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OF
THE MIAMI VALLEY RISK MANAGEMENT ASSOCIATION
September 20, 2004
MVRMA Office, 4625 Presidential Way, Kettering, Ohio. The meeting began at 9:12 am.
The following individuals were present when the meeting was called to order: Sherry Callahan, Beavercreek; Dave Helling, Bellbrook; Jim Pfeffer, Blue Ash; Janine Cooper, Englewood; Mark Schlagheck, Centerville; Nancy Gregory, Kettering; Kim Lapensee, Madeira; Bruce Snell, Mason; Dody Bruck, Miamisburg; Wayne Davis, Montgomery; Tom Judy, Sidney; Derrick Parham, Springdale; Tom Reilly, West Carrollton; Jenny Chavarria, Wyoming; John Milazzo, Lauren Kitchen, Nikki Speller and Shellee Wagner, Marsh; and Kathy St. Pierre, Craig Blair, Starr Markworth and Michael Hammond, MVRMA.
Due to a problem on I-75, the following northern representatives arrived approximately five minutes after the meeting started: Dick Drennen, Tipp City; Sue Knight, Troy and Lori Koch, Vandalia. Cynthia Holtzapple, the new Trustee from Piqua, arrived a few minutes later.
Motion by Ms. Gregory, seconded by Mr. Davis, to approve the Consent Agenda. Motion carried.
Finance Committee Report
There are five open claims in LY 13 with reserves in excess of the current LY 13 balance. In order to cover these reserves, Mr. Reilly, as chair of the Finance Committee, recommended $350,000 be transferred from the Shock Loss Fund. Mr. Hammond noted this amount would satisfy the shortfall in LY 13. Motion by Mr. Pfeffer, seconded by Mr. Parham, to make the recommended transfer from the SLF to LY 13. Motion carried.
Mr. Reilly informed the Board loss years 11 and 12 may now be closed. On behalf of the Finance Committee, he recommended the following disposition of the $1,188,703 in funds from LY 11 and 12:
1. $500,000 to replenish the Shock Loss Fund
2. $250,000 to GEM as a capital contribution contingent upon being able to obtain increased liability limits. Should increased limits not be available, the funds would be transferred to the General Reserve Fund along with the remaining $400,000+, per the Surplus Loss Reserves Disbursement Policy.
Motion by Mr. Pfeffer, seconded by Ms. Gregory, to approve closure of loss years 11 and 12 and dispose of the funds as recommended in 1 and 2 above. Motion carried.
Motion by Mr. Parham, seconded by Ms. Lapensee, to accept the Financial Audit and CAFR for the year ended December 31, 2003. Motion carried.
Mr. Hammond informed the Board that Fifth Third Bank would now be charging $325 for processing MVRMA’s annual Line of Credit renewal. Since MVRMA has not borrowed against this credit since 1997, and because a new line could be established in 3-4 work days, Mr. Hammond recommended we allow the line of credit to lapse. Motion by Mr. Reilly, seconded by Mr. Drennen, to allow the Fifth Third Line of Credit to lapse. Motion carried.
Mr. Hammond explained the Shock Loss Fund Policy was amended to clarify the policy’s original intent, which was to have a one-to-one ratio between the loss fund and the Shock Loss Fund. Since members’ contributions to the loss fund will vary from year to year, and transfers out of the SLF will vary among members, it became necessary to address individual members’ contributions. The amended policy incorporates an annual comparison of the members’ loss fund contribution and shock loss fund balance in conjunction with MVRMA’s preliminary budget process. Since only the new members will be making SLF contributions in 2005, the amended policy will not have any effect until the 2006 preliminary budget. However, several of the original contributing members will have achieved parity between LY 17’s loss fund contribution and their shock loss fund balance, once the $500,000 transfer from LY 11 and 12 has been made. Motion by Mr. Pfeffer, seconded by Ms. Gregory, to approved the amended Shock Loss Fund Policy. Motion carried.
Mr. Hammond described the changes in the GEM Bylaws as housekeeping matters. As currently written, the bylaws allow for voting power to be based on a member’s surplus balance 180 days after the close of the fiscal year. Since GEM’s annual meeting is held prior to the end of the 180 day period, the change being recommended allows the Board of Directors to establish the date for determining surplus balance. Motion by Ms. Callahan, seconded by Mr. Parham, to authorize the Executive Director to approve the changes in the GEM Bylaws. Motion carried.
Mr. Reilly reviewed amended Endorsement No. 1-04 and new Endorsement No. 8-04 of MVRMA’s Liability Coverage Document. He explained No. 1-04 amends the named insureds to include the City of Centerville. Because Centerville had a claims made policy with its former carrier for public officials liability, Mr. Reilly explained No. 8-04 provides prior acts public officials coverage retroactive for the period 9/1/01-9/1/04. Motion by Mr. Pfeffer, seconded by Ms. Gregory, to approve Endorsements 1-04 and 8-04 as presented. Motion carried.
Mr. Reilly informed the Board the Auditor of State will require pools to contract for auditing services through its office once current contracts expire. Since MVRMA has negotiated auditing services with Deloitte & Touche through December 31, 2004, it will not be necessary to contract through the State Auditor’s office until the 2005 audit.
Risk Management Committee Report
Ms. Markworth provided a training update. Regarding training already completed this year, she noted there have been 891 attendees with 611 or 70% from MVRMA cities. She reviewed the list of upcoming training and added the Annual Legal Update on November 4 to the schedule. Some of the topics for future training will be discussed in focus groups composed of representatives from departments whose training needs are not often addressed. Before beginning another Supervisor Training, members will be surveyed to determine their needs. Two classes of participants are essential to the success of this six month program so that alternative dates and times are available to participants who miss their regularly scheduled class. Ms. Mark worth’s final comments concerned Heavy Vehicle Driver Training and the opportunity to train additional driver trainers when our current drivers are re-certified in 2005. The initial cost to the city is $1,500 per trainer, but recertification after three years is paid by MVRMA.
There was a discussion concerning the carrying of concealed weapons by off-duty and retired police officers. Because of the liability issues, several Trustees voiced concerns. In order to address these concerns, there was a motion by Mr. Davis, seconded by Mr. Pfeffer, authorizing the Executive Director to get a legal opinion addressing the various issues, the coverage provided by the MVRMA Liability Coverage Document and what risk management approaches or “best practices” might be recommended. Motion carried. Prior to obtaining the legal opinion, Mr. Hammond would like Mr. Surdyk to meet with several of MVRMA’s police chiefs in order to discuss the various issues and concerns. Any Trustee wishing his chief to participate in these discussions should contact Mr. Hammond. Mr. Hammond will also survey the members to determine what policies and practices are currently in effect.
In order to maintain a consistency in managing claims, GEM requested each member develop a Claims Management Policy. The draft policy provided in the agenda packet provides expectations and procedures for managing MVRMA’s claims. According to Mr. Hammond, much of the policy corresponds with practices already in place. Motion by Ms. Gregory, seconded by Mr. Davis, to approve the draft Claims Management Policy as presented. Motion carried.
Mr. Blair reviewed four claims on the Claims Watch List. Carder vs. Kettering will hopefully reach settlement in the next 4-6 weeks when a mediation involving all interested parties is scheduled. Hatcher vs. Vandalia, for which a settlement was approved at the June Board Meeting, did not settle. Oestreicher vs. Piqua has an October 4 trial date but may have to be rescheduled. Porter vs. Wilmington may result in a payment exceeding $300,000 depending on the amount of the Medicare reimbursement.
Awards Committee Report
As chair of the Awards Committee, Mr. Parham made the following suggestions for improving the Awards Program:
1. Change the name of the Innovation Award to Special Achievement Award in order to broaden its scope and have a greater opportunity to recognize the efforts and achievements of MVRMA members.
2. Increase the reimbursement rate for departmental breakfasts or other celebrations from $8 to $10 per employee.
3. In lieu of a breakfast or other celebration, provide a cash option for both winning and zero-loss departments which is to be used for departmental safety related training.
4. Increase the cash option from $150 to $250.
Motion by Mr. Pfeffer, seconded by Mr. Davis, to approve the changes in the Awards Program, as presented, effective in 2005. Motion carried.
Marsh USA Report
Ms. Kitchen introduced Nikki Speller who will be assisting her with day to day questions and concerns regarding MVRMA’s property program (i.e., boiler inspections, builders risk, etc.). She also introduced Shellee Wagner who provides assistance with surety bonds. With regard to the upcoming property renewal, Ms. Kitchen noted 2004 renewals have generally included rate decreases. The amount of the decrease has been dependent on current exposures and the previous increase during the hard property market. Where previous increases were smaller, there is less room for decreases now. Ms. Kitchen is hoping for a less than flat increase for MVRMA, but the recent hurricane losses may have some affect on renewals.
Mr. Milazzo explained that Marsh will be working on an alternative placement for MVRMA’s excess liability program. He and Mr. Hammond recently had a conference call with Mary Chiu, Marsh’s National Practice Leader in Public Entity Pooling. They discussed three main points for inclusion in an excess program:
1. A form that aligns with MVRMA’s primary coverage
2. Increased limits
3. A competitive rate
Ms. Chiu was quite impressed with MVRMA’s loss history, standards for membership and other aspects of the pool. She seemed confident about providing an alternative market for MVRMA’s excess liability program.
Executive Director’s Report
Mr. Hammond once again recognized MVRMA’s newest member, Centerville, and thanked Mark Schlagheck and Greg Horn for their support during membership discussions with city council. Vying for Centerville’s renewal were three traditional insurance agencies and three pools. The letter to Greg Horn, included in the agenda packet, addresses questions raised by the Centerville’s former insurance agent.
Mr. Hammond discussed his recent attendance at the AGRIP Institute for Management and Leadership in Newport, Rhode Island from August 16-18. The topic of the conference was “Scanning into the Future of Public Entity Pooling.”
Mr. Hammond informed the Board he and Dave Helling from Bellbrook will be attending the AGRIP Governance and Leadership Conference in Hershey, PA October 18-20. The title of the conference is Key Drivers for Commitment & High-End Performance for Pools.
President’s Report
Mr. Judy noted it is once again time for the Nominating Committee to develop a slate of officers for the upcoming year. He asked Mr. Parham, as chair of the committee, to present the slate at the December Board Meeting.
Before adjourning, Mr. Hammond distributed General Reserve Fund balance information and the actuary’s report on funding for LY 17.
Having concluded its business for the day, the Board adjourned at 11:23.