FYI:

-Mike Hammond

As MVRMA nears the end of its 20th year of operation, it is good for us all to stop and reflect on how far we have come since MVRMA's inception December 1, 1988. So much has changed since that time, not only in the field of risk management

and pooling, but in our everyday work lives as well. Twenty years ago, things like computers at every desk were unheard of. Many high-tech innovations we rely on today, like conference calling, being connected 24/7 by email and PDAs to remotely access messages and information, have truly revolutionized the way we do business. We now expect almost instant communication.

With the changes in how we do business have come changes in how we practice risk management and pooling. During the past 20 years, MVRMA has experienced some major developments:

A slow but steady growth in membership - With 20 members, we have reached a critical size that allows for a reasonable spread of expenses for funding both our self-insured retention and the cost of operations.

Staying true to the commitment of being selective about membership - MVRMA is not a good fit for all municipalities. Our members share a common interest in risk management, loss control prevention and the concepts of risk pooling, risk assumption and risk sharing. They work hard at minimizing exposure to liability and are committed to appropriate risk transfer. Their efforts have produced favorable loss experience during the last 20 years, which has resulted in lower premiums.

Increased emphasis on risk management as a means of controlling losses - MVRMA subscribes to the philosophy that to control losses, one must manage risks, and an absence of loss is not an absence of risk. We believe our Safety Performance Evaluation Checklist (SPEC) Program is a major tool for measuring our members' commitment to risk management. It is reviewed regularly for concurrence with "best practices" of loss control and risk management to assure it remains current and pertinent. In addition, MVRMA encourages attendance at its numerous training programs related to risk management, safety and loss prevention held throughout the year.

Becoming a premier member of Government Entities Mutual, Inc. (GEM) - MVRMA joined GEM, a reinsurance captive controlled by and serving public entity pools, in 2003 as a charter member. MVRMA made a capital surplus contribution to GEM totaling $750,000. As of December 31, 2007, our total member balance with GEM was $884,138. GEM has total member equity of over $18 million and total assets of more than $65 million. It provides us with reinsurance of $9 million excess our $1 million SIR. By participating in GEM, MVRMA has been able to distance itself from the commercial insurance market while controlling its cost of reinsurance.

Establishing our own liability memorandum of coverage (MOC) document - In 2003, the Board approved its first MOC document for liability. The MOC became necessary with the decision to secure reinsurance through GEM. The document is written to provide broad coverage that meets the needs of our members rather than the interests of the insurance industry. This document is reviewed and updated regularly and is then reinsured by GEM using a follow form reinsurance agreement. In other words, we control the terms and conditions to a large extent, rather than relying on a policy that is prepared by an insurance company.

Establishing a liability self-insured retention of $1 million - In 2003, with the help of its actuary, MVRMA determined it was financially advantageous to increase its self-insured retention for liability to $1 million, rather than pay for insurance/reinsurance at this level. MVRMA had been preparing for the increased retention for some time. In 1996, it established the Shock Loss Fund (SLF) to replace costly stop loss insurance. With Board approval, funds from the SLF can be transferred to any loss year whose balance becomes insufficient to cover expected losses. Today, we have available over $2.9 million in the SLF. Our members continue to place importance on adequately funding this reserve.

Participating in the Public Entity Property Insurance Program (PEPIP) - PEPIP, a proprietary program of Alliant Insurance Services, is the world's largest public entity property insurance program. PEPIP provides us with broad coverage terms and limits and is very competitively priced. The rate at our last renewal, in July 2008, was the lowest it has been in the last ten years.

I can personally say these developments make my job more exciting. During all the market ups and downs and changes in the job of public entity management, MVRMA has remained the one constant. It is our hope that the resources, networking opportunities and financial stability provided by MVRMA help you deal with the ever changing world of risk management and insurance. You can be assured MVRMA will continue to evolve as together we meet the challenges of the next 20 years.

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Counselors' Comments

 - Surdyk, Dowd & Turner

On September 18, 2008, the Supreme Court of Ohio held that an ordinance adopted by the City of Clyde, Ohio banning the possession of firearms in municipal parks was unconstitutional. The Supreme Court determined the Clyde ordinance was unconstitutional because it conflicted with a general state law that permits licensed individuals to carry a concealed weapon on any public property other than at locations specified in the state statute. This Supreme Court decision sought to determine whether a municipality possessed the authority to regulate handgun possession, by persons possessing a valid permit to carry a concealed handgun, on its own property.

In January of 2004, the Ohio General Assembly enacted Am.Sub.H.B. No. 12, which created a licensing procedure for handgun owners. Specifically, R.C. Section 2923.126, allowed persons who meet certain qualifications to obtain a license and carry a concealed firearm anywhere in Ohio other than in excepted locations enumerated in the statute. The General Assembly commented that as part of the concealed carry bill, its purpose was to adopt a general and uniform regulatory scheme for the concealed carry of firearms in all parts of the state. In adopting the legislative scheme found in Chapter 29 of the Ohio Revised Code, the legislature intended to preempt the future adoption or enforcement by any Ohio municipality or political subdivision of any local ordinance that conflicted with state law by prohibiting the carrying of a concealed weapon in a location permitted by R.C. Section 2923.126.

Nevertheless, in June of 2004, the Clyde City Council enacted a municipal ordinance (Ordinance 2004-41) that prohibited any person within the confines of any city park from possessing a deadly weapon. The ordinance stated:

"No person located within the confines of any City park shall knowingly carry or have, on or about his person or readily at hand, irrespective of whether such person has been issued a license to carry a concealed handgun pursuant to Ohio R.C.2923.125 or pursuant to a comparable provision of the law of any other state." (Section 923.10(a) of the Codified Ordinances of the City of Clyde, Ohio). The ordinance further provided that a violation of the prohibition was a misdemeanor offense of the first degree.

In response, Ohioans for Concealed Carry (OCC) filed an action in August of 2004 seeking an order striking down the ordinance and, further, seeking injunctive relief prohibiting the City from curtailing gun owners' rights. OCC argued that the City's ordinance was void and unenforceable because it was in conflict with an individual's right to carry a concealed weapon prescribed by R.C. Section 2923.126.

To make matters more confusing, at the time of OCC's lawsuit, the Sixth District Court of Appeals in Toledo v. Beatty upheld a Toledo city ordinance banning guns from city parks. Therefore, the Sandusky County Court of Common Pleas, citing Beatty, entered judgment in favor of the City of Clyde, affirming the enforceability of its ordinance. OCC appealed the determination of the Common Pleas Court to the Sandusky County Court of Appeals. While that appeal was pending, the General Assembly enacted 2006 Sub.H.B. No.347 which emphasized the "fundamental individual right" to "keep and bear arms" and expressed the legislature's further desire to "provide uniform law throughout the state regulating the ownership and possession of firearms." In doing so, the General Assembly created R.C. Section 9.68, which gave persons in Ohio the right to carry a handgun unless federal or state law prohibits them from doing so.

Thereafter, the Court of Appeals, relying upon R.C. Section 9.68, reversed the ruling of the trial court, thereby invalidating the Clyde city ordinance. The Court of Appeals remarked that the City's ordinance was in conflict with the "general laws of the state" and thus, remanded the matter to the lower court for entry of summary judgment in favor of OCC. Consequently, the City of Clyde sought and was granted Supreme Court Review of the Appellate Court's ruling.

The City argued before the Supreme Court that the challenged ordinance was a valid exercise of its "home rule" powers granted by Section 3, Article XVIII, of the Ohio Constitution. The Home Rule Amendment to the Ohio constitution permits municipalities to "exercise all powers of local self-government and to adopt and enforce within their limits such local police, sanitary and other similar regulations, as are not in conflict with general laws." In rejecting the City's argument, the Supreme Court held that (1) the city's ordinance was not an "exercise of local self-government" affecting only the internal affairs of the city but is rather, "an exercise of police power" that establishes a public safety regulation also applicable to non-residents using the city's parks; and (2) the ordinance is in conflict with R.C. Section 2923.125 because it prohibits conduct (i.e. possession of a gun by a person licensed to carry a concealed weapon in a public park) that is permitted by state law. Therefore, the Supreme Court affirmed the decision of the Court of Appeals invalidating City of Clyde ordinance section 923.10(a).

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The Claims File

- Craig Blair

A good loss history is a key factor to obtaining a satisfactory insurance renewal, and MVRMA members are to be commended in that regard. Since 1999, no claim has exceeded MVRMA's Self-insured Retention (SIR).

In 2009, that good loss history coupled with a fairly soft insurance market should result in a very satisfactory insurance renewal. The excess liability premium for $1 million excess MVRMA's $1 million SIR will actually be less than it was in 2008. The rates for excess liability $8 million excess $2 million and property coverage are expected to remain flat. Additionally, due to MVRMA's favorable loss development, loss funding for the coming year decreased from $2.525 million to $2.4 million. Given the current economic climate, these are all favorable developments. In 2009, MVRMA will actually be billing the member cities less than it has for the last three years!

What can you do to encourage good loss history and keep the momentum going? First of all, we recommend you take advantage of the numerous training programs offered by MVRMA. Secondly, we suggest you make all employees aware of the $2,500 deductible for each claim. Those small fender/bender accidents are ultimately paid by the cities, unless they exceed the $2,500 deductible. And they do add up! Since 2000, the cost of claims, other than lawsuits, has accounted for 72% of our total losses. Thirdly, you should explain to employees how the city's contribution to MVRMA is calculated. In addition to population, number of employees and vehicles, net operating expenditures and property values, the city's four year average annual losses are weighted three times! Although most employees have no control over the other factors, they can do their part to control losses, which will positively impact their city's bottom line.

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Loss Control Lowdown

-Starr Markworth

During times like these, when our city budgets are tight, training does not have to be cut out completely. MVRMA offers several cost-effective training alternatives.

The MVRMA Multi-media Library has an inventory of more than 285 training videos and DVDs, as well as 18 CD-ROM programs, all of which are available to our members free of charge. The purpose of the library is to provide additional information to supplement the members' in-house training efforts. The library covers a broad range of public sector safety and management issues which are applicable to most city departments and divisions.

Funds are budgeted annually for the purchase and upgrade of additional materials. Recommendations from member cities of topics they would like included are encouraged and utilized in the planning of future purchases. Currently, we are in the process of adding new and replacement materials in the DVD format.

How do you get access to these resources? It's really very easy. The MVRMA Multi-media Library listing can be found at www.mvrma.com under Training and Loss Control, or you can contact me if you would like a copy emailed or faxed. A Video Request Form can be downloaded or requests can be made by phone 937/438-8878 or by email to smarkworth@mvrma.com. Please allow 3-5 days for delivery of these materials, and limit your requests to three videos at a time. MVRMA assumes the cost of delivering the materials via the US Postal Service, and the member cities are responsible for returning the materials to the MVRMA office.

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Brokers Beat

In this article, we want to acquaint you with named insured provisions of the MVRMA Liability Coverage Document and the automatic coverage that is available to a number of different individuals as "insureds." The automatic coverage issue is addressed in the Persons or Entities Covered section of the MVRMA Liability Coverage Document which is stated below:

Persons or Entities Covered

(A) The Member Entity (Member of the Association),

(B) Those individuals who were or now are elected or appointed officials of the Member Entity, including members of its governing body, volunteers, trustees and members of any other committees, boards or commissions of the Member, while acting for or on behalf of the Member and within the course and scope of their employment.

(C) Past or present employees or contract employees of the Member Entity while acting for or on behalf of the Member in the course and scope of their employment.

We are often asked by employees, "Am I covered if I am sued for damages in the course of my employment?" The answer is yes, subject to the other terms, conditions and exclusions of the policy. Having this coverage is noteworthy, since the Comprehensive Personal Liability coverage found under the typical Homeowner's Policy excludes work related exposures.

As municipal employees, we have a fiduciary responsibility to our cities to obtain this automatic coverage through the transfer of risk whenever possible. When negotiating agreements with contractors and vendors, insurance requirements should include an additional insured provision. Contractors and vendors should be required to add endorsements to their own Commercial General Liability and Automobile Liability policies that cover the entity, its officers, officials, employees and volunteers as insureds as respects liability arising out of the work or operations performed by or on behalf of the Contractor/Vendor or automobiles owned, leased, hired or borrowed by the Contractor/Vendor. By including these insurance requirements in your agreements with contractors and vendors, their insurance will extend the same automatic coverage to you as a city employee without affecting the city's loss experience.

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From the Board Room...

At the September 29, 2008 Quarterly Board Meeting, the following actions were taken:

- Approved the Open Claims & Incurred Loss Report

- Approved the 2009 Preliminary Budget and PCF

- Approved a one-year contract with Carol Riggle for preparation of financial statements for the year ending 12/31/08

- Accepted the loss funding study for LY 21 (2009) which recommends loss funding of $2.4 million

- Approved closure of LY 13 (2001) which will return $350,000 to the Shock Loss Fund

- Approved MOC Endorsement 9-08, which provides liability coverage for the City of Mason's Pine Hill Lake Dam effective 10/1/08

- Accepted the financial audit and CAFR for the year ended 12/31/07

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