multiple policy limits up to $1 million are available through a master policy issued to the PG, with certificates of insurance issued to PG members.

All PG members have voting rights in the RRG.

He said this type of “reverse cell” structure is distinguished from a protected-cell arrangement, where the protected cells sit behind the RRG.

In this model, the PGs sit in front of the RRG, with the PG insured's loss fund taking the first layer of loss and the RRG coming in above that. By contrast is a protected cell, where the RRG takes the first layer of loss and the protected cells follow.

In addition, he noted that the PGs are “one of the competitive advantages we have, particularly in California, where a lot of competitors will only write intrastate [local] truckers. We have found a niche to write long-haul truckers who operate in both inter- and intrastate commerce.”

The PGs also offer truckers competitive rates, at a time when they are feeling the pain of ever-increasing fuel costs, he said.

With long-term relationships that CBIP has developed with retailers across the country, Mr. Valuntas expects more PGs will come on line using this model.

As for the PGs currently formed, he anticipates $3.5 million in premium for the first full year of operations, growing to $15 million by the third year.