The Mackinac Bridge Authority (MBA) canceled its insurance for liability, excess liability, contractor's equipment, boiler and machinery, employee crime, marine, and business property and, instead, will selfinsure by starting a cash fund for such emergencies. The agency will keep its automotive insurance, because the savings would be minimal.

Over the last decade, the Authority's insurance provider has paid an average of $3,600 a year in insurance claims while the MBA has paid $453,000 annually for insurance premiums, a 0.079% return that prompted the administration to look at other solutions, including selfinsurance.

From the time of the bridge's construction in 1956, the trust indenture held the MBA to certain requirements, including carrying commercial insurance. When the bonds were paid off in 1986, this rule was extended by a task force that recommended the MBA continue to carry insurance.

The strategy was recently called into question, however, by a risk assessment completed by the Michigan Department of Management and Budget, which recommended the MBA drop its insurance because of the low rate of return.

State legislation was signed in June allowing the bridge authority to self-insure instead of purchasing insurance through a commercial insurance provider. The MBA approved the plan at its July 10 meeting and made the switch in September.

The bridge is now setting aside $200,000 each year until the insurance fund reaches $1 million. This fund will be replenished to $1 million each time a claim draws money from it.

The Michigan Department of Transportation (MDOT) entered into an agreement with the bridge, where any claim under $1 million will be covered from the bridge's insurance fund and any catastrophic claim over $1 million will be covered by MDOT.

After the terrorist attacks September 11, 2001, the insurance premiums for the bridge increased from $200,000 a year to about $1 million, while coverage was reduced from $300 million to $100 million and was eliminated in the event of terrorist attacks.

Mackinac Bridge Authority Chairman William Gnodtke said supplemental terrorism coverage would have increased premiums by a third.

"We feel comfortable that we are protected as a stakeholder," Mr. Gnodtke said at the MBA meeting in St. Ignace Friday, December 4.

The MBA estimates that it has saved about $50,000 since it switched to self-insurance in September and estimates it will recover $250,000 in savings each year.

Self-insurance was one of the money-saving strategies that former

MDOT Director Gloria Jeff proposed in 2005 when she attempted to take control of the MBA. It was also a strategy employed by the Michigan Department of Natural Resources to insure the museum at the Father Jacques Marquette National Memorial in St. Ignace, which subsequently burned to the ground and was never rebuilt because the funds to do so were not available.