Report of the PRCUA Growth and Development Committee

Ad Hoc Committee:

Dir. William Nowakowski, Chairman
Pres. Wallace M. Ozog, Executive Committee Representative*
Dir. Barbara Toboy*
Dir. Edward Kaplaniak
Dir. Joan Sylak
Dir. Lillian Stempinski
Dir. Elizabeth Grabowski
(* not present at the meeting)

INTRODUCTION

This document is an outline to discuss various considerations for the growth, development and evolution of the P.R.C.U.A. The goal of this outline is to establish talking points about areas of concern along with specific items that can be considered to enhance the growth and membership of the P.R.C.U.A. It addresses the organizational, fraternal and financial activities of the organization.

Items presented herein take into account the National Fraternal Congress, Fraternal Vision Subcommittee's Final Report, which evaluated the status of all fraternal organizations. The NFCA report can be used as a guide for considering the future activities of this organization as part of the fraternal community.

It is expected that proposals, that this committee and the board deem worthy of consideration, would be followed up with additional research and fact-finding. This would include having presentations made to the board and/or to the committee laying out the specific details of items considered, including the cost of undertakings, the potential benefits to be garnered along with an analysis of any potential risk and economic impact that it would have on the organization.

I. How to Attract New Members & Retain Existing Members.

A. Marketing and Sales

Essential for future growth and development of this organization will be the necessity of identifying and reaching out to persons of Polish or Slavic descent, who would meet the requirements for membership within the organization. Many problem areas include the difficulty in recruiting deputies and supervisors in the states in which P.R.C.U.A. is licensed to sell products and to effectively market our products. These problems could be
addressed by:

1) Retaining a highly qualified national sales director with duties to include the recruitment of deputies in each district; training new and existing deputies; evaluating the existing commission structure and developing a commission structure that will attract new deputies and conform to the new actuarial tables recently approved for use by the Union.

2) Develop and implement an effective marketing plan for the Union's products and benefits. This can be accomplished by requesting bids or proposals from outside agencies or hiring a properly educated and experienced marketing professional.

B. Young Members

Retention of younger members is critical to our future. It is necessary to have our younger members more fully participate in the organization. It is then incumbent to create a structure that will instill enthusiasm among the youth. In this respect, the Committee believes that establishing a "Youth Czar" will set the foundation for increased participation. It is envisioned that the Youth Czar try to develop networks among our younger members, have a designated by-line in the official organ, develop and implement
programs that create greater activity among this peer group, and report to the board of directors.

In conjunction with the Youth Czar, serious consideration should be given to implementing the recommendations of the Youth Committee Report to the last quadrennial convention.

C. Identifying & Reaching New Potential Members

In order for the organization to grow and succeed, it will be necessary to identify persons who would be interested in joining the organization. Ideally, these are persons between ages 24 to 48 who are in careers and have growing families. Before P.R.C.U.A. can market or sell to a new group of individuals, it must know the following:

• Why would a person join this organization or a fraternal organization?

• What activities or goals of the organization would be important to a person that would cause them to join?

• What specific products or services, or combination thereof, would be significant to a person that would cause them to become a member of the organization?

It becomes apparent that the P.R.C.U.A. needs to specifically isolate people who identify themselves as being of Polish or Slavic heritage as opposed to those who may simply have Polish or Slavic surnames. If and when such persons can be identified as potential members, the goal will be to market P.R.C.U.A. benefits and products in a method that reinforces the reasons that one would consider membership.

How do we get the answers to the above?

The only way to obtain information that would be reliable is to undertake a scientific survey that would provide answers from participants who identify themselves as Polish or Slavic persons within the age group desired. Such a survey would have to be done on a large scale, at least in the majority of the states in which the P.R.C.U.A. conducts business, in order to account for geographic differences in attitudes. A survey would be expensive, but could provide the P.R.C.U.A. with tools to structure the organization, its products and services in a manner to significantly increase membership.

Options for obtaining this information would include:

1. Ask other fraternals if they have conducted such studies and ask if they would be willing to provide or share their survey results with us.

2. Conduct our own scientific survey.

3. The P.R.C.U.A. could jointly work with other fraternals to share in the cost of conducting such a survey that would result in mutually beneficial information.

4. Seek grants to underwrite the cost of such a survey. Alternatively, an informal survey could be undertaken through the Narod Polski and the Union's website, which at least could provide an understanding of what current members by age and location desire as to fraternal activities, and financial services which may cause greater participation in the organization.

If the committee believes that this is a recommendation that should be forwarded to the board of directors, it is suggested that the executive committee undertake to interview various scientific surveying companies to determine the scope of the survey that would be needed and the associated cost. Various bid proposals from several survey companies could be presented to the board detailing the scope and the expense of such a survey. The board would then determine the feasibility and advisability of pursuing a survey.

II. Services That Can Be Introduced In The Near Term To Assist With Member Retention And Enhance Growth Of New Members

The financial services industry, as a whole, has been moving toward one-stop shopping. Organizations, such as Thrivent as well as the United Services Automobile Association (USAA), have created one-stop shopping providing their members with complete financial services. Other fraternal organizations have also moved towards expanding the services, which they offer their members. A number of fraternals have undertaken to establish federal credit unions or federal savings banks.

A. Savings Bank or Federal Credit Union

The establishment of a federal savings bank or credit union can greatly enhance the ability of this organization to provide common everyday financial services for its members and employees. The merger of the Alliance of Poles in Cleveland with the P.R.C.U.A. has yielded an opportunity for strong linkage to a credit union. The Alliance of Poles Federal Credit Union (FCU) recently had its field of membership expanded to include all P.R.C.U.A. members. The establishment of a close working relationship with the FCU can create the opportunity for the P.R.C.U.A. to sell its products through the FCU, in mutually beneficial association, creating a synergy of financial services for the benefit of our members.

The FCU has a very low asset base and in order to provide meaningful services it will need to increase its deposits and loans significantly in order to be an effective partner with the P.R.C.U.A.

Numerous products and benefits could be offered to P.R.C.U.A. members. These include establishing an integrated service where our members could obtain online information about all of the products and services that they may be utilizing in our organization, and acting as a method to advertise the activities of the P.R.C.U.A. to credit union members.

The following services could be provided to members either initially or progressively over time:

1. Savings accounts;

2. Interest bearing checking accounts;

3. Mortgages;

4. Auto loans;

5. Money market accounts;

6. Safety deposit boxes;

7. Certificates of deposit;

8. Affiliated credits cards;

9. Debit Cards;

10. Online banking/financial services;

11. Mutual Fund Sales;

12. Student Loans;

13. Second Mortgage Loans;

14. Home-Equity Loans;

15. Vacation Home Loan;

16. Condominium Residence Loans;

17. Mutual Fund Sales;

18. CD or High Interest Savings Accounts.

B. Insurance Based Products

Greater diversity of insurance products will retain membership in the P.R.C.U.A. and entice new members to join. The P.R.C.U.A. must look to expand the scope of the insurance products that it now offers, especially in products that are experiencing growth nationally.

1) Prepaid Monument or Tombstone Coverage

The Union should explore the issuance of insurance specifically geared to paying for a memorial, as permitted by Section 297.1 of the Illinois Insurance Code.

The product could help offset funeral related expenses and could name the monument provider as a direct beneficiary. The member is thus assured that his or her final resting place will have the memorial marker they desire. Further research will be needed to determine if this type of policy can meet the Medicaid exception relating to final funeral arrangements. If it does, it could provide a member with peace of mind knowing that they
will have a memorial even if they pass while on Medicaid.

2) Charitable Giving or Donation Policies

Another area of growth and interest, especially in light of the aging population, are policies that would be specifically geared toward the benefit of a certain charitable or cultural organizations. These products could either be marketed through the organization, which will be the beneficiary, and/or through the P.R.C.U.A. itself. The development of this type of policy should be fairly easy to accomplish using the existing structure for basic life insurance products that the P.R.C.U.A. presently offers.

These policies could be aimed at such groups as Orchard Lake Schools, the Polish Museum of America, and other charitable foundations or religious organizations. The development of these products would then indoctrinate the beneficiary organizations as active producers of new membership for the organization through their solicitations for their benefit.

Further study of these types of products should be undertaken including identifying organizations would be interested in working with the P.R.C.U.A. to establish a mutually beneficial relationship.

3) Return of Premium Term Life Insurance

A number of insurers have begun using return of premium term life policies, when certain conditions were met. These types of policies may be attractive to younger people who do not wish to purchase whole life but are still looking for some return on their insurance outlays. The Union should study the viability of
offering this coverage.

C. Non-Life-Insurance Products

The committee should also consider the possibility of the P.R.C.U.A. developing other types of insurance products such as long-term care, drug benefit or disability insurance. These types of products have also been increasing in growth due to the aging population of the membership. The cost and feasibility of undertaking these types of products needs to be studied in greater detail.

Information can be obtained from our actuary and various other sources to determine the costs and the pricing structure that could be established for these types of programs. It is recommended that the executive officers undertake further study of these non-life-insurance products and determine the feasibility of implementing them.

Investigation into having other financial services underwritten by a larger organization is also warranted. A discussion should be had with Thrivent and other large fraternal benefit societies to determine: if it is legally possible for them to act in such a capacity, and the associated fees and expenses involved. Alternatively, the possible formation of a National
Fraternal Holding Company could be studied in order to provide a centralized source of products for all its members, with significant assets to leverage better rates to its members.

D. Modernization and Increased Computerization

In order to properly serve and retain P.R.C.U.A. members, it will be necessary to improve and expand our computerization. There has been ongoing progress in this area but there are many items which still need to be addressed. The development of comprehensive online computer services would be another tool to enhance the ability of people to become members, as well as providing the ability for people to access the organization on a regular basis. In this regard, the comprehensive online program should consider adding the following options to service members and attract new ones:

1. Availability for online quotes and sales of policies over the Internet

2. Provide individuals with the ability to review the status of their accounts including annuities, mortgages, certificate values and status.

3. Estate planning information - providing basic information about the various insuring products and how they could be of value for planning their future and that of the children and grandchildren.

4. Basic tax information about the products that are offered by the P.R.C.U.A. including annuities; i.e. tax penalties, when an annuity can be withdrawn, etc.

5. Creating society chat rooms to allow for virtual meetings of societies and districts; and

6. Developing on the website a password-protected list of names, e-mail addresses, addresses and phone numbers for each society. This information could then be updated by the home office each time a new member is added.

F. Other Growth Options and Considerations

• Continue mergers with smaller fraternals by active solicitation;

• Merger with a comparable or larger fraternal;

• Assisted takeover of a subsidiary insurance company via a state insurance department.
  This would assume control of an insurance company as an affiliated subsidiary through an insurance commission of a state, which would guarantee the payments under the policies and eliminate the assumption of any debt of the company. Further investigation of this option is recommended. The takeover of a subsidiary company could yield benefits such as an increased sales force that could be used to market the P.R.C.U.A.'s products.

G. Long Term Considerations

For the organization to grow and prosper, it must continue to expand its horizons to look for different services and products. Study of larger, more capital-intensive alternative lines of products should be undertaken as part of on ongoing review process. The following would represent some possibilities for long-term investigation and development.

This could be done by establishing joint ventures and/or holding companies to allow for creation of larger capital products founded on a multi-organizational platform such as a fraternal holding company. This type of venture would be capable of developing and implementing large capital-intensive products through which each participating organization could offer services or products to the individual members. Potential partners could include:

• Larger Polish and Slavic fraternals;

• Establishing a holding company with in the framework of the National Fraternal Congress and/or forming joint ventures with it to undertake funding of new products;

• Seek parallel or joint venturing with organizations such as a Catholic Church or other large cultural or charitable institutions.

• Establishing subsidiaries that would be able to offer financial or insurance products the Union is currently not able to offer itself.

III. Organizational and Management Considerations

Presently the P.R.C.U.A. Task Force is studying ways reorganize the structure of the Union and create a new and modern constitution as was previously urged by this committee and adopted by the last convention.

Pending the report of the Task Force, there remain other options to better the organization including:

1) Adopt and employ an effective team-oriented management system such as Six Sigma by having the executive officers and managers undertake this training. This management style would improve efficiency, productivity, profitability and employee morale;

2) Retain and utilize a professional money manager/broker to enhance the performance of the Union’s portfolio assets. This will also free the executive officers from the burden of trying to act as financial professionals and free their time to focus on increasing membership.

The money manger/broker would also be able to provide detailed financial analysis, which heretofore has not been available to the Board of Directors; and

3) Improve reporting to members, especially annuity owners, by providing them with quarterly reports on their accounts.

IV. Conclusion

The full Committee strongly urges the Board of Directors to charge the executive officers to investigate and report their findings, as to each of the categories discussed herein, no later than at the final board meeting of the calendar year. It is further suggested that each officer be tasked to address specific categories identified above. The reports of the executive officers on each area should then be published in the Narod Polski and on the P.R.C.U.A. website.

Respectfully Submitted,

William E. Nowakowski, Chairman