NLADA empowers ‘equal justice community’ by forming a captive insurance company in DC

The National Legal Aid & Defender Association, America’s oldest and largest nonprofit devoted to delivering legal services to those who can’t afford counsel, has given new and improved powers to the equal justice community by establishing a captive insurance company in Washington, D.C.

A “captive” is an insurance organization created by a parent company or a group of related companies to provide insurance coverage primarily for their own risks.

It allows the parent company to have ownership, control and flexibility over their own insurance programs, potentially reducing costs and tailoring coverage to their specific needs.

“We saw over time that our ability to meet the insurance needs of the equal justice community across the country was directly correlated to our control over making decisions on their behalf,” said Jo-Ann Wallace, president, CEO and board chair of NLADA Mutual Insurance Co., a Risk Retention Group.

Captives serve as a risk management tool, enabling companies to better understand and manage their risks.

“Our goal was to have increased control over all aspects of the pricing, policies, claims and related services,” Wallace said. “We wanted more flexibility in order to be able to develop specially-curated training and risk management programs for our members.”

Evolving and empowering

Late last year, it was announced that the NLADA Insurance Program would be relaunched as NLADA Mutual Insurance Co., a Risk Retention Group.

With that transition, Wallace explained that NLADA Mutual would take control of underwriting policies and, over time, enhance insurance products and services to meet the evolving needs of the equal justice community.

Under the new system, NLADA Mutual is owned by the policyholders and members of NLADA, and it is governed by a board of directors mostly drawn from and elected by the NLADA community.

“Up until the formation of NLADA Mutual, the insurance program relied on working with commercial carriers, which limited the program’s ability to fully be responsive to the members’ insurance needs,” Wallace said. “Now, through NLADA Mutual, we have much more control over policy terms and pricing.”

Essentially, NLADA Mutual is an evolved version of the NLADA Insurance Program, which was created in 1994 as an advocate and provider of quality professional liability insurance products for the full spectrum of the NLADA membership community.

That community includes individual attorneys, legal aid organizations, public defenders, corporate pro bono law programs, law school clinics, individual clients and public interest groups.

“We have a justice gap in our country,” said Wallace. “That means the need for people to have legal assistance when they’re facing life-altering circumstances is much greater than the resources available to them.”

According to Wallace, NLADA Mutual is America’s first and only equal justice insurance and risk management insurance firm exclusively dedicated to equipping its policyholders with the coverage they need to “courageously and confidently” advance justice and equity for all.

Why choose the District?

Washington, D.C. licensed its first captive insurer in 2001 and since then, the city has earned a reputation of being among the leading U.S. jurisdictions for captive insurance.

The District has a staff of knowledgeable and experienced captive insurance professionals dedicated to the reasonable and efficient regulation of captives.

“We have a team of 10 people in my unit and that’s all we do,” said Dana Sheppard, the associate commissioner of the risk finance bureau within the District of Columbia Department of Insurance, Securities and Banking.

“We have decades of experience regulating insurance companies, and we are very knowledgeable when it comes to doing that,” Sheppard said.

Even though the insurance industry is complex and heavily-regulated, the assistance of talented consultants can make the experience smooth and manageable.

“It’s a very welcoming jurisdiction for this type of company,” Wallace said. “Dana’s team does a really thorough analysis, and they are extremely helpful and informative.”

When it comes to advice for others who may be considering forming a captive insurance company in D.C., Wallace said you must “do your homework.”

“You do need a dedicated team of professionals working with you, for sure,” Wallace said. “Dana’s team is going to thoroughly review your application, so make sure that you present a solid one because that will help ensure your company’s success.”

Sheppard agreed that being fully prepared ahead of time is crucial.

“A lot of companies and organizations don’t understand what a captive insurance company is and what the benefits are,” Sheppard said. “I always tell people, ‘do your homework,’ as Jo-Ann mentioned, and give us a call because we’re always happy to talk to people and explain the process.”

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