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At the December 15, 2003 Quarterly Board Meeting,
the following actions were taken:
- Approved the 2004 liability coverage $1 million
excess $1 million through GEM
- Authorized the Finance Committee to approve the
2004 excess reinsurance proposal when received
- Approved the 2004 Final Budget and Objectives/Work
Plan
- Approved the amended Cash and Investment Policy
which decreases the requirement for pooled collateral from 110% to 105% to
match the change in the Ohio Revised Code
- Approved the amended Auto Physical Damage Policy
which increases the limit per vehicle from $400,000 to $750,000 in 2004
- Approved the amended SPEC guidelines to become
effective in 2005
- Elected the following officers for 2004:
President - Tom Judy, Sidney
Vice President - Sue Knight, Troy
Treasurer - Tom Reilly, West Carrollton
Secretary - Julie Trick, Vandalia
- Approved the 2004 property, crime and bond
renewals as presented by Marsh
- Approved membership for Bellbrook effective
January 15, 2004 (See article "MVRMA Welcomes 2 New Members"
- Approved the following 2004 Quarterly Board
Meeting dates: March 15, June 21, September
20 and December 20
- Surdyk, Dowd & Turner
Criminal Restitution Award for Economic Loss
In 2002, the Ohio General Assembly adopted Amended
Substitute House Bill 490 which provides a court with a variety of options
when sentencing an offender for a misdemeanor. This legislation, which
became effective January 1, 2004, allows a court to impose jail terms,
community residential sanctions, nonresidential sanctions, fines and other
financial sanctions. When imposing a sentence, a court must now consider
the purposes of a misdemeanor sentence which are to protect the public
from future crime by the offender and to punish the offender. It grants a
court sentencing an offender for a misdemeanor (except when a mandatory
jail term is required) the discretion to determine the most effective way
to achieve those purposes, but prohibits the court from basing the
sentence on the offender's race, ethnic background, gender or religion. It
also precludes the court from imposing a sentence that results in an
unnecessary burden upon local government resources.
One of the novel provisions of the law permits a
court which imposes a sentence for a misdemeanor, in addition to imposing
court costs, to sentence the offender to any financial sanctions or a
combination of financial sanctions which include, but are not limited to :
1) a fine; 2) a state fine or cost; 3) restitution; 4) reimbursement by
the offender of any or all of the costs of sanctions incurred by the
government.
In regard to the issue of restitution, the
sentencing court may now require restitution by a misdemeanor offender to
the victim of the offender's crime or any survivor of the victim in an
amount
based on the victim's economic loss. The law
establishes a procedure by which the amount of restitution is determined
and a procedure by which the restitution may be made and collected. It
requires that all restitution payments be credited against any recovery of
economic loss in a civil action brought by the victim or any survivor of
the victim against the misdemeanor offender. It further permits the court
to order that the misdemeanor offender pay a surcharge of not more than 5%
of the amount of the restitution otherwise ordered to the entity
responsible for collecting and processing restitution payments.
Under the new law, an individual who sustains
economic loss may apply to the court for an order requiring the offender
to pay his loss. The court must conduct a hearing if the offender or the
victim disputes the amount of the restitution. The restitution order then
becomes a civil judgment in favor of the victim against the offender. All
restitution payments shall be credited against recovery of economic loss
in any subsequent case brought by the victim.
In the past, when individuals have damaged
government property as a result of the negligent operation of a motor
vehicle, it has been necessary to pursue civil actions to recover the
amount of damages. However, now, under the new law, persons may soon find
themselves being asked to pay restitution within a short time of their
accident. If restitution is ordered, they may turn to their insurer for
reimbursement. If they have no insurance and fail to pay the order of
restitution, the court can continue to exercise its jurisdiction and
impose additional penalties. Because of the complexity of the new statute,
it will take municipal courts some time to become familiar with the
provisions of this new law and adopt procedures to implement those
provisions. In the meantime, it is recommended that if an accident occurs
in which city property may be damaged and an individual is cited into
court as a result of that accident, the court should be made aware of the
amount of damages incurred and request that restitution be made as part of
the sentencing process.
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- Craig Blair
In 2003, the total number of claims was up
significantly, 409 compared to an average 335 the previous five years.
However, individual claims cost in 2003 averaged less than the previous
five years. An increase in the number of claims is always a concern, but
the severity of those claims will generally have an even greater impact on
the bottom line.
A review of the total losses for 2003 reveals a
fairly normal loss year. Another positive indicator was the number of
lawsuits filed, only 11. This number is about half of what we have come to
expect.
Loss Year 13 - 2001 is not quite so positive. At
year end, it ranked as the second worst loss year in MVRMA's history and
still has 11 pending lawsuits.
There is good news on the horizon, however. Two loss
years (LY 11-1999 and LY12-2000) should close in 2004. As of December 31,
LY 11 had a balance of $118 thousand and LY 12 had in excess of $1
million! With these projected returns, MVRMA will have refunded
approximately $4 million to its members. This total reflects well on the
quality of MVRMA's members and their commitment to risk management and
loss control. The return of excess loss funds is just one of the many
benefits of pool membership.
Subrogation Update
Subrogation (filing for reimbursement against third
parties that damage city property) is another benefit provided by MVRMA.
For more information, call the MVRMA office or refer to the Subrogation
Policy in the MVRMA Handbook. The chart below reflects the results
of MVRMA's subrogation efforts:
Loss Year
Claims Per Year
Average Collected
1996-2002
59
$ 1,098
2003 45
$ 3,498
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-Starr Markworth
Accreditation Reimbursement
At the September Board Meeting, the MVRMA Board of
Trustees approved a new policy that will be of great interest to MVRMA
police departments.
Effective January 1, 2004, MVRMA has in place a Law
Enforcement Accreditation Reimbursement Policy. This policy has been
established to financially assist member municipalities with a portion of
the cost for obtaining Law Enforcement Accreditation through CALEA.
Risk Management studies by state sponsored
self-insured pooling organizations indicate accreditation significantly
reduces risk factors associated with police operations. These studies
report a positive correlation between CALEA accreditation and loss
reduction. Accordingly, MVRMA encourages its members to upgrade their
police department standards by achieving this accreditation.
The MVRMA policy will reimburse member police
departments, upon notification of accreditation or reaccreditation, a sum
of 50% (up to $4,000) of the Law Enforcement Accreditation fee, not
including on-site assessment fees.
To take advantage of this new policy, please notify
MVRMA in writing on or before September 1, in order to receive the
reimbursement in the following budget year. Upon receipt of notice
verifying accreditation or reaccreditation through CALEA and proof of
payment for the accreditation fee, MVRMA will reimburse the member.
For those members who are not already accredited or
are not quite ready to begin the full accreditation process, CALEA offers
a "recognition program" as a starting point. The reimbursement would also
apply to this program.
If you have any questions regarding this policy,
please contact the MVRMA office at 937-438-8878.
For more information on CALEA accreditation, please
visit CALEA’s website at
www.calea.org.
New Videos
MVRMA purchased six new videos in January. If you
would like to borrow any of the following titles, please contact the MVRMA
office:
Creating a Drug-Free Workplace
Housekeeping: It Ain't Like the Movies
Forklift Safety
Clown - Diversity
Customer Service: The Royal Treatment
Customer Service: Difficult Customer Alert
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-MARSH USA Inc.
The Blackout of 2003
An old adage was dusted off this summer, with people
in eight states and one Canadian province asking one another, "Where were
you when the lights went out?" The blackout of August 14, 2003 cut the
power to as many as 50 million people in Connecticut, Massachusetts,
Michigan, New Jersey, New York, Pennsylvania, Vermont and yes… Ohio. Tens
of thousands of small and large communities lost power. Although it was
relatively short lived- power was restored in most places within 24
hours-estimates on the cost to the U.S. economy range from $6 billion to
$30 billion.
The August blackout was relatively benign in terms
of the hardships and disruptions it created. But what if the next blackout
goes on for not hours, but for days? What if it happens not on a bearably
warm summer day, but in the dead of winter when lack of heat can be
lethal?
Smart communities will use the blackout as a
catalyst to assess their readiness for future power outages and other
interruptions. The following is a guideline of best practices prepared by
Marsh Risk Consulting Practice. A good plan for power outage should
include:
- Having people in place that are able to assess the
extent of power outage quickly and are authorized to make decisions about
what is to be done
- Identifying employees who may need special
assistance and ensuring their needs can be met
- Assessing what a loss of power will mean for
water supplies - Bottled water and instructions on limiting use of
toilets may be needed
- Inspecting, testing and maintaining emergency
generators periodically to ensure reliable operation; maintaining the
fuel storage tank at least three quarter full at all times
- Evaluating
emergency lighting to all exit travel paths and periodically inspecting
and testing each unit
- A plan to
supervise the use of stairwells
- Verifying there are sufficient first-aid
supplies on hand and personnel certified in first aid and CPR
- Assessing
building security systems to determine if they would operate during a
blackout
- Having a solid
communications strategy - Keeping hard copies of updated lists of
utility companies, building management, contractors and others as well
as employees and their family contacts
Preparing for an emergency is the best insurance
against a disaster occurring.
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February 18
Customer Service Training
9:00 am - noon and 1:00-4:00 pm, MVCC
March 15
MVRMA Quarterly Board Meeting
9:00 am
MVRMA Offices
March 18 and 24
First Aid and Safety Training
10:00 - 11:30 am and 1:00 - 2:30 pm, MVCC
April 1, 6 and 15
Diversity Training
9:00 am - noon and 1:00 -4:00 pm, MVCC
May 6 through September 7
Supervisory Development Program
MVCC
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-Michael Hammond
We are now in our third renewal since the commercial
insurance market plunged into one of the hardest market cycles in recent
history. Substantial premium increases accompanied by reduced limits of
liability have been observed across most lines of insurance. Commercial
insurance increases in excess of 40% have impacted many sectors. A
reduction in the number of insurers with an interest in public entity
business also contributed to an already difficult market. In addition,
insurance underwriters are requiring extensive documentation of exposures
and losses. As a result, we often feel like we’re "jumping through hoops"
in order to pay higher premiums for less coverage.
In order to fully understand the scale of change, it
is worth reviewing what has occurred over the last few years.
Prior to 9/11, it was clear we were entering a
hardening insurance market. Insurance experts attributed this change to:
1. Adverse litigation trends
2. Underpricing that leads to an insufficient
premium pool
3. Poor underwriting results that lead to much
higher losses
4. Poor investment climate with much lower return on
investments
5. Depletion of loss reserves due to catastrophic
events.
The solution was to increase insurance renewal rates
in order to restore profitability in the insurance market. As the
insurance industry was preparing to make these adjustments, the unforeseen
occurred. On September 11, 2001, the world’s eyes were opened to the
magnitude of potential exposure from one occurrence. This event was
unquestionably the most significant loss in the history of the insurance
industry. The full range of losses provided by various analysts was
between $30-70 billion.
The changes the insurance market planned prior to
9/11 would now have to be dramatically adjusted. Many insureds experienced
significant increases in their renewal premiums ranging from 30-300%,
depending on the type of insurance. In addition, insurance companies
offered lower limits and higher deductibles, and some coverage was
eliminated altogether.
It became clear the financial complications from the
hardening insurance market and the "Attack on America" would continue for
several years.
The role of MVRMA’s insurance brokers became more
important than ever in achieving optimum results on behalf of its members.
Pools and MVRMA, in particular, have succeeded
during previous insurance cycles. In the 1980s, pools provided insurance
at a time when public entities either couldn’t get coverage or were able
to secure only limited coverage at a very high cost. In the 1990s, pools
were able to offer lower retentions and increased coverage when the
insurance market softened.
Now, during the hardened market, pools can reaffirm
to their members why they were formed in the first place: ·
Price and coverage stability due to large self insured retention
· Group buying
power in the insurance market
· Long term
relationships with markets, which equate to enhanced coverage
· Creativity and
flexibility
· Internal control
over settlement and litigation matters
· Value added
services (training, safety and loss control, etc.)
MVRMA’s 2004 average member contribution actually
decreased by 2.9% while the average rate for commercial insurance
increased by 12%. Pooling has generally resulted in coverage stability
at below market costs. MVRMA’s 2004 renewal is a good example. Our brokers
were able to negotiate very acceptable renewals at below market rates as
reflected in the following chart:
2004 Coverage
Change
Property & B/M
-6.0%
Bonds
0.0%
Casualty
0.5%
Crime
8.4%
The total premium amount for this renewal is about
$1,500 less than was paid in 2003! This reduction is significant in light
of the additional pool exposures and market conditions.
The advantage of participating in a pool was further
evidenced recently when MVRMA submitted proposals to the City of Englewood
and the City of Bellbrook, our newest members. At Englewood, we were
selected as the lowest and best from the six proposals the city received.
At Bellbrook, we were again the lowest and best of the four proposals
considered.
One of the bidders at the bid opening in Englewood
commented, "It looks like being in a pool is the place to be." As the
insurance industry works to regain its former financial position and
continues to experience cyclical changes, the members of MVRMA couldn't
agree more!
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