July 9, 2001

Time and Location

Cassel Hills Golf Club, Vandalia OH

The meeting began at 9:05 am.

The following individuals were present when the meeting was called to order: Jim Pfeffer, Blue Ash; Sherry Callahan, Beavercreek; Michael Burns, Indian Hill; Nancy Gregory, Kettering; Julie Robinson, Madeira; Starr Markworth, Mason; Kathy Weisgarber and Jolene Walker, Miamisburg; Cheryl Hilvert and Kate Earley, Montgomery; Tom Judy and Jon Crusey, Sidney; Derrick Parham, Springdale; David Collinsworth and Richard Drennen, Tipp City; Sue Knight, Troy; Julie Trick, Vandalia; David Watson, West Carrollton; Dina Minecci and Margaret Main, Wyoming; John Milazzo and Dan Cullen, Marsh; and Kathy St. Pierre, Craig Blair, Danny O’Malley, and Michael Hammond, MVRMA.

Welcome and Introductions

Mr. Hammond thanked everyone for coming and introduced the day’s facilitator, Dan Cullen.  Mr. Cullen, a former Risk Manager for the city of Ann Arbor, is currently a Vice President with the Marsh Public Entity Group.

Review of MVRMA Mission Statement and Goal Statements

The Mission Statement, last revised August 14, 1995, was reviewed.  Everyone agreed it still adequately expresses the mission of the organization.

MVRMA’s eight goal statements, last revised August 12, 1996, were reviewed and no changes were recommended.  When Goal Statement #5 (Communication) was discussed, several people suggested email be used more frequently in the future.  A sheet was passed around to obtain the email address of everyone in attendance.  Mr. Hammond informed the group that MVRMA staff now has email addresses employing the website domain (i.e., mhammond@mvrma.com, kstpierre@mvrma.com, cblair@mvrma.com.). 

Review of 2001 Membership Survey Results

Overall, the membership is very satisfied with the service provided by MVRMA staff and outside TPAs.  The only areas with an overall rating less than 4 (Service regularly meets and occasionally exceeds expectations) were Brokering Services (3.6) and Workers’ Comp TPA Services (3.9).  The main issue in both areas appears to be communication, or a lack thereof.  Part of the problem appears to be knowing who to contact when.  Mr. Hammond suggested that questions be directed to staff who can then direct the member to the appropriate party or act as a go-between, if necessary. Staff will work with both Marsh and CompManagement to improve their responsiveness

General Discussion (Open Forum)

The manner in which the PCF is calculated was discussed, and a suggestion was made to include an explanation in the MVRMA Handbook.

Since reserves are included in a city’s rolling four-year average annual losses, which are counted three times when calculating a member’s PCF, Mr. Blair was asked to explain how reserves are set.  The reserve for an automobile claim (without a personal injury) is usually set at $500 since governmental immunity applies.  If a personal injury is involved, the reserve is set in relation to the severity of the injury.  Reserves for lawsuits are dependent on the potential litigation expense as well as the potential settlement.  Mr. Hammond and Mr. Blair meet with MVRMA’s attorneys twice a year to review pending suits and set reserves.

In relation to the four-year average annual losses, the Loss Capping Policy was also briefly discussed.  This policy caps the first claim that exceeds $35,000 at $35,000.  For each additional claim that exceeds $100,000, the cap is $100,000.  This policy was developed to “soften the blow” of a catastrophic loss and provide some stability of premium for members.  At the June Board Meeting, staff suggested the Board consider changing the existing policy to allow the largest loss to be capped first, in order to provide the most benefit to the member.  The possibility of segregating “natural disasters” from other losses was also discussed.  This policy will be reviewed for possible changes by the Risk Management and Finance Committees prior to the September Board Meeting.  At Strategic Planning, a  suggestion was made to review this policy well in advance of the next Board Meeting.  Members would like the opportunity to review and comment on the final recommendation before it is presented for approval September 24^th.

Governmental immunity, which is of great benefit to public entities, was also discussed.  Mr. Hammond noted it is to the pool’s benefit to invoke governmental immunity whenever possible.  Mr. Blair does an excellent job of explaining to claimants how immunity works and the obligation of MVRMA to pay most out-of-pocket expenses.  At the time of the meeting, staff was unable to provide any further updates on the amicus brief prepared by Jenks Surdyk re: Wallace v. The Ohio Dept. of Commerce.  The lawsuit seeks to  challenge the constitutionality of both the public duty doctrine and governmental immunity provided under R. C. Section 2743. 

Discussion of MVRMA Services

The list of services currently provided by MVRMA was reviewed.  Suggestions included:   

1.        A friendlier approach by the appraisal company during the biannual appraisal update.  In the past, the appraiser has shown up unannounced with various demands for directions, blueprints, building specifications, etc.

2.        Providing an updated PRIMA-FAX listing.

3.        Repeating the “Introduction to MVRMA“ and “Certificate of Insurance Seminars.”

4.        Considering an actuarial study to determine if the SLF provides enough surplus.

 Issues Relating to MVRMA’s Future

Mr. Cullen pooled the group on various aspects of MVRMA’s past and current activities to determine its direction for the future.

Growth/Retention – Members are satisfied, for the most part, with MVRMA’s growth and the fact that no member has ever left the pool.

Marketing – MVRMA has been very selective in its marketing strategy.  Members would like to continue that selectivity.  Mr. Cullen’s prediction is there will be a lot more interest in MVRMA as the insurance market continues to firm over the next two years.

Staffing – No changes to staff were recommended at this time.

Training – Training for members and employees has been acceptable.  Members see a need for additional OSHA Training and Drivers Training for Police Officers.

Service Providers – No recommendation for change at this time.  In a “firming” insurance market, it is important to maintain a relationship with existing carriers, whenever possible.

Insurance Market/SIR (NPX) – Changes in this area are probably imminent given the changing marketplace.

Bylaws & Handbook – No changes other than previously noted.

Surplus – Discussed previously.

Buying Insurance in a “Firming” Market

Mr. Cullen provided an overview of the “fiming” insurance market.  He believes rates will go even higher as reinsurers strive to improve their financial performance. 

Negotiating in the insurance marketplace has become very aggressive.  The art of underwriting has returned.  More complete submissions and a greater lead time will be required.  Multi-year deals are no longer entertained.  Now, more than ever, it is important to maintain relationships.  

Mr. Cullen suggested MVRMA prepare a detailed action plan for the upcoming renewal.  The pool may have to consider higher deductibles and retentions.  It may be necessary to delete unnecessary coverages and pursue higher limits.  Purchasing stand alone policies for specialty coverages is another option to consider in order to hold down costs.  Although another year remains on MVRMA’s casualty program, it is not too soon to begin discussions with Discover Re about extending or renewing the coverage.

Report on Reliance and its Impact on MVRMA

Mr. Hammond provided an analysis of the Reliance financial status.  During the three year period (1997-1999) Reliance was the excess liability reinsurance carrier for NPX, providing limits of $10M excess MVRMA’s pool limit of $1M.  Reliance maintained an AM Best rating of A- during that period.  The NPX coverage was moved to American Protection Insurance Co. (Am-Re) in 2000, when Reliance was subsequently downgraded to B++.  By August, 2000, Reliance had stopped writing new business and was running off claims from existing reserves.  In June, 2001, Reliance filed for reorganization under bankruptcy laws.  Since Am-Re provided 90% of the reinsurance for Reliance in 1997 and 1998 and 100% in 1999, attempts were made to access Am-Re directly for payment of pending claims.  However, due to Am-Re’s contractual obligation to Reliance, it will not pay claims directly because of the potential for “double indemnity.”  MVRMA is faced with two issues for this period:  whether to purchase “nose coverage” to provide coverage for unknown claimsz; and how to fund Theobald v. Montgomery, if necessary.

 The Strategic Planning Meeting concluded at 2:05 PM.