September 24, 2007

Time and Location

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: Carol Becker, Beavercreek; Dave Helling, Bellbrook; Jim Pfeffer, Blue Ash; Mark Schlagheck, Centerville; Janine Cooper, Englewood; Nancy Gregory, Kettering; Tom Moeller, Madeira; Wayne Davis, Montgomery; Stacy Wall, Piqua; Tom Judy, Sidney; Derrick Parham, Springdale; Sue Knight, Troy; Julie Trick, Vandalia; Tom Reilly, West Carrollton; Laura Curliss, Wilmington; Rick Steddom, Alliant Insurance Services; and Kathy St. Pierre, Craig Blair, Starr Markworth and Michael Hammond, MVRMA.

 Dick Drennen, Tipp City arrived shortly after the meeting started, and Mary Mueller, arrived at 9:20 am.

Consent Agenda Approval

Motion by Ms. Gregory, seconded by Mr. Davis, to approve the Consent Agenda.  Motion carried. 

Risk Management Committee Report

Ms. Markworth provided a training update.  As of the end of August, almost 800 participants had attended training.  Upcoming classes includes driver training, Effective Performance Appraisals (October 25), the Annual Legal Update (November 8) and Winter Risk Management and Parks & Rec Risk Management (November 14 and 15).  Next year, there will be a Professional Assistants’ Development class.  Although not advertised as yet, the class is already full.  Because of the huge response, another class will most likely be held in the fall.   

Mr. Hammond referred to the Risk Management Requests & New Issues Report discussed at the RM Committee Meeting.  He noted Special Events Coverage, offered through Alliant, has been very popular.  It offers first dollar coverage for a premium that is often less than MVRMA’s $2,500 deductible.  Another type of coverage members may want to consider is Event Cancellation insurance.  However, since it covers losses caused by cancellation due to weather, it is necessary to apply for this coverage well in advance of the event. 

Mr. Blair reviewed the Open Claims and Incurred Losses Report.  He noted the bold print indicates any changes since the last Board meeting.  Motion by Ms. Curliss, seconded by Mr. Judy, to approve the Open Claims and Incurred Losses Report dated August 30, 2007.  Motion carried. 

Ms. Markworth discussed House Bill 9 (Open Records Request Requirements) which was the subject of the Hot Topic Lunch held last week.  Bob Surdyk, MVRMA’s corporate counsel, was the speaker and provided extra handouts of his presentation.  Ms. Markworth suggested anyone who didn’t attend should pick up a copy after the Board meeting.  She noted several members have already developed Open Records policies and asked those members to email copies to her so she can share them with the other members.  The official training for handling open records requests will be conducted by the Ohio attorney general’s office.  On October 5, training will be held in Cincinnati and on November 28, training will be held at Wright State University.  For more information about this training, consult the attorney general’s website.  Since MVRMA also has to adopt an Open Records Policy, Mr. Hammond stated he will present one for the Board’s approval at the December Board Meeting. 

Ms. Markworth explained three of the four NAPD driver trainers, who handle the bulk of the training held at Miamisburg, will not be able to fulfill that function much longer.  She asked if any city would like to send someone new through the training in 2008.  To be cost effective, the training of the new trainers would have to take place when the existing trainers are re-certified.  If we don’t secure new trainers, another option would be to contract with the current trainers who are retiring.  However, this solution would be more costly to the members, who now pay $40 per participant for two full days of training.  The retiring trainers will be re-certified at the recommendation of the Risk Management Committee. 

Ms. Markworth reported the new summer schedule for conducting the SPEC evaluations has worked out well.  Scheduling was much easier than ever before, and she was very pleased with the final results.  This year’s Ascension Award, for the most improved compliance, went to the City of Centerville, which improved from 74.1% to 96.67%.  The Pinnacle Award, for the best compliance (100%), went to the City of Troy, which has had 100% compliance since 2001. 

Mr. Hammond reviewed the Incurred Loss Ratio report which compares paid losses to contributions during a five year period.  The paid loss figure includes reserves less deductibles.  Since the first report, for the period 1998-2002, the average loss ratio has declined each year.  The current ratio, for the period 2002-2006, was 38.7%.  Since the industry benchmark is 60%, Ms. Markworth and Mr. Hammond will visit each city with a ratio higher than 60%.  They will discuss specific claims that contributed to the ratio and loss control measures that might help lower the ratio in the future. 

Finance Committee Report

Mr. Schlagheck stated the crime rate for 2008 is expected to be flat.  Mr. Hammond added that no crime applications will be necessary this year, but some additional information may be required.   

Mr. Schlagheck stated the 2008 primary excess casualty premium, for $1M X $1M, will be 20% less than 2007.  The lower premium was attributed to GEM’s underwriting process which considers the last nine years of losses.  Since 1997 and its two large claims were no longer considered, MVRMA’s historical losses improved significantly.  Had our exposures not increased, and had GEM not invoked a 25% rate cap, MVRMA’s premium would have been even lower.  Additionally, MVRMA received 14% out of a possible 15% credit for various loss control measures.  The premium for 2008 will be $199,144.

Mr. Hammond advised the group he would receive the excess liability proposal at the GEM Board Meeting later in the week.  A flat rate renewal has been anticipated in the preliminary budget.   

Mr. Schlagheck stated MVRMA has received a one year contract from Carol Riggle, the CPA who has prepared MVRMA’s financial statements for the last two years.  Since staff has been very satisfied with Ms. Riggle’s work, and her fee remains the same as 2007, the Finance Committee recommended approval of her contract for 2008.  Motion by Mr. Parham, seconded by Mr. Davis, to approve Ms. Riggle’s contract.  Motion carried. 

Mr. Hammond distributed a letter from Terry Godbold, MVRMA’s actuary, regarding the  Loss Year 20 Funding Requirement.  Referring to the summary in the agenda packet, Mr. Hammond explained MVRMA has selected a funding amount between the 60% and 70% confidence levels, based on MVRMA’s unadjusted experience.  That amount is $2.525M, or $75,000 more than was contributed in 2007.  Because MVRMA has its shock loss fund, it does not have to consider the industry standard when selecting the funding amount.  Motion by Ms. Curliss, seconded by Mr. Schlagheck, to accept the loss funding study for LY20 (2008) and approve a loss funding amount of $2.525M for 2008.  Motion carried. 

Ms. St. Pierre reviewed the 2008 Preliminary Budget. 

100-xxx Excess Insurance: Crime and bonds are expected to be flat.  The premium for primary excess casualty ($1M X $1M) is $199,144.  The rate for Excess Casualty ($8M X $2M) is expected to be flat, and based on current exposures was budgeted at $312,594.  Property was budgeted for a 5% increase based on TIV, for which appraised properties and contents were increased 5.3%.  Property coverage will not renew until July 1, 2008. 

200-xxx Professional Services:  Loss control services increased from $23,975 to $30,985 to allow for reimbursement of law enforcement accreditation and reaccreditation fees, $500 for OPOTA training for Troy and recertification of current driver trainers.  Corporate Legal Services increased over what was budgeted in 2007, to provide for the more frequent occurrence of coverage or other legal opinions.  The only other significant change is the broker fee.  The initial three-year agreement with Alliant ends July 1, 2008.  For the optional two years, an annual fee not to exceed a 10% increase will be mutually agreed upon.  

300-xxx Employment Services:  The budget anticipates a 3% payroll expense increase.  New salary ranges for MVRMA’s four employees, reflecting a 4.41% CPI increase, were included in note 1.  Health insurance was increased by 15.8% over what is expected to be paid in 2007.  This figure may be adjusted downward depending on the type of coverage selected for 2008.  MVRMA will be discussing HSAs and other options with its health insurance broker later this year.  All other figures in this category are based on payroll.

400-xxx Pool Operations:  There was very little change in this category.  We allowed for an extra $1,900 to purchase a projector and a replacement computer, if necessary.  $7,500 was added to miscellaneous to allow for the extra expense of adding the CORMA cities.  This amount will be adjusted prior to the Final Budget, since CORMA will not be extended an invitation. 

500-xxx Claims/Loss Adjustment Expenses:  As stated previously, $2.525M will be contributed to the LY20 loss fund.  The amount to be contributed to the Shock Loss Fund is based on a comparison of the member’s current SLF balance and its 2008 loss fund contribution.  If the member’s loss fund contribution is greater than its SLF balance, the member is required to contribute 15% of the loss fund amount or the difference between the two, whichever is less. 

Pool Contribution Factors:  Ms. St. Pierre asked everyone to review the exposures and contact her if there were any discrepancies.  

Loss Year 19 Operating Fund Rebate:  Ms. St. Pierre stated the $60,000 rebate would probably be increased to $100,000 once a more accurate projection of the 2007 expenses could be made. 

Amount to be Billed:  Mr. Hammond stated the 2008 Operating Fund contribution is 2.3% less than 2007.  The 2008 Loss Fund contribution is 3.1% or $75,000 higher than 2007.  The overall amount to be billed is .4% higher than 2007. 

Ms. St. Pierre noted copies of the 8/31/07 Shock Loss Fund and General Reserve Fund balances were included with the expense budget.  Motion by Ms. Gregory, seconded by Mr. Moeller, to approve the 2008 Preliminary Budget as presented.  Motion carried. 

Mr. Schlagheck stated a motion would be necessary to formally accept the Financial Audit and CAFR for the year ended December 31, 2006.  It was so moved by Mr. Moeller and seconded by Ms. Gregory.  Motion carried. 

Mr. Schlagheck explained vehicle reporting would be standardized in 2008 to simplify the process for Ms. St. Pierre.  Mr. Steddom stated he would check with the reinsurers to verify no significant changes in required information would be requested.  Ms. St. Pierre said she would provide a sample spreadsheet after the first of the year.  Once completed, the spreadsheet would just be updated annually when MVRMA prepares its preliminary budget.  

Membership & Marketing Committee Report

Mr. Hammond stated MVRMA did not have all the information necessary to compute a premium for the CORMA cities until late last week.  Prior to receiving the loss funding amount, members of the M&M Committee were questioning if one of the CORMA cities, in particular, satisfied the requirements of membership.  Using the raw loss data, Mr. Judy computed this city’s loss cost per NOE, per employee and per population.  This city would have been number one for the entire pool in almost all categories.  Mr. Judy also computed a loss to contribution ratio for the city.  A ratio of 1.0 or less would be desirable and would indicate the city’s losses do not exceed its contributions.  The city’s ratio was 2.0, an unacceptable ratio. 

As a group, the four CORMA cities represented 40% of MVRMA’s existing exposures.  Once the loss funding was established by the actuary, staff was able to compute “Total Amount to be Billed” for the reconfigured pool that included the CORMA cities.  At the Board Meeting, Mr. Hammond distributed a comparison of  the “Total Amount to be Billed” for LY19 (MVRMA cities only), LY20 (MVRMA cities only), LY20 (MVRMA + 4 CORMA cities) and LY20 (MVRMA +3 CORMA cities).  Using the last calculation, and deducting the amount paid by the three CORMA cities, the current MVRMA members would have paid only 7/10 of 1% less than they would have paid without adding any new members.  In fact, because of the additional loss funding, several of the MVRMA members’ shock loss fund contributions increased so much, they would have paid more by adding the three members.  Motion by Mr. Judy, seconded by Mr. Drennen, not to make a proposal to the four CORMA cities.  Motion carried. 

Alliant Insurance Services Report

Mr. Steddom reported the liability market continues to be soft.  The 7/1 renewals were very good and he sees no reason for that market to change.  He stated the property market has also been very good and will continue along that path barring any significant storm losses in the next month or so. 

Mr. Steddom suggested everyone consider adopting the specific wording he provided in his August Risky Business article when stating requirements for contracts with vendors and contractors.  Specifically, the wording with regard to liability should be “Coverage will be at least as broad as Insurance Services Office Commercial General Liability coverage (occurrence Form CG00 01) including products and completed operations coverage.  The contractor/vendor shall maintain limits of insurance no less than $1,000,000 per occurrence for bodily injury, personal injury and property damage.  If Commercial General Liability insurance or other form with a general aggregate limit is used, either the general aggregate limit shall apply separately to this project/location or the general aggregate limit shall be twice the required occurrence limit.” 

Because MVRMA did not receive the final 1% credit from GEM because of the absence of tort caps, Mr. Steddom explained the difference between tort caps and immunities.  A tort cap is a maximum dollar amount, established by state law, for payment of a lawsuit.  Immunities are also established by the state, but disallow certain claims to be brought against a local government. 

Executive Director’s Report

Mr. Hammond reported the recent AGRIP Executive Leadership Institute in Cleveland, which was hosted by MVRMA and three other Ohio pools, was well attended.  Everyone was divided into groups and participated in a computer simulation of running an insurance company.  The attendees found the experience very worthwhile. 

Mr. Hammond stated MVRMA would be hosting the GEM Board Meeting and Financial Summit to be held in Columbus 9/26-9/28.  Ms. St. Pierre will be attending the last day and a half.  Topics for discussion included reinsurance data submission, emerging issues in accounting, pool financial reporting, how technology is impacting pools, financial implications of discounting and reserving and GEM financials.  

October 29-31, Mr. Hammond and Ms. Bruck, Miamisburg, will be attending the AGRIP Governance Conference in Savannah, GA.  Terry Godbold, MVRMA’s actuary, and Mr. Hammond will be making a presentation on planned growth. 

President’s Report

Ms. Knight asked that anyone wishing to serve as an officer of MVRMA should contact Mr. Judy, chair of the Nominating Committee.  The Nominating Committee was then directed to prepare a 2008 slate of officers for consideration at the December 17 Board Meeting. 

Ms. Knight also asked anyone wishing to change committee assignments contact Ms. St. Pierre with his/her request.   

Ms. Markworth stated staff would like to schedule a meeting and information exchange involving at least one participant from each member’s Safety Committee.  More information on this meeting will be forwarded later. 

Having concluded its business for the day, the meeting adjourned at 11:10 am.