ARA Removes Insurance Companies from Membership

Last week, Lift and Access received calls from a handful of insurance providers reporting that the American Rental Association has opted to remove all insurance suppliers as associate members. This action prevents these companies from participating in The Rental Show.

According to a statement from the ARA, the association’s board of directors voted to amend the membership policy and ARA bylaws. The amended bylaw states that businesses substantially engaged in providing insurance or insurance products to rental businesses are not eligible to be ARA associate members. Therefore, they can no longer use the ARA logos and cannot exhibit at, attend, or participate in The Rental Show.

At the most recent Rental Show, held the first week of March in Las Vegas, Nev., National Insurance Specialists and Allied Insurance Brokers had two booths. HUB International Northeast Ltd., NBIS, USI Rental Specialties, and Xinsurance also took part in the trade show. "We've always gone to support the companies served by our insurance," said Brian Hall, president, National Insurance Specialists, which has participated in The Rental Show for 23 years. The decision to remove insurance providers came after the annual trade show.

Companies affected by this action were notified that this membership change applies only on the national level. State and local associations are governed by their own bylaws. Lift and Access obtained a copy of the certified letter sent on March 31 to tell insurance providers that are associate members of the ARA that a recently adopted amendment to the ARA bylaws has redefined the term Associate Member. The new definition is as follows.

Associate Member. A business engaged in furnishing or providing equipment, merchandise or services related to the Rental Business, but not otherwise qualified to be a General Member; provided, however, that businesses substantially engaged in providing insurance or insurance products to the Rental Businesses shall not be eligible to be Associate Members.

 Hall responded to the new policy in a letter to his clients. "I am a firm believer in competition and know it is a foundation of which most Americans believe in," he said. "This is a political move to eliminate competition and restrict your choices. The whole point of the ARA Rental Show is to have all the suppliers in one place for your convenience."

He added that insurance companies heavily participate in the local, state, and provincial associations, sponsoring events and sitting on the local boards. Although ARA reiterated that the board’s actions pertain only to the national level and no change has been made to the state and local association bylaws, he said many of the regional associations follow the national bylaws, and he is concerned that they will adopt the same policy.

Reasons for removal

When Lift and Access asked what drove the ARA's decision to remove rental companies from its membership, ARA said that in the past few years, members have noted their confusion about ARA's support of insurance carriers, and ARA insurance has always been and remains the association’s only endorsed insurance program. Since ARA Insurance is wholly owned by the association, the ARA said the board has a duty to protect the product and trademark, and ensure its viability as a rental insurance choice for members.

In a statement from the ARA, the association said: "ARA Insurance is committed to supporting the rental industry for all members regardless of where they place their insurance and have proven their support through the many risk management products and services all ARA members have available to them. ARA members are free to purchase insurance products from any insurance provider they choose and are not required to purchase from ARA Insurance." Additionally, ARA said it will not suggest that its members should refrain from purchasing insurance or insurance products from other companies. 

But Jeff McGeary, executive vice president of sales for Allied Insurance Brokers, questioned whether this was a decision that benefits the members, or if it is for the financial gain of the association.

Publisher's comment

Industry trade associations often focus on the successful collaboration of like companies to participate in public relations activities and policy making, as well as to enhance dialogue within the industry. According to ARA's mission statement, its core purpose is "to promote the success of our members and advance the growth of the equipment rental industry." Throughout the year, the ARA hosts numerous educational and training events, works with other associations to establish best practices for equipment usage, provides information on risk management, and offers business resources that small businesses may not otherwise be able to obtain.

Ted Cook, ARA's president, was quoted in the association's statement as saying it is a benefit to members to have the choice among ARA Insurance and other options for insurance coverage, and that the board continues to support options in the marketplace. However, Cook's statement contradicts the association's actions. The ARA has limited its members’ opportunity to review the range of available insurance choices with all providers placed on the same level in one place—the tradeshow floor.

Will being removed from the ARA hurt these insurance providers? Potentially. However, most ARA members will select the insurance program that best suits their company's needs based on the coverage they require at an affordable price. Whether that is ARA Insurance Services, Allied Insurance Brokers, USI, National Insurance Specialists, or any one of a number of insurance providers serving the equipment rental industry, the decision is purely up to the buyer. It most likely will not take place at a tradeshow, but instead through a number of office visits, phone calls, and emails in which the rental company gathers information, and the buyer becomes comfortable enough to select a trusted provider.

The ARA’s action is only a speed bump for insurance companies, but it does raise this question: Should other ARA associate members expect to receive similar treatment down the road?