Mass. Allows Liquor Liability JUA to Expand as Hospitality Mutual

Massachusetts lawmakers have approved legislation converting the state’s liquor liability insurer of last resort into a competitive mutual insurance company offering liquor liability insurance to the entire hospitality industry.

The Liquor Liability Joint Underwriting Association of Massachusetts (LLJUA) said it will restructure as a mutual insurance company to be called the Hospitality Mutual Insurance Co.

As LLJUA, the insurer was restricted to writing liquor risks that had been turned down by the voluntary market three times. Now as a mutual insurer, it will be able to sell to the entire market and even expand into new markets with regulatory approval.

According to Hospitality Mutual President and CEO John W. Tympanick, some Massachusetts firms that need liquor liability coverage — including bars, restaurants, social clubs, package stores and caterers — have had to use out of state insurers for a portion of their coverage or have had to piece together full coverage using several carriers. But now they will have a domestic carrier for all of their coverages.

“As a mutual insurance company, Hospitality Mutual will have the ability to operate as a competitive business,” Tympanick said. “This means it will be able offer new products that better meet the needs of our policyholders and enter new markets to expand our business.”

Tympanick compared the conversion of LLJUA into Hospitality Mutual with the 1994 conversion of the Medical Malpractice Joint Underwriting Association into ProMutual.

“By any measure, that conversion has been a tremendous success,” Tympanick said. “Not only is the medical malpractice market in the state much more competitive than it was before, but the company is financially very strong, has increased its size and reach, and has expanded its employee base.”

The creation of Hospitality Mutual will also mean premiums will stay within the state and new jobs will be created, Tympanick said.

Those testifying in support of legislation to create Hospitality Mutual included the Massachusetts Restaurant Association, the Massachusetts Insurance Federation and the Massachusetts Association of Insurance Agents.

LLJUA was created in 1985 to provide liquor liability insurance to bars, restaurants and package stores that could not readily purchase coverage in the voluntary market. Since then, LLJUA has issued 30,000 policies with total premiums approaching $100 million.

Tympanick maintained that Hospitality Mutual will continue to stabilize the liquor liability market negating the need for a residual market.

The act approving the conversion to a mutual insurer was signed into law by Lieutenant Governor Timothy P. Murray on June 20.

Source: Hospitality Mutual Insurance Co. www.HospitalityMutualIC.com