The Newton County Home Builders Association has joined with its parent organization to move to oust the board of directors of Builders Insurance Group, which provides workers' compensation and general liability insurance to homebuilders.
The Home Builders Association of Georgia, which has 13,000 members statewide, has called for a special meeting to elect a new board of directors for Builders Insurance.
Bob Goucher, president of NCHBA, said the local homebuilders association voted to join in the effort because, "it's the right thing to do. Their directors are taking advantage of us. It's not nice to kick somebody at all but it's worse to kick them when they're down."
Housing industry business for Newton County has decreased by 85 percent from this time a year ago said Goucher.
"The money [the board of directors is] pulling down is equivalent to $300-$400 from every policyholder's pocket," Goucher said. "We feel that we can have more competitive insurance ...if we have more control of the company."
Goucher and HBAG claim that Builders Insurance was originally started by HBAG and is a captive company and so should not be able to issue policies to builders outside of HBAG.
"The board of directors of Builders Insurance Group is basically trying to make it their own group," Goucher said.
In response to the call for a new board of directors, Builders Insurance released a statement accusing HBAG of "trying to paint itself as the "protector" of small homebuilders when in fact it is acting like a predator to protect what many HBAG members see as exorbitant membership rates."
Builders Insurance claims that HBAG objects to its board not because of high directors fees but because Builders Insurance has been endorsed by the Contractors Benefit Association, an alternative association with lower dues.
Builders Insurance also claims that CBA requires dues of just $60 per year, compared to the $450-$750 charged by HBAG.
NCHBA charges $425 in annual dues to its members, according to a membership application. Of that fee, $150 is for membership in the National Association of Homebuilders and $75 is for membership in HBAG.
According to a press release from HBAG, the board of directors has ignored "repeated requests for accountability and transparency." HBAG accuses the board of directors of charging exorbitant director fees which it says were reported at more than $1.9 million in 2006 and 2007. HBAG also believes that additional unreported payments in 2007 are likely.
HBAG claims that this is out of line with market compensation for similarly-sized companies and as a percentage of revenue far exceeds directors' compensation at large public companies such as United Parcel Service and Delta Air Lines.
According to HBAG, since 2000, insurance premiums have gone up considerably while dividends to policyholders have gone down considerably from 13.6 percent of premiums to 1.5 percent.
Builders Insurance board members' fees released by HBAG were $35,000 in 2006. The fees increased to on average $80,000 in 2007. Total compensation for board members in 2006 ranged from $95,000 to $198,000. HBAG said it has not received total compensation figures for 2007.
According to Frank Ranew, senior vice president for Manning Selvage and Lee, a public relations firm hired by Builders Insurance, the board's compensation policy changed from 2006 to 2007 and resulted in each board member receiving less than half of the amount of the previous year.
In 2007 Ranew said each director received $75,000, except committee chairmen and the board's chairman who were paid $5,000 to $10,000 more respectively.
HBAG also accused Builders Insurance of attempting to get rid of HBAG by replacing it with a shell association with little accountability to policyholders and of supporting legislation that would enable them to reorganize the company on terms financially favorable to the board without the consent of policyholders.
HBAG claims that Builders Insurance was started by HBAG in the early 1990's to provide workers' compensation exclusively to its builder members and local builders associations and that it is owned by its policyholders, similar to a co-op or a credit union.
According to Builders Insurance's company profile, the company originated when several Georgia homebuilders, who are members of HBAG, started a "self-insurance fund" that eventually became the company Builders Insurance Group.
