MINUTES

OF

THE MIAMI VALLEY RISK MANAGEMENT ASSOCIATION

September 25, 2006

Time and Location

MVRMA Office, 4625 Presidential Way, Kettering, Ohio.  The meeting began at 9:15 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; Dave Couch, Indian Hill; Nancy Gregory, Kettering; Kim Lapensee, Madeira; Dody Bruck, Miamisburg; Wayne Davis, Montgomery; Gary Lucas, Piqua; Ginger Adams, Sidney; Derrick Parham, Springdale; Sue Knight, Troy; Julie Trick, Vandalia; Tom Reilly, West Carrollton; Jenny Chavarria, Wyoming; Rick Steddom, Alliant Insurance Services; and Kathy St. Pierre, Craig Blair, Starr Markworth and Michael Hammond, MVRMA.

Dick Drennen, Tipp City arrived at 9:20 am and Laura Curliss, Wilmington arrived at 9:40 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.  So far this year, 659 people have attended various MVRMA training seminars.  Two programs that were especially well attended were “Understanding Sign Liability” (55 attendees) and three sessions of “Workplace Harassment for Supervisors” with Cindy Ann Thomas (101 attendees).  Ms. Markworth is currently working with Ms. Thomas to develop a workplace investigation seminar to be held later this year.  Three driver training sessions have been scheduled during the next few weeks.  However, the session taking place later this week only has four participants, and unless four more people register, that class will be canceled.  An interesting program scheduled for November 1 is titled “Connecting the Generations – The Four Generation Workplace is Here to Stay.”  Ms. Markworth also announced two days of of ½ day sessions with Doug Wyseman, a well known risk management specialist from Canada.  He will be conducting programs titled “Risk and Roads” which will cover risk management of road maintenance and “Small Towns – Big Risk” which will provide an overview of the risks associated with municipalities.  At the meeting, Ms. Markworth provided a list of 11 new videos purchased in 2006 which included topics such as stress management, the Family Medical Leave Act, the generational workplace and harassment.

Ms. Markworth asked for help in finding good training videos dealing with police risk management issues.

Ms. Lapensee explained the Risk Management Committee now discusses various risk management requests and new issues in its quarterly meeting.  A list of those items was included in the minutes.  Mr. Hammond added that members facing similar issues could get help from MVRMA or the cities that had already tackled these problems.

Mr. Blair reviewed the Open Claims & Incurred Loss Report dated September 6, 2006.  Changes, since the last report was issued, were noted in bold print and included in Mr. Blair’s update.         

Motion by Mr. Parham, seconded by Ms. Trick, to approve the Open Claims & Incurred Loss Report dated September 6, 2006.  Motion carried.

Mr. Hammond reviewed the Five-year Loss to Premium Ratio Report.  He explained the incurred claim totals used in this table are not first dollar payments.  They include reserves but do not include member deductibles or any excess reinsurance payments.  The year 2001 includes the transfer of $350,000 from the shock loss fund as part of the loss fund contribution.  The % shown for each city is the sum of the claims for five years divided by the sum of the loss fund contributions for five years.  The industry standard is 60%.  Mr. Hammond reminded the members that beginning in 2007, members who have an incurred loss ratio higher than 60% and a three year SPEC score average of less than 80% will be expected to participate in a two-year improvement plan aimed at obtaining 80% compliance in SPEC.  He and Ms. Markworth will be reviewing the claims for cities that exceed 60% to determine whether the high percentage was caused by frequency or severity.  A meeting will be scheduled with each of these cities.  The “Total” percentages in the table reflect the pool ratio for each year (2001 through 2005) and the total ratio for the five year period.  Loss years 2001 and 2002 are considered high.  The last three years are much better; however, they are not, as yet, fully developed.  This year’s report, with an overall percentage of 44%, is slightly better than the previous report (44.8%).

Ms. Lapensee reported the RM Committee was very complimentary of the new power point presentation developed by MVRMA staff.  She said it provides a great overview of MVRMA and the services it provides.  She also announced Montgomery’s plan to host the presentation on October 3 and suggested anyone interested in attending should contact the city.  Mr. Hammond distributed hard copies of the presentation at the meeting and noted Ms. St. Pierre previously emailed the program to all Trustees.  He noted the presentation can be tailored to any member’s specific needs and time constraints. 

Finance Committee Report

Motion by Mr. Parham, seconded by Mr. Davis, to approve the three-year contract for actuarial services with Godbold, Malpere & Co.  There will be no increase the first year, but the second and third years will increase 6.4% and 7.1%, respectively.  Motion carried.

Motion by Mr. Parham, seconded by Mr. Davis to approve the one-year contract with Carol Riggle to prepare financial statements for the year ending 12/31/06.  Ms. Riggle’s fee will decrease from $3,300 to $3,150.  Motion carried.

Mr. Hammond reviewed the GEM surplus and reinsurance account balance as of 12/31/05.  Total member equity is $13,865,597.  MVRMA, which has been a member since 2003, has a surplus account balance of $699,935.24 as compared to its contribution of $750,000.  It has $65,077.53 in its 2003 policy account, for total equity of $765,012.77.  Performance ratios for the first three years of operations were favorable.

Mr. Schlagheck stated the GEM liability renewal will reflect a 3.4% increase for 2007.  Am Re has not provided a renewal quote for excess coverage, but Mr. Hammond said the liability marketplace is generally showing a flat to slight reduction.  Am Re has mentioned a 5% loss trending cost, so it will likely charge a 5% increase.  For the preliminary budget, MVRMA has included a 10% increase for this layer.  Mr. Steddom believes a flat renewal is in order from Am Re since there has been no significant change in MVRMA’s exposures or losses since last year.  Mr. Hammond noted Am Re’s 2007  application questioned whether we or our members had adopted a model child molestation policy.  It appears this policy may be a condition of coverage for 2007. 

Regarding the 2007 crime coverage, Mr. Hammond expects a flat renewal, but a 10% increase was budgeted.  Applications are being collected from each MVRMA member. 

At the meeting, Mr. Hammond distributed the Loss Funding study for LY 19 (2007) prepared by Terry Godbold using MVRMA’s exposures and past loss history.  Mr. Godbold recommends a funding range between 60% and 70% confidence levels.  Mr. Hammond stated an amount of $2,450,000 will be collected.  Motion by Ms. Gregory, seconded by Ms. Trick, to accept the loss funding study for LY 19 2007.  Motion carried.

Ms. St. Pierre reviewed the 2007 preliminary expenditure budget and PCF calculation which were distributed at the meeting.  Only significant line items were discussed.  They included the following:

Excess Insurance: As stated previously, the GEM premium reflects a 3.4% increase, but MVRMA rounded the figure to $250,000.  The budget allows for a 10% increase for both excess liability coverage and property coverage.

Professional Services: Brokering services was the only significant cost ($83,000), and it was determined by an agreement executed in 2005.

Employment Services: The payroll figure was increased by 3%.  Salary ranges reflect a CPI increase of 4.8%, but no one on staff is affected by this change.

Pool Operations: The only significant expense is rent, which is determined by MVRMA’s lease.  Line item 400-413 includes $2,500 for the 2007 Strategic Planning Retreat.

Claims/Loss Adjustment Expenses: Loss funding, as discussed previously was set at $2,450,000.  Shock loss fund contributions are determined by the Shock Loss Fund Policy.

MVRMA Pool Contribution Factors: All factors have been updated with information provided by the members.  As significant changes take place before the December Board Meeting, these percentages may be adjusted slightly.  The Insurable Property Values include an increase of 5.5% for all appraised property and contents.

LY18 Rebate: A conservative rebate of $60,000 was used for the preliminary budget.

Total Amount to be Billed: The preliminary budget reflects an overall increase of 4.77%. 

Copies of the current Shock Loss Fund balances and General Reserve Fund balances were included with the budget.  Motion by Mr. Davis, seconded by Ms. Lapensee, to approve the 2007 Preliminary Expenditure Budget and PCF.  Motion carried.

Motion by Ms. Gregory, seconded by Mr. Schlagheck, to accept the financial audit and CAFR for the year ended December 31, 2005.  Motion carried.  The CAFR has been submitted to the GFOA for review.

Mr. Schlagheck explained a new contract with MVRMA’s attorneys was developed so that only the “Rates for Services” would have to be updated.  The new contract gives the Executive Director the authority to execute the agreement with both Surdyk, Dowd and Turner and Dinsmore and Shohl and to negotiate an increase in rates as needed.  Motion by Mr. Davis, seconded by Ms. Lapensee, to approve the new agreement with the attorneys.  Motion carried. 

Alliant Insurance Services Report

Driver Alliant had a change in investors as of the first of the year and has now shortened its name to Alliant Insurance Services.  Under the Alliant umbrella will be specialized units that cater to middle market accounts.  Mr. Steddom’s specialty is public entities, and he will be associated with the Driver Specialty Unit.

Mr. Steddom reported the property market deteriorated further after the June Board Meeting, but it was mainly the high excess companies that were impacted.  Particularly affected were those companies that insure for wind exposures along the Gulf and southern coastline and earthquake exposures on the west coast and in the Midwest states located over the New Madrid Fault.  Prior to our July 1 property renewal, Mr. Steddom will be able to provide updates on the market as follows: following the current windstorm season; after the January 1 property renewals and after the April 1 property renewal for 55 of the 57 counties in California.  Mr. Steddom is hopeful he will be able to increase the property coverage limits to $500,000,000 at renewal.

Executive Director’s Report

August 21-23 Mr. Hammond attended the AGRiP Executive Leadership Conference in Whitefish, Montana that included an eight hour workshop on mentoring.  Mr. Hammond found the session very worthwhile and returned with a guide that can be shared with MVRMA members.  There was also a discussion on financial reporting and reinsurance risk.  Following the meeting, Mr. Hammond joined a group who hiked 26 miles in Glacier National Park over three days. 

September 20-22 Mr. Hammond attended the GEM Board Meeting in Traverse City, Michigan.  A discussion about the agreement between GEM and Am Re provided a “heads-up” on changes that will be necessary in MVRMA’s Liability Coverage Document for 2007.  Mr. Hammond and Mr. Steddom will begin working on the MVRMA document and hope to have it ready for approval at the December Board Meeting.  The summit that followed the board meeting provided a number of training resources.  John Salisbury, the current CEO of GEM, announced he will be retiring in January 2008.  A vice president will named to replace Mr. Salisbury at a board meeting which will be held at the end of November or first of January.

Mr. Hammond reported CORMA is going ahead with its October 1 renewal.  Dublin is still very interested in MVRMA, but the other members appear reluctant to go to their councils with a new membership agreement at this time.  Once we have final budget figures for 2007, we will get the necessary information from Dublin to compute its PCF.  Having favorable premium information in hand, Dublin might be able to pique the interest of the other three members of CORMA.

Having concluded its business for the day, the meeting adjourned at 11:02 am.