An Insurance Company for MESSA?

MEA Financial Services may have been created in order to compensate for the insurance programs which MESSA could not legally provide, but that does not mean MESSA has no interest in MEA Financial Services. In 1992, MESSA advanced $3 million to MEA Financial Services in order to capitalize the Verity Insurance Company, a wholly-owned for-profit domestic insurer. Verity underwrites long term care insurance programs, which the MEA can negotiate as an additional benefit in labor contracts. According to the Michigan Insurance Bureau's latest statistical report, the Verity Insurance Company is located at the same address as both MEA Financial Services and MEDNA. In 1991, it did not write any direct premiums, but finished the year with a $2.8 million net worth.

Since MESSA advanced $3 million to MEA Financial Services in order to purchase Verity, MESSA, as the financier, has a financial claim to Verity. Final maturity is not scheduled to take place until September 1, 2002. In effect, MESSA has purchased an insurance company which is managed by another MEA subsidiary. School districts across the state should be alarmed by this. With Verity in place and the MEA on its side, school districts could end up with larger bills for employee insurance if MEA local units begin demanding Verity benefits in addition to MESSA benefits. Nevertheless, there is one question every school district should pose to MESSA: Why is MESSA funding the multi-million dollar purchase of an insurance company when it could be reducing premiums for its customer school districts?