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December 20, 2004
Time and Location
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: Sherry Callahan, Beavercreek; Dave Helling and Dave Hamilton, Bellbrook; Janine Cooper and Eric Smith, Englewood; Mark Schlagheck, Centerville; Kim Lapensee, Madeira; Bruce Snell, Mason; Dody Bruck, Miamisburg; Wayne Davis, Montgomery; Cynthia Holtzapple, Piqua; Tom Judy, Sidney; Sue Knight, Troy; Julie Trick, Vandalia; Tom Reilly, West Carrollton; Laura Curliss, Wilmington; Jenny Chavarria, Wyoming; Dana Snider, Marsh; Tom Bryson and Rick Steddom, Driver Alliant Insurance Services; and Kathy St. Pierre, Craig Blair, Starr Markworth and Michael Hammond, MVRMA.
Derrick Parham, Springdale, arrived at 9:09 am.
David Collinsworth, Tipp City, arrived at 9:16 am.
Bob Harrison, Wyoming, arrived at 9:35 am.
Dave Couch, Indian Hill, arrived at 10.23 am.
Cheryl Hilvert, Montgomery, arrived at 11:10 am.
Consent Agenda Approval
Motion by Mr. Davis, seconded by Ms. Lapensee, to approve the Consent Agenda. Motion carried.
Risk Management Committee Report
Ms. Markworth was pleased to announce more than 1,000 MVRMA employees attended 39 training sessions about 26 different topics in 2004. She also noted the “Insurance 101” seminar will be revived in 2005 as a help to the many new trustees.
Ms. Markworth explained the formation of focus groups to identify training needs, concerns, trends or other issues. These groups will assist MVRMA and MVCC with the following:
1. Prioritize the top three training opportunities
2. Discuss the best time of day and year to hold training
3. Describe training be held in each city that could be beneficial to the group
Another outcome of the focus groups may be the formation of professional organizations which would continue to meet beyond the focus group activity.
2005 will be the first year of SPEC since the program’s revision in December, 2003. To assist with the collection of compliance documentation, Ms. Markworth distributed notebooks containing dividers for each section of the evaluation. As policies or other documentation is collected, it can be filed in the notebook which will then be given to Ms. Markworth at the evaluation. Ms. Markworth explained that each city will receive a letter in January noting the additional documentation still required to reach compliance for each section.
Mr. Hammond distributed copies of the “2005 Claims Audit” conducted by Bridget Rogier, Vice President of Member Services for GEM. She was very complimentary of MVRMA and in particular Mr. Blair. In reaction to the recommendations in the audit, Mr. Hammond provided a copy of his responses to the Board. All recommendations will be easily resolved. Motion by Mr. Davis, seconded by Ms. Callahan, to accept the 2005 Claims Audit. Motion carried.
At the September Board Meeting, the Board recommended staff obtain a legal opinion on the implications of the Law Enforcement Safety Act of 2004 and provide members with best practices on limiting liability related to this new law. Included in the agenda packet was a memorandum provided by Attorney Surdyk that addresses the proposed manner in which MVRMA members should comply with the provisions of the Act regarding retired officers. Mr. Hammond reviewed the “best practices” provided in the memorandum which include the following:
1. If a decision is made to issue identification cards to retired officers, the cards should have a disclaimer which reads, “[Political subdivision name] issues this identification card to [officer’s name] because he/she has retired as a law enforcement officer with this agency. [Political subdivision name] does not, in any way, certify that [officer’s name] is a qualified retired law enforcement officer pursuant to 18 U.S.C. 926(c).
2. MVRMA recommends that its members not provide firearms training and qualification to retired law enforcement officers. If a city does decide to train and qualify its retired officers, its identification cards must indicate that the agency issuing the card certifies the retired officer met the agency’s standard to carry a particular firearm. The card should also clearly state the date of qualification and include the proposed disclaimer. The city should maintain appropriate records of the training and qualification.
Mr. Hammond also reviewed an article contained in the October, 2004 issue of Police Chief Magazine. He suggested all members seriously consider the recommendations in this article in order to limit their liability and provide their officers with clear direction and training.
Mr. Blair reviewed the Claims “Watchlist” and discussed settlement authority in the Porter vs. Wilmington claim. Ms. Porter was in an assisted living environment when she was struck by a Wilmington cab driver. The cab backed over her right foot causing her to fall which resulted in more severe injuries. Her attorney is requesting $250,000, which includes $85,000 in Medicare and out of pocket medical reimbursements. Motion by Parham, seconded by Ms. Knight, to approve the $250,000 settlement in the Porter vs. Wilmington claim. Motion carried.
Finance Committee Report
Mr. Hammond explained that GEM provided three renewal options for the liability layer just above MVRMA’s self insured retention (SIR), $1M x $1M, $1.5M x $1M and $1.5M x $500K. The price for $1M x $1M was $266,235. For an additional $43,269, MVRMA could opt for $1.5M x $1M. Lowering the SIR to $500K would not have much affect on the amount required for the loss fund, so it was not a consideration. By increasing GEM’s layer to $1.5M, MVRMA would only have saved $22,000 on the next layer of coverage ($5M x $2.5M). Therefore, the recommendation of the Finance Committee was to approve the GEM option of $1M x $1M.
For the liability coverage excess of $2M, MVRMA requested proposals from both Marsh and GEM/NPX. Ms. Chiu, the Marsh broker, was unable to provide an acceptable proposal. After negotiating with four different reinsurers, GEM/NPX provided a proposal from ACE – Illinois Union Insurance Company as the reinsurer. For $5M excess $2M, the annual premium would be $235,000, inclusive of all taxes and fees. However, under the Ohio Revised Code, MVRMA is able to waive the taxes usually charged for purchasing insurance from an insurer not authorized to do business in Ohio, so the premium is expected to be even less than originally quoted. With ACE, there are several advantages over AIG, the current reinsurer. There are fewer exclusions and better claims control; new members can be added without approval so long as their exposures are less than 10% of the pool’s exposures; and there is a very good possibility that ACE will be able to reinsure each pool’s documents in 2006. Mr. Steddom explained the aggregates associated with the ACE proposal as follows:
General Liability: Three times the per occurrence amount per member
Auto Liability: No aggregate
Public Officials, Law Enforcement and Employment Practices: Jointly, two times the per occurrence amount per member
MVRMA’s 2004 liability document has only one time the limit aggregate for Public Officials and Employment Practices, so when the 2005 policy is developed, a change will be made to keep the coverages in line with the excess program.
The MVRMA budget has an additional $70,000 with which to purchase additional excess limits. Mr. Steddom believes this amount is adequate to purchase additional limits of $3M, which would give MVRMA a total of $10M per occurrence. Motion by Mr. Parham, seconded by Ms. Knight, to approve the 2005 Liability Program as follows:
$1M x $1M with GEM for $266,235
$8M x $2M for a maximum premium of $305,000
Motion carried.
Mr. Judy also directed the Risk Management Committee to develop a written policy which would establish minimum limits that would be acceptable to the pool.
Regarding the 2005 property coverage, Mr. Hammond explained there were proposals from both Chubb, MVRMA’s expiring carrier, and PEPIP, Driver Alliant’s proprietary program. Chubb’s final proposal was $.047/100 for 2005, while the PEPIP proposal was $.038/100 for the period 12/31/04-7/1/05 and a not to exceed rate of $.035/100 for the period 7/1/05-7/1/06. The PEPIP program not only has higher limits but also includes coverages not currently provided (i.e. builders risk, business interruption, auto physical damage, flood zone A, errors and omissions, etc). The PEPIP premium of $401,808 for 18 months exceeds the figure allocated for property coverage in the preliminary budget ($382,144), but not when other budget factors are considered. As part of the PEPIP program, Driver collects a fee of approximately 4% for Driver Signature Services (DSS). That fee can be used at MVRMA’s discretion for appraisals or various other loss control services. Since the DSS would cover appraisals, the appraisal line item of $23,000 would be eliminated from the 2005 budget. Additionally, since Marsh would not be placing the property coverage, their fee in 2005 would be decreased by $13,000. The net payment for property coverage through June 30, 2006 would be $375,308, well within the budgeted amount. The PEPIP program provides a $90,000 annual savings to the pool. With regard to the auto physical damage coverage included in PEPIP’s program, Mr. Hammond noted MVRMA would be using the original purchase price for all vehicle values. Motion by Mr. Collinsworth, seconded by Mr. Parham, to approve property coverage with PEPIP for the period 12/31/04-7/1/06. Motion carried.
Referring to the 2005 crime coverage proposal, Mr. Hammond noted there is no change in staff coverage, and the pool crime coverage will renew with expiring coverages but with a lower premium ($11,710). Subsequent to the meeting, the dates of coverage were changed to include 1 extra day (12/31/04-1/1/06) to be in line with other coverages. The final bill was $11,827. The 2005 premium for staff crime coverage was the same as 2004 ($1,550). There was no change in the bond pricing. Motion by Mr. Parham, seconded by Mr. Davis, to approve the 2005 crime coverage and bond placement. Motion carried.
Ms. St. Pierre reviewed the following adjustments in the 2005 final budget as compared to the preliminary budget:
Excess Insurance 100-xxx: Modifications were a result of final renewal proposals. The Primary Excess Casualty, 100-113, decreased $6,037. Excess Casualty NPX/GEM decreased $34,117. Commercial Property, 100-117, increased $19, 356.
Professional Services 200-xxx: Changes included the elimination of appraisal services -$23,000, the decrease in brokering services -$13,000 and the addition of DSS $10,500.
Employment Services 300-xxx: Changes dealt with the increase in disability insurance which increased 300-301 and corresponding line items.
Pool Operations 400-xxx: The decrease in this total was due to the purchase of a new copier with 2004 funds, which reduced 400-403 by $9,000.
PCF: There were minor changes due to additional vehicles, employees and buildings.
LY16 Rebate: Increased from $30,000 to $50,000
Total Amount to be Billed: The above changes were reflected in the total amount to be billed for each member. The total amount to be billed was reduced by $74,430.
Mr. Hammond reviewed the changes for the 2005 Objectives/Work Plan, some of which were simply housekeeping matters. Additional objectives were as follows:
Goal Statement 1: Includes recertification of driver training instructors and possible certification of new instructors; possible use of Great Oaks Driver Training facility.
Goal Statement 2: Includes preparation of biennial loss fund contribution report and site visits to cities that fall below the MVRMA average; execution of new agreements with MVRMA’s attorneys
Goal Statement 3: Includes an RFP through the Auditor of State’s office for the financial audit in 2006; determination on whether to extend Marsh’s agreement for two additional years; evaluation of Bond-tech’s results as investment advisor; review and update of liability coverage document
Goal Statement 6: Includes holding a Strategic Planning Retreat and completion of public records retention and disposition policy
Motion by Ms. Trick, seconded by Ms. Knight, to approve the 2005 Final Budget and Objectives/Work Plan. Motion carried.
Mr. Reilly reported the GEM Board decided at its December meeting to revisit the need for additional capital at its April, 2005 meeting. Mr. Hammond will report the outcome of that meeting at MVRMA’s June Board Meeting. Until a decision is made, MVRMA will retain the $250,000 appropriated as an additional contribution to GEM at the September 20, 2004 MVRMA Board Meeting.
Nominating Committee Report
Mr. Parham, on behalf of the Nominating Committee, nominated the following slate of officers for 2005:
President: Tom Judy, Sidney
Vice President: Sue Knight, Troy
Secretary: Julie Trick, Vandalia
Treasurer: Tom Reilly, West Carrollton
Motion by Ms. Callahan, seconded by Mr. Parham, to elect the proposed slate of officers for 2005. Motion carried.
Broker Report
Mr. Hammond informed the Board that John Milazzo, MVRMA’s client executive with Marsh, had resigned. MVRMA’s new client executive will be Greg Alt, who was unable to attend the meeting. In his place was Dana Snider, Vice President and FINPRO Practice Leader. Mr. Snider addressed the recent allegations concerning insurance broker irregularities brought against Marsh. Mr. Snider explained accepted practice in the insurance industry has been for carriers to pay a contingency fee or profit sharing to brokers or agents based on their total book of business with that carrier. This fee has been outside regular commissions or fees. Since the contingency fee was not based on a placement to a specific client, it was not disclosed to the client. In response to the allegations in a suit filed by NY Attorney General Spitzer, Marsh will now provide full disclosure of any and all fees, and contingencies are being discontinued. Other brokers are following Marsh’s lead and also discontinuing the practice of accepting contingency fees. Since these fees are being eliminated, in the future there will be fees attached to specific services provided by the brokers or agents.
Mr. Hammond noted he participated in a conference call with Driver Alliant representatives in which they stated all contingencies would be discontinued effective 1/1/05. Mr. Steddom, from Driver Alliant, noted the coverages provided to MVRMA through GEM have not contained contingencies nor have there been contingencies associated with PEPIP carriers. Generally, the Public Entity Division of Driver Alliant has not had contingency agreements.
Mr. Hammond noted how impressed he was with the response to the allegations brought against both Marsh and Driver Alliant. Both companies have stated they will provide full transparency and disclosure going forward.
Executive Director’s Report
Mr. Hammond recommended approval of the 2005 Board Meeting dates. Motion by Mr. Snell, seconded by Mr. Davis, to approve the following dates:
Monday, March 21, 2005
Monday, June 20, 2005
Monday, September 19, 2005
Monday, December 19, 2005
Motion carried.
Mr. Hammond informed the Board there would be a Strategic Planning Retreat in the April/May timeframe and asked for volunteers to host the meeting. Ms. Callahan offered the Beavercreek Golf Course Clubhouse as the location. Harold Pumford, CEO for AGRIP, will be contacted about facilitating the meeting.
Mr. Hammond noted he and Chief Helling attended the October AGRIP Governance Conference in Hershey, Pennsylvania. Chief Helling participated in the Basic Pooling Track, while Mr. Hammond attended several sessions including Leaving a Positive Board Member Legacy and Characteristics of the Most Effective Board Members. He will share information from these sessions with all MVRMA Trustees when they are posted on the AGRIP website.
Mr. Hammond reviewed the conference opportunities in 2005: June 5-8 in Milwaukee, Wisconsin and November 14-16 in San Antonio, Texas. Ms. St. Pierre asked that Trustees interested in attending one of these conferences contact her after the first of the year.
President’s Report
Mr. Judy reminded everyone that participation on a MVRMA committee is an important responsibility as a Board Member. Ms. St. Pierre said she would be contacting everyone not currently on a committee to determine their preference for the coming year.
Having concluded its business for the day, the Board adjourned at 11:20 am.
A holiday luncheon at the Kohler Center Banquet Room immediately followed the Board Meeting.