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MINUTESOF
THE MIAMI VALLEY RISK MANAGEMENT ASSOCIATION
December 18, 2006
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: Jim Pfeffer, Blue Ash; Mark Schlagheck, Centerville; Eric Smith and Janine Cooper, Englewood; Dave Couch, Indian Hill; Nancy Gregory, Kettering; Kim Lapensee, Madeira; Mary Mueller, Mason; Jolene Walker, Miamisburg; Wayne Davis, Montgomery; Gary Lucas, Piqua; Tom Judy, Sidney; Sue Knight, Troy; Julie Trick, Vandalia; Tom Reilly, West Carrollton; Jenny Chavarria and Lynn Tetley, Wyoming; Rick Steddom, Alliant Insurance Services; and Kathy St. Pierre, Craig Blair, Starr Markworth and Michael Hammond, MVRMA.
Shortly after the meeting began, Derrick Parham, Springdale; Dick Drennen, Tipp City and Laura Curliss, Wilmington arrived.
Motion by Ms. Gregory, seconded by Mr. Davis, to approve the Consent Agenda. Motion carried.
Risk Management Committee Report
Ms. Markworth reviewed the 2006 Training Program. In 2006, 1012 participants attended 29 training opportunities. 618 of those attendees were from MVRMA member cities.
Ms. Markworth reviewed proposed training for 2007. The schedule will include Supervisory Training to be held March through May. There will be two, possibly three sessions. In January, there will be an FMLA/ADA training session held in the morning with a PM session covering emerging technologies ( i.e., cell phones, GPS on vehicles, etc.).
Mr. Hammond highlighted some of the risk management requests/issues discussed at the December 5 Risk Management Committee meeting. They included a fire department vehicular accident involving a trainee in Wilmington, a new law requiring lockdowns at schools and signage required for the new non-smoking policy. For more specific information about these issues members should contact Mr. Hammond directly.
Mr. Blair noted no substantial changes to the Open Claims & Incurred Loss Report since last quarter. However, subsequent to the Risk Management Committee meeting, Mr. Blair received a request for settlement of the 2005 Manley v. Kettering claim. This claim involved a Kettering police officer who rearended a car driven by Sheila Manley who then rearended another car. Ms. Manley’s car flipped onto its top and both she and her passenger were removed to local hospitals. Total medicals were $7,413, of which $1,265 was not paid. Lost wages totaled $9,612 for Mr. and Mrs. Manley. Motion by Mr. Pfeffer, seconded by Ms. Trick to approve a settlement of up to $35,000. After some discussion, Mr. Pfeffer amended his motion to approve a settlement of up to $32,000, which was seconded by Mr. Davis. Motion carried.
Ms. Markworth explained that the underwriters are paying more attention to whether certain employment practice policies exist. Since all members do not currently have these policies, the Risk Management Committee is recommending development of model policies for anti-discrimination, anti-harassment, ADA, workplace violence and sexual misconduct. These policies would be reviewed and updated by legal counsel every two years. If a member chooses to develop its own policies, the member will be responsible for having them reviewed every two years. Motion by Mr. Judy, seconded by Ms. Curliss, to develop the aforementioned policies that would be reviewed and updated by legal counsel every two years. Motion carried.
Mr. Hammond informed the Board that during this year’s renewal process, the underwriters questioned whether all members have Child Molestation Policies. The underwriters even provided a sample policy. Although there is low frequency for this type of claim, the severity is always high. The RM Committee recommended development of a Child Molestation Policy at the time the other model policies are developed. Motion by Mr. Judy, seconded by Ms. Lapensee, to approve development of a model Child Molestation Policy, which will be reviewed every two years by legal counsel. Motion carried.
Ms. Markworth informed the Board that MVRMA was approached about participating in a pilot program for on-line loss control training by TargetSafety. Seven members would evaluate this training for a 60 day period. If the pilot program is successful, MVRMA would need a commitment of 500 employees at $75 per employee each year for a three year period. A one-time fee of $14,895 would be paid by MVRMA. This training is designed specifically for the public sector and is approved for paramedic CEUs and Ohio EPA contact hours. Information about the program was included in the agenda packet. Motion by Mr. Davis, seconded by Mr. Reilly, to approve participation in the pilot program. Motion carried. Initially, Mr. Judy and Mr. Davis expressed an interest in participating in the pilot program but indicated they would need to get approval. Those cities wishing to participate in the pilot program were instructed to contact Ms. Markworth.
Ms. Lapensee explained that background checks and pre-employment screening were discussed at the Risk Management Committee meeting. Ms. Markworth stated she will be conducting a survey of the members to determine the type and cost of background checks and pre-employment screening each is conducting. Depending on the need, a joint program with MVCC, and possibly CLG, may be developed to provide a cost savings for this type of service.
Finance Committee Report
The AGRiP Advisory Standards Recognition Application was included with the agenda packet. Mr. Hammond explained the application is a self evaluation that considers MVRMA’s policies, procedures, bylaws, contracts, etc. to determine if it is in compliance with AGRiP standards. MVRMA has received continuous recognition since 1994. This recognition provides a 1% underwriting credit from GEM. Out of 450 governmental risk pools in the US, only 37 have achieved this recognition. Motion by Ms. Trick, seconded by Mr. Davis, to approve the application. Motion carried.
Mr. Hammond explained changes in the 2007 Liability Coverage Document were necessary to make our document consistent with the GEM member reinsurance agreement as well as GEM’s agreement with Munich Re America. He highlighted the following changes:
Page 2 – Under Coverage Territory, territory was changed from “anywhere in the world” to “in the United States of America, its territories or possessions, the Commonwealth of Puerto Rico, the District of Columbia and Canada; but shall also include incidental exposures elsewhere.”
Page 4 – A new (J) was inserted which describes contractor liability, and defines what construction is and is not covered.
Page 5 – (K) discusses the exclusion for nuclear energy liability and includes wording changes that meet specifications of the reinsurer’s attorney.
Page 6 – (M) further defines the exclusion for asbestos (or silica) liability.
Page 8 – (U), the mold exclusion, now includes bacteria. (V) further defines the exclusion for Terrorist Activity. (Y) excludes coverage related to securities laws or regulations. The exclusion for liability as a result of war in (Z) was expanded.
Page 11 – The definition for Terrorist Activity in (P) was expanded.
Page 19 – Endorsement 3-07 includes City Prosecutors as covered persons.
Motion by Mr. Parham, seconded by Mr. Smith, to approve the 2007 Liability Coverage Document. Motion carried.
Mr. Schlagheck stated the overall liability renewal will increase 3.9%. The premium will be $249,397 for coverage $1M x $1M and $289,948 for coverage $8M x $2M. Crime will be a flat renewal and the price for bonds will be the same as 2006. Mr. Hammond expressed his pleasure in the liability renewal, which was less than projected in the preliminary budget. Exposures used for determining the liability premium are net operating expenses and vehicles which changed 2.1% and 0.4%, respectively. He noted MVRMA received a 14% credit from GEM out of a possible 15%. Motion by Mr. Judy, seconded by Mr. Schlagheck, to approve the 2007 renewal for liability, crime and bonds. Motion carried.
Mr. Schlagheck noted there were only minor changes in the expenditure budget since it was presented at the September Board Meeting. Mr. Hammond noted the final PCF calculation now includes a separate line item for NAWA, the water authority jointly owned by Tipp City and Vandalia. Providing a separate line is believed to be the simplest way to segregate the premium for NAWA. The final 2006 operating rebate was increased from $60,000 to $100,000. A copy of the 2007 objectives was provided with the agenda packet, but there was no discussion at the Board Meeting. Motion by Mr. Schlagheck, seconded by Mr. Davis, to approve the 2007 final expenditure budget, PCF and workplan (2007 objectives). Motion carried.
Mr. Hammond explained that recent appraisals have included contents values. To be consistent, staff has been working with the appraiser at Alliant to obtain contents appraisals for all buildings. The appraiser will use computer modules to determine contents values from the size and use of each building. Preliminary calculations indicate contents may currently be overstated. A lower contents value would have a positive effect on our property renewal July 1. Final contents appraisals are expected to be completed in the next couple weeks.
Nominating Committee Report
Mr. Judy thanked the 2006 officers for their service and on behalf of the Nominating Committee, recommended they be reelected to the same positions in 2007. Motion by Ms. Mueller, seconded by Ms. Curliss to elect: Sue Knight, President; Tom Reilly, Vice President; Mark Schlagheck, Treasurer and Julie Trick, Secretary. Motion carried.
Alliant Insurance Services Report
Mr. Steddom stated unless there is a major earthquake in California, he expects insurance companies to have record profits ($57 billion) at year’s end. Even with the anticipated $400 billion surplus, it is expected the insurance industry will still be under capitalized by about $30 billion. The profits are expected to fund past losses from asbestos and similar type claims.
Based on recent catastrophes such as Katrina, Mr. Steddom sees rates stabilizing for the next 3-4 years. In individual market segments, he has seen liability softening a bit. Boiler, machinery and crime are stable. Property remains hard but is expected to level out. Mr. Steddom expects our property rate to be stable or increase no more than 10-15% at renewal. He noted PEPIP is diversifying somewhat and may even change some renewal dates. Our current renewal, July 1, is out of sync with our budget and other renewals which take place 1/1. However, Alliant does not like 1/1 property renewals because that date is too close to the season for bad wind losses.
Mr. Steddom also requested ideas for future Risky Business articles.
Executive Director’s Report
Mr. Hammond stated Mr. Davis, Ms. St. Pierre and he attended the fall AGRIP Governance Conference in New York City October 9-11. Mr. Davis reported he found it very worthwhile. He stated there were over 400 attendees representing 69 pools. He attended sessions concerning trustee governance. From discussions at his sessions and with other attendees, Mr. Davis determined MVRMA is in very good shape. Regarding issues of pool effectiveness, he noted two areas that MVRMA should address: a succession plan and a formal process for evaluating each member.
Mr. Hammond noted a sign-up sheet was being passed around to determine who might have an interest in attending a conference in 2007. The budget allows for four Board members and the Board President to attend a conference next year.
The recommended Board meeting dates for 2007 are:
Monday, March 19
Monday, June 18
Monday, September 24
Monday, December 17
Motion by Ms. Gregory, seconded by Mr. Judy, to approve the 2007 meeting dates as recommended. Motion carried. Mr. Hammond reminded everyone that the September meeting will actually be the fourth Monday, to provide additional time for preparing the preliminary expenditure budget.
Mr. Hammond reminded everyone that the Strategic Planning Retreat will be held in 2007. The Board agreed to meet on Monday May 7. Anyone interested in hosting the retreat was asked to contact staff after the meeting.
Mr. Hammond informed the Board that MVRMA received the Certificate of Achievement from GFOA for its CAFR for the year ended December 31, 2005. MVRMA has received this certificate for fourteen consecutive years.
Having concluded its business for the day, the meeting adjourned at 10:50 am.
The meeting was followed by a holiday luncheon at the Kohler Center Banquet Room across the street from the MVRMA offices.