Five Juneau businesses celebrated Christmas in March last month when they were presented refund checks from workers' compensation insurance premiums they paid in 2000.
"It was totally unexpected," said Reecia Wilson, a co-owner of the Hangar on the Wharf restaurant. Her business received an $8,627 dividend. "As a small business operator, you get involved in these things and quite frankly you forget about them."
In 1998, the Alaska Cabaret, Hotel, Restaurant and Retailers Association, or CHARR, offered its member businesses an opportunity to participate in a workers' compensation insurance pool.
Workers' compensation insurance is mandatory for most employers. The rates are based on the size of a business's payroll and the type of work that employees perform. Rates have grown rapidly in recent years.
To help members, CHARR worked with the insurance agency CHI of Alaska, based in Anchorage, to set up a pool. Republic Indemnity, of Encino, Calif., provided the insurance for Alaska hospitality employers. Businesses that bought the insurance paid rates similar to those offered by most insurance companies at the time.
The basis of the dividend system is simple, said Dale Fox, executive director of CHARR.
"Once you get into the program, what happens is the insurance company pays administrative costs, and then all the claims," Fox said.
If at the end of the year the total administrative costs and claims are less than the premiums paid by Alaska businesses, Republic Indemnity pays a dividend to CHARR.
"You have to wait three years, because that's how long it takes to make sure all the claims are taken care of," Fox said. "After three years they do a profit-sharing with CHARR, and CHARR gives what it receives back to its members."
The first two years that the program was in place, only a few of CHARR's members joined the program, and no dividends were paid. This year's dividend is from 2000, when 49 members were participating in the program.
The 49 businesses split the dividend, which, at $92,000, was 30 percent of what the business paid in premiums in 2000.
"Getting 30 percent of your premium back is just amazing," said Fox. "If you had a $30,000 workers' comp policy and you get $10,000 back, that's a darn good deal."
For Wilson at the Hangar on the Wharf, the dividend came at an opportune time.
"It came very off-season, so it allowed us to revisit our cash flow and do some things like buy new equipment," Wilson said. "It gives us a little cushion to not fly by the seat of our pants so much."
The Fiddlehead, the Triangle Club, the Red Dog Saloon and the Cook House also received dividends this year. More businesses have enrolled in the program since 2000, Fox said, but that doesn't guarantee the businesses will receive future dividends.
"It depends how the whole pool does," Fox said. "If there is some catastrophic claim, somebody dies or something, probably that year you wouldn't get a dividend back. But for a normal year it's looking pretty good."