COVINGTON - The Newton County Home Builders Association is backing the state association in its attempted takeover of Builders Insurance Group, a leading provider of worker's compensation and liability insurance for the industry.
The Home Builders Association of Georgia has launched a campaign to oust the Builders Insurance board of directors and "take back" the policyholder-owned company.
HBAG formed Builders Insurance in the early 1990s to provide affordable insurance exclusively to its builder members and local builder associations across the state.
But now, HBAG is alleging that the Builders Insurance board of directors is trying to take control out of policyholders' hands and pad its own pockets.
According to HBAG, board members are being paid excessive salaries, fees and indirect compensation that totaled upward of $1.9 million in 2006 and 2007.
Since 2000, premiums have skyrocketed, while dividends to policyholders have plummeted, from 13.6 of premiums to 1.5 percent, HBAG claims.
Other allegations are that the board stopped reporting a large portion of directors' compensation in 2007; changed bylaws to increase its control of the company, making it difficult for policyholders to remove a director and hold a special meeting; "attempted to throw out HBAG and replace it with a shell association with little or no accountability to policyholders;" and supported legislation, without consent of policyholders, that would "enable them to reorganize the company on terms financially favorable to the directors."
HBAG is now urging its members to vote to amend the Builders Insurance charter to return power to policyholders and call a special meeting to elect a new board of directors.
"At a time when our industry is fighting for survival in a tough economy, it's outrageous that Builders Insurance's board members have padded their pockets with exorbitant payments that rightfully belong to our members, who are the policyholders and owners of this company," HBAG President Charlie Eison said. "We need to take control and return Builders Insurance to its rightful mission of serving our members - not creating a financial jackpot for directors."
The Newton County Home Builders Association is behind the move "100 percent," President Bob Goucher said.
"It's a battle for control," Goucher said. "Should the policy owners that own the company control the company or should the board members that want to make a personal profit from it control the company?"
For its part, Builders Insurance released a statement claiming that the real reason for HBAG's objections are because Builders has been endorsed by an alternative association, the Contractors Benefit Association, which has lower membership dues.
CBA requires dues of $60 per year, rather than the $450 to $750 annual dues now required by HBAG, "a significant amount of money for a small homebuilder," according to Builders Insurance.
"HBAG is trying to paint itself as the 'protector' of small homebuilders when, in fact, it is acting like a predator to protect what many Builders' policyholders see as exorbitant membership rates. This is a self-serving effort by HBAG to grow and maintain its membership rolls at a cost of increased expenses to the policyholders of Builders Insurance ... Builders Insurance has maintained an A- Best rating and has paid out more than $42 million in dividends to its policyholders, achievements that would be the envy of comparable insurers," the statement concludes.
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