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OF
THE MIAMI VALLEY RISK MANAGEMENT ASSOCIATION
March 19, 2007
MVRMA Office, 4625 Presidential Way, Kettering, Ohio. The meeting began at 9:07 am.
The following individuals were present when the meeting was called to order: Carol Becker, Beavercreek; Dave Helling, Bellbrook; Jim Pfeffer, Blue Ash; Mark Schlagheck, Centerville; Janine Cooper, Englewood; Dave Couch, Indian Hill; Nancy Gregory, Kettering; Mary Mueller, Mason; Dody Bruck, Miamisburg; Wayne Davis, Montgomery; Gary Lucas, Piqua; Derrick Parham, Springdale; Sue Knight, Troy; Julie Trick, Vandalia; Tom Reilly, West Carrollton; Laura Curliss, Wilmington; Jenny Chavarria, Wyoming; Rick Steddom, Alliant Insurance Services; and Kathy St. Pierre, Craig Blair, and Michael Hammond, MVRMA.
At 9:20 am, Dick Drennen, Tipp City arrived.
Motion by Ms. Gregory, seconded by Mr. Davis, to approve the Consent Agenda. Motion carried.
Risk Management Committee Report
Mr. Hammond reviewed the 2007 Training Program. He noted 218 participants had attended the nine training sessions conducted through February 21, 2007. Supervisory training, with a class of 32, began last week. Mr. Hammond reminded everyone there are four upcoming driver training sessions scheduled for April and May. On April 24, there will be three sessions of sexual harassment training held in the Centerville Police Department training room. In the planning phase is a training class for administrative assistants. More information on that class, as well as all upcoming training, will be forwarded as it becomes available.
Mr. Hammond highlighted some of the risk management requests/new issues discussed at the March 7, 2007 Risk Management Committee meeting. One topic was the importance of developing an Emerald Ash Borer Management Plan. Because ash trees dry out very quickly, it is important that all members inspect their trees regularly and remove those that are diseased and dying. Otherwise, these trees will become hazards as they begin dropping their limbs. Mr. Hammond noted there are two management plans available through the internet, one developed by the city of Upper Arlington and the other by the city of Wyoming. Jenny Chavarria, Trustee from Wyoming, mentioned that her city has been working with its Urban Forestry Board and has determined it will cost more than one million dollars to replace the city’s ash trees!
Chief Helling discussed the implications of substitute HB 347, effective March 14, 2007, which provides amendments to the concealed carry law. Three primary issues are addressed: 1) It makes moot a city’s licensing procedure; 2) It allows a driver to carry a concealed weapon on his person rather than being required to have the weapon in plain sight; 3) It allows off duty police officers to carry concealed weapons as long as they have qualified to carry such weapons, unless the agency for which they work has expressly denied them that right.
Chief Helling also discussed the new Public Records laws which go into effect 9/29/07. The Attorney General’s office will be supplying a model policy and is recommending the policy be posted. The policy will provide direction to all city employees. It appears elected officials or their designees will be required to attend training. Mr. Blair is hopeful the model policy will cover electronic data and the destruction thereof, since it is becoming a big issue with regard to litigation. He suggested before discarding a computer, the city verify it does not contain information or correspondence concerning any pending litigation or claims.
In all, Mr. Hammond stated 22 items regarding risk management requests and new issues were reported to the Risk Management Committee. This list is provided in the packet so that members with similar concerns may contact staff for additional information.
Mr. Blair explained there were quite a few updates in the Open Claims and Incurred Losses Report dated March 5, 2007 because of staff’s recent open claims meeting with the attorneys. Mr. Blair reviewed the changes, which were noted in bold print. Motion by Mr. Davis, seconded by Ms. Curliss, to approve the Open Claims and Incurred Losses Report dated March 5, 2007. Motion carried.
Mr. Hammond reminded everyone SPEC visits would begin in July. These evaluations will cover the 18 month period 1/1/06 through 6/30/06 in order to establish the new cycle running from July 1 to July 1. The previous calendar cycle required Ms. Markworth to conduct SPEC visits during her busiest training period.
At the December Board Meeting, participation in a pilot program for on-line loss control training with TargetSafety was approved. Subsequent to the meeting, TargetSafety suggested a new driver training program. After attending a webinar explaining the new training, fourteen MVRMA members agreed to participate. Each member city will be charged $250 per year for three years which will permit an unlimited number of employees to complete two courses per quarter. MVRMA will pay a one time set-up fee of $4,895. The program is expected to begin the end of March. Motion by Mr. Parham, seconded by Ms. Becker, to authorize the Executive Director to execute the agreement with Target Safety to provide Fleet Safety Employee On-line Training. Motion carried.
Mr. Hammond provided an update on the survey conducted by staff to determine the members’ use of employment background checks. As a result of the study, the Risk Management Committee directed staff to develop a best practices checklist and a list of resources to assist the members with employment background checks.
Mr. Hammond reviewed the amended SPEC. It includes sample policies, provided by Dinsmore & Shohl, which address the amended Employment Practices Checklist in Appendix D. Members will be required to adopt anti-discrimination, anti-harassment, ADA, workplace violence and sexual misconduct policies that meet the requirements listed in the checklist. The sample policies provided by the attorneys will be reviewed and updated every two years. If a city decides to develop its own policies, the city will be responsible for having them reviewed and updated by legal counsel. Motion by Ms. Curliss, seconded by Ms. Trick, to approve the amended SPEC which includes model employment practice policies. Motion carried.
Finance Committee Report
Mr. Schlagheck informed the Board the Finance Committee was pleased with the investment results attributed to Bond Tech during the last year. MVRMA’s investments have continued to outperform short term investments. Bond Tech’s suggested strategy for the next year would be to extend maturities because of the projected stabilization and drop in rates. On behalf of the Finance Committee, Mr. Schlagheck recommended increasing Bond Tech’s investment authority from $8 million to $10 million. Motion by Ms. Gregory, seconded by Mr. Davis, to approve increasing Bond Tech’s total for investment to $10 million. Motion carried.
Mr. Schlagheck stated the time and expense of publishing six issues of Risky Business is no longer the best use of MVRMA’s resources. Staff believes communication with the members will not suffer by cutting back to four issues annually. Motion by Ms. Gregory, seconded by Mr. Drennen, to change Risky Business to a quarterly publication. Motion carried.
Mr. Hammond explained the rate for the PEPIP property renewal, effective 7/1/07, is anticipated to increase 0-6%. Mr. Steddom noted there could even be a slight decrease. He expects to have a proposal to us by June 1, in plenty of time for approving at the June Board Meeting. The per occurrence limits of $350 million are still available.
In the past, MVRMA’s contents values for appraised structures were generally determined by multiplying .30 X the structure value. For many structures, this value was not relevant. After consulting with Alliant’s appraiser, he provided a chart that determines contents by use and size of structure. Using this chart, staff reevaluated contents for most appraised structures that had not been appraised during the previous 18 months (contents appraisals were included in appraisals conducted during that period). As a result, contents values were reduced approximately $68 million or 47%, which would equate to premium savings of $22,400.
Mr. Hammond explained, until recently, GEM was unaware many of its participating pools were self insuring their in-house operations. After some discussion, GEM agreed to provide this coverage as long as the pool’s coverage document disclosed the coverage, exposures were reported to GEM and information was provided so that the coverage could be underwritten. Subsequently, staff submitted the association’s exposures for 2003-2007 and completed the Application for GEM Members Covering Pool Operations under the Pool Memorandum of Coverage. A copy of the completed application was included in the agenda packet. Mr. Hammond pointed out several items in the application for further consideration by the Board. They included the following:
1. Assigning the responsibility of audit committee to the Finance Committee
2. Developing a Governance Policy and Values/Ethics Policy for the Board of Directors
3. Developing Anti-discrimination and Anti-harassment policies together with signed acknowledgments for association staff
Mr. Hammond reported on the unaudited GEM financial statement for 12/31/06. GEM’s goal of preserving capital was achieved. Member equity was $14,465,378, which was about $600,000 more than the previous year-end. Losses and loss adjustment expenses totaled $7,852,040 which was the primary contributor to the net loss on the income statement of $72,559. With $19,008,120 in net loss and LAE Reserves, Mr. Steddom stated GEM takes a very conservative approach in its reserving practices.
Mr. Hammond reported on the 20% incentive accrual provided to GEM founding members. For MVRMA, the total incentive is $100,000. For all founding members, the total is $1,788,724. The GEM Board approved the accrual of this incentive over ten years. For 2006 and 2007, the incentive will be allocated from associate member accounts. This allocation will continue during the ten year period, assuming there are sufficient funds in those accounts.
Mr. Hammond informed the Board a successor had been selected to replace John Salisbury, current CEO of GEM. The successor is John M. Foehl, Jr., who will join GEM as Executive Vice President on April 1, 2007. Mr. Foehl will become President and CEO effective January 1, 2008 when Mr. Salisbury retires. Mr. Foehl has 25 years experience in the captive insurance, banking, investment management and consulting business.
Alliant Insurance Services Report
Mr. Steddom stated insurance companies made a lot of money during the last year, and as a result, the insurance market is softening. At 1/1, liability was renewing at flat to down, and crime and boiler and machinery were flat. Regarding property, he stated providing a complete schedule of values is crucial (i.e., number of stories, sq. ft., etc.). He noted MVRMA’s schedule has been acceptable. Due to the change in how MVRMA is valuing its contents, Mr. Steddom will report on this and other aspects of our property coverage in the next issue of Risky Business.
Executive Director’s Report
Mr. Hammond stated the following people agreed to represent MVRMA at conferences in 2007:
Starr Markworth attended the Spring AGRIP Conference in San Diego, CA March 12-14.
Derrick Parham, Springdale, and Tom Judy, Sidney, will attend the PRIMA Annual conference in Boston, MA June 10-13.
Mark Schlagheck, Centerville, will attend the GEM Summit in Madison, WI July 17-18 with Mike Hammond.
Dody Bruck will attend the Fall AGRIP Conference in Savannah, GA October 29-31 with Mike Hammond and Kathy St. Pierre.
There is still one opening for a Trustee to attend a conference. Anyone interested in attending should contact the MVRMA office.
Mr. Hammond announced MVRMA has received recognition for compliance with AGRIP’s Advisory Standards. This recognition is effective for three years beginning May 1, 2007. MVRMA is one of only 32 pools to earn this recognition and has received continuous recognition since 1994.
Mr. Hammond stated he met with the Board officers on March 9 to begin preparing for the Strategic Planning Retreat scheduled for Monday, May 7. The officers selected the Centerville Police Department training room as the site for this year’s meeting because of its central location. Mr. Hammond distributed and reviewed a preliminary agenda that was developed with input from the officers. The meeting will begin at 9:00 am with refreshments. The keynote speaker, Superman Dave Leedy, will address the group at 9:30 am. Before lunch, the group will break into four groups to discuss and identify whether we’re doing what we should be doing with regard to Board governance and rate stabilization. After lunch, Paul Wright, the Fire Chief at Montgomery, with some assistance from Wayne Davis, will lead the group in an interest based approach to discussing 3-5 hot topics. Mr. Hammond distributed a survey with 16 topics and asked the Board to rank the five topics they would most like to discuss. Staff will compile the results of the survey and provide the outcome in the final Strategic Planning agenda. The retreat is expected to end by 3:30 pm.
The final item discussed at the Board Meeting was the recent contact from Ken Beres, a risk management consultant hired by CORMA. Mr. Hammond explained that CORMA is reviewing its options with regard to its October 1 renewal date. Mr. Beres asked Mr. Hammond to respond to 21 questions about various aspects of MVRMA including its underwriting, governance, committees, deductibles, current reinsurers, etc. A copy of Mr. Hammond’s responses was distributed at the meeting. Mr. Hammond believes Mr. Beres has a positive outlook regarding pools, and is confident MVRMA will be viewed in a positive light. CORMA is expecting Mr. Beres’ report by the end of the month.
Having concluded its business for the day, the meeting adjourned at 11:05 am.