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June 20, 2005
MVRMA Office, 4625 Presidential Way, Kettering, Ohio. The meeting began at 9:10 am.
The following individuals were present when the meeting was called to order: Sherry Callahan, Beavercreek; Dave Helling, Bellbrook; Jim Pfeffer, Blue Ash; Eric Smith, Englewood; Mark Schlagheck, Centerville; Dave Couch, Indian Hill; Nancy Gregory, Kettering; Kim Lapensee, Madeira; Bruce Snell, Mason; George Perrine, Miamisburg; Wayne Davis, Montgomery; Gary Lucas, Piqua; Tom Judy, Sidney; Sue Knight, Troy; Julie Trick, Vandalia; Tom Reilly, West Carrollton; Laura Curliss, Wilmington; Rick Steddom, Driver Alliant Insurance Services; and Kathy St. Pierre, Craig Blair, Starr Markworth and Michael Hammond, MVRMA.
Derrick Parham, Springdale arrived at 9:12 am, and John Salisbury, Government Entities Mutual, Inc., arrived shortly thereafter.
Motion by Ms. Knight, seconded by Ms. Gregory, to approve the Consent Agenda. Motion carried.
Risk Management Committee Report
Ms. Markworth mentioned attendance at this year’s training opportunities has been low in comparison to last year. At the suggestion of the Risk Management Committee, Ms. Markworth will be meeting with MVRMA’s public works directors to determine why attendance has been low (i.e. time of day, day of week, type of sessions, etc.). As a result of fewer people enrolling for classes, several trainers have had to be cancelled at the last minute.
Ms. Markworth noted how helpful it was to meet with the individual departments during this year’s SPEC evaluations and thanked everyone for their cooperation. She then presented this year’s SPEC awards. The Ascension Award for most improved was given to the City of Bellbrook, which improved its compliance 37.71%. The Pinnacle Award, given to the city(ies) with the best overall percentage of compliance, was awarded to the Cities of Troy and Sidney with 100% compliance. Ms. Markworth praised the Sidney Police Department for meeting the requirements of SPEC even though it is not accredited by CALEA.
Mr. Blair reviewed the Claims Watchlist, a listing of current claims with total incurred greater than $25,000. The most significant claim on the list is the Carder lawsuit which is scheduled for trial in a couple weeks. The maximum amount currently authorized by the MVRMA Board for settling this suit is $50,000. The Cincinnati Insurance Company, which provides the Carders’ uninsured motorist coverage, is now willing to participate in a settlement. Mr. Blair will keep the Board posted on the outcome of this claim.
Ms. Markworth reviewed MVRMA’s Top Twenty-Five Paid Losses and noted it has been awhile since a new claim has been added to the list. The most recent claim occurred in 2002.
There was quite a discussion concerning SPEC and possible consequences or rewards. It was agreed all members have the same goal of improving risk management and loss control. There were differing viewpoints on how this improvement is to be accomplished. It was generally agreed that SPEC standards should continue to be reviewed. Any Board member who believes there are requirements of SPEC that are not worthwhile or that have an overestimated value, should bring them to the attention of staff. Further review and discussion of SPEC will be an ongoing responsibility of the RM Committee.
Finance Committee Report
As discussed at the March Board Meeting, Marsh settled its lawsuit with the New York Attorney General for $850,000,000 (the amount of contingent fees received by Marsh in one year). Included in the agenda packet was the settlement notice MVRMA recently received concerning this settlement. MVRMA’s share is $2,665.13, which would be paid in four annual installments. Mr. Hammond is verifying that all contingent fees for the period 1/1/01-12/31/04 were included. At the request of the Ohio Attorney General, MVRMA has been asked to defer acceptance of the settlement for 90 days while the OAG conducts its own investigation. Mr. Hammond will report the OAG’s findings at the September Board Meeting.
Mr. Alt, MVRMA’s client executive at Marsh, met with Mr. Hammond to discuss Marsh’s future relationship with MVRMA. Since Marsh is placing only crime coverage and bonds, Mr. Alt suggested we not renew our broker contract when it expires August 11. He further suggested we provide a broker of record letter to Driver Alliant so they could interact with current crime and bond carriers on our behalf. Loss control services provided by Marsh would still be available to MVRMA on a fee for services basis. Motion by Mr. Parham, seconded by Ms. Knight, not to renew the Marsh brokerage agreement. Motion carried.
Mr. Hammond reviewed the new broker agreement which would establish Driver Alliant as MVRMA’s broker. It was modeled after our current agreement with Marsh. The effective date of 7/1/05 was designed to coincide with MVRMA’s property renewal. Since this agreement is based on a fee for services, it would include placement of the property program. Any commission derived from this placement would be deducted from the property premium. The obligations of Driver include placements of the twelve coverages listed on page 1 of the agreement. Coverages 13 through 16, listed on page 2, are optional placements not covered by the annual fee. MVRMA reserved the right to approve the Driver personnel who would be responsible for our business. The term of the agreement is three years with a renewal option of two additional years. The annual fee of $83,000 for each of the first three years will be paid quarterly. If additional cities are added to the pool, there will be no additional fee. If the agreement is renewed, the annual fee will not increase by more than 10%. Motion by Mr. Pfeffer, seconded by Mr. Davis, to approve the brokerage agreement with Driver Alliant Insurance Services as presented. Motion carried.
Mr. John Salisbury, CEO for Government Entities Mutual, Inc., presented a power point presentation about GEM. He noted GEM is in its third year of operation and has 16 members in 14 states. Each member has one vote per $100,000 of capital. Board members are elected, but each Board member has only one vote. Mr. Hammond is currently a member of the GEM Board. GEM is similar to two other organizations, a captive of county pools and a captive of state municipal league pools. Mr. Salisbury stated GEM has a pool of 75-100 potential new members. It is very likely GEM will have two new members by July 1, 2005. In addition to distancing its members from the commercial insurance market, GEM also provides excellent networking opportunities. With regard to the 2004 financial results, Mr. Salisbury noted the net operating loss. Because the company is so young, the actuary is being very conservative. Currently, 78% of GEM’s loss reserves are IBNR. In response to the question “Why make an additional capital contribution to GEM?” Mr. Salisbury provided the following:
1. It increases GEM’s capacity to assume additional risk.
2. It decreases reliance on reinsurance.
3. It provides potential savings to members based on loss experience.
4. It provides enhanced opportunity for rate of return on equity with some protection on downside risk.
GEM’s short term goal is to have $20 million in capital by 2008, and its long term goal is to have $100 million in capital.
Motion by Ms. Gregory, seconded by Mr. Davis, to approve using the funds currently held in closed loss year 12 to make an additional $250,000 capital contribution to GEM. Motion carried.
Mr. Hammond reviewed the 2004 Annual Report. He mentioned the 2004 highlights which included adding three new members and closing loss years 11 and 12 which returned more than $1 million to the members of those loss years. The insurance claims cost for the period 1998-2004 was 75% indemnity and 25% defense. The average per claim of $2,746 was down when compared to the previous report. Claims cost by type of claim for the same period was 25% auto liability, 12% auto physical damage, 42% general liability and 21% property. The per claim cost was down for all types except auto physical damage which was about the same as the previous report. 2004 was a stellar year for loss control activities with 1171 individual participants and 20 risk/needs assessments.
Mr. Hammond informed the Board an additional $3 million in liability coverage for 2005 is not available because ACE was unable to secure reinsurance beyond the initial $5 million x $2 million. ACE will, however, refund the $11,000+ MVRMA paid in taxes and fees. Driver will pursue higher limits for 2006.
Regarding the outlook for the liability renewal, Mr. Steddom is anticipating a 5-20% increase. AIG could have an impact on both the liability and property renewals. AIG was recently downgraded from A++ to A+. Mr. Steddom noted a dwindling number of players in the public entity market.
Mr. Hammond reviewed the PEPIP property renewal. The total limit of liability was increased from $250 million to $1 billion. Increases in sublimits and terrorism were also noted. The rate quoted for the period 7/1/05-7/1/06 is $.0348/$100 TIV. GEM will also be offering a property program, but it will be priced approximately 10% higher than PEPIP. Motion by Mr. Davis, seconded by Ms. Knight, to approve the 7/1/05 property renewal with PEPIP. Motion carried.
The 2004 financial audit is nearing completion. This is the last year of our contract with Deloitte & Touche LLP. Mr. Hammond has contacted the Dayton Regional Office for the State Auditor regarding the RFP for financial auditing services for the year ending 12/31/05. He would like to award the bid by the end of the year.
Mr. Hammond acknowledged receipt of the Certificate of Achievement from GFOA for MVRMA’s 12/31/03 CAFR.
Membership & Marketing Committee Report
The M& M Committee reviewed the 2005 Membership & Marketing Survey and identified eight cities as the most desirable candidates for prospective membership in MVRMA. Ms. Knight noted six of the eight cities are in the Columbus region. Dublin, Upper Arlington, Westerville and Pickerington make up a pool known as CORMA, which is managed by Willis Pooling. Delaware has considered CORMA membership but as yet, has not made that decision. Worthington appears to be aligned with a local agent. Before cities are added to the Approved List, the committee would like to secure the services of an outside consultant to assist with an impact study concerning membership growth. The questions of whether to expand MVRMA membership and at what cost need to be addressed. Motion by Mr. Davis, seconded by Mr. Reilly, to authorize the Executive Director to develop an RFP for obtaining the services of a risk management consultant to develop a business growth plan for MVRMA. Motion carried.
Awards Committee Report
Ms. Gregory reviewed the overall, department, safety performance and standard of excellence award winners recommended by the Awards Committee. She then reviewed the two recommendations for the Special Achievement Award and the two recommendations for Honorable Mention. She encouraged everyone to read the details of each of these programs and noted all four will be included in future issues of Risky Business. Ms. Gregory took this opportunity to promote the contribution of other articles of general interest to Risky Business throughout the year. Motion by Mr. Reilly, seconded by Mr. Pfeffer, to approve the 2004 Safety Awards Program as follows:
Overall Winner – Tipp City
2nd Place Overall Winner – Montgomey
Department Winners (all with zero losses)
Police – Piqua
Fire & EMS – Troy
Water & Wastewater – Vandalia
Parks & Recreation – Vandalia
Streets & Refuse – Beavercreek
Safety Performance Award (three or more consecutive zero loss years)
Police – Wilmington (5 years)
Fire & EMS – Tipp City (4 years), West Carrollton & Wyoming (3 years)
Water & Wastewater – Vandalia (11 years), West Carrollton (6 years)
Parks & Recreation – Madeira (10 years), Montgomery (4 years)
Standard of Excellence (total losses $100 or less per employee)
Tipp City - $11.54
Montgomery - $22.77
Kettering - $40.83
Wyoming - $50.13
Blue Ash - $59.47
Vandalia - $64.08
Troy - $74.46
Springdale - $77.99
Mason - $82.82
Special Achievement Winners
Vandalia Parks & Recreation for its Aquatics Safety and Emergency Preparedness Program
Indian Hill for its HPO Safety and Security Committee
Special Achievement Honorable Mention
Springdale Fire Department for it “On Spot” remote controlled tire chain system used on all fire and EMS vehicles
Montgomery’s Employee Advisory and Safety Team for its solution for preventing the city’s police vehicles from being struck while on routine traffic stops - the installation of blue and amber L.E.D. or strobe light bars and four corner strobes
Motion carried.
Driver Alliant Insurance Services Report
Mr. Steddom informed the Board property appraisals will be conducted in July by a company named Maximus. The Maximus representative will call each contact person to arrange an appointment. No one from Maximus should arrive unannounced. Anyone who has a problem with this year’s appraisal process should contact Ms. St. Pierre.
Executive Director’s Report
Mr. Hammond referenced his attendance at the GEM Board Meeting June 16-17. At that meeting, the Board decided it would be beneficial to have both NPX and GEM domiciled in the same jurisdiction. The Board decided to dissolve NPX, a California corporation, and reorganize in Washington, D.C. The new organization would be known as the National Association of Government Entity Programs.
Mr. Hammond noted that in 2006, GEM will begin accruing the funds necessary to return 10% of each member’s initial capital contribution.
Executive Session
At 11:15 am, there was a motion by Ms. Trick, seconded by Ms. Knight, to recess into Executive Session to discuss the Executive Director’s contract renewal, annual evaluation and compensation. Motion carried. Everyone other than board members was excused from the meeting.
At 11:50 am, there was a motion by Mr. Davis, seconded by Mr. Snell, to adjourn from Executive Session and return to Regular Session. Motion carried.
Personnel & Compensation Committee Report
Ms. Trick presented Resolution No. 1-2005 – Authorization for MVRMA to Pick Up the Statutorily Required Contribution to the OPERS. This resolution permits the deduction of the employee contribution to OPERS pre-tax. Motion by Ms. Knight, seconded by Mr. Davis, to approve Resolution No. 1-2005. Motion carried.
Mr. Hammond explained that the Personnel & Compensation Policy must be amended to accommodate the pre-tax deduction for health insurance and OPERS. Motion by Ms. Knight, seconded by Mr. Davis, to approve the amended Personnel & Compensation Policy as presented. Motion carried.
Mr. Judy thanked Mr. Hammond for his leadership of MVRMA during the last five years and expressed the Board’s pleasure to renew his contract for an additional five years. Motion by Mr. Pfeffer, seconded by Mr. Smith, to approve the Executive Director’s contract renewal for an additional five years effective July 1, 2005 and approve a 4% annual salary increase. The salary range for this position will be $80,000-96,000. Motion carried.
Having concluded its business for the day, the Board adjourned at 12:00 noon.