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ABAG PLAN Corp. 17th Annual Board of Directors Meeting

ABAG PLAN Corp. 17th Annual Board of Directors Meeting . May 28, 2003 South San Francisco, CA. AGENDA. Business Meeting Year in Review Actuary & Underwriting Report Actuarial Analysis Renewal Options Funding Recommendations Loss Prevention Programs Risk Assessment

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ABAG PLAN Corp. 17th Annual Board of Directors Meeting

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  1. ABAG PLAN Corp.17th Annual Board of Directors Meeting May 28, 2003 South San Francisco, CA

  2. AGENDA • Business Meeting • Year in Review • Actuary & Underwriting Report • Actuarial Analysis • Renewal Options • Funding Recommendations • Loss Prevention Programs • Risk Assessment • Police Training & Equipment • Sewer Backflow Prevention

  3. AGENDA • Financial Summary • Investment Performance Report • Audited Financials • Planning Meeting Update • Claims Committee Report • Staffing Plan Update • Loss Run & Analysis • Administrative Budget

  4. ABAG PLAN Mission Statement The purpose of the PLAN is to benefit the citizens of each Member Entity by establishing a stable, cost-effective self-insurance, risk sharing and risk management program for each Member Entity.

  5. Actuary Report • John Alltop, Principal Actuary, Bickmore Risk Services, will present his firm’s report of the PLAN’s outstanding liabilities as of 6/30/03 and funding for FY 2003-04 expected losses.

  6. Renewal Options • Dennis Mulqueeney, Vice President, Driver Alliant Risk Services, will present his firm’s activities and results in marketing the PLAN’s excess liability and property coverages for FY 203/04

  7. Funding Options & Recommendations • Outstanding Liabilities • Comparison of 6/30/02 & /03 Expected Liabilities and Fund Balances • Retention of funds > 90% CL in SIR Fund • Funding for FY 2003-04 • Funding Guidelines & Ratios • Cost of excess insurance at various levels • Choice of SIR

  8. Funding PolicyObjectives • Sufficient assets to pay expected losses • Stability of funding to avoid substantial fluctuations in deposits or assets • Support risk management programs to benefit all members

  9. Funding PolicyDistribution of Funds* • EXPECTED LIABILITIES (50% CL, disc.) • $11.2 million • RISK MARGIN FUND (50% TO 90% CL) • $5.4 million • SIR FUND (Above 90% CL) • $ 16.8 million • Loss Prevention Programs • $350,000 * Projected 6/30/03

  10. Funding Comparison FY02 to 03

  11. Funding PolicyBenchmarks • Maintain Risk Margin Fund at 90% CL • Yearly Deposit at least 50% CL • Goal = 70%. • Total Fund to SIR ratio at least 2:1 • Goal = 3:1 • SIR Fund to SIR ratio at least 1:1 • Goal = $10 MillionRevise to 2:1?

  12. Funding Ratio Comparison

  13. FY 2003-04 Liability Program Funding • Ratios allow for up to $7 mil retention • $3 mil xs $7 mil SIR = $300,000 • Total Funding -2.3% from 02/03 • $5 mil xs $5 mil SIR = $416,500 • Total Funding + 0.5% from 02/03 • Increase in $5 mil premium = 8.5% • Recommendation was cap at $400,000

  14. FY 03-04 Funding Recommendations • $5 xs $5mil Option • Price per “riskier” million is $83,300 vs. $100,000 for $3 mil xs $7 mil option • Compare to $93,514 per mil for “riskier” $7 xs $3 mil layer • Increase of 8.5% less than expected • 30% average, 19-20% expected • Enough to consider raising retention • Increased funding ratios/stability

  15. Liability Program FundingBoard Motions • Fund FY 2003-04 expected losses with a $5 mil or $7 mil SIR • Maintain funds > 90% CL in the SIR Fund.

  16. Property Program Funding • See Funding & Comparison FY 2003 v. 04 • Insurance Premium Decrease from $0.0611 to $0.05 per $100 TIV • Change in Total Funding = -4% • Continue to fund appraisals with service credits and up to $50,000 of pool funds. • Board Motion to Approve Funding

  17. BREAK

  18. 7. Loss Prevention Programs • Risk Assessment • Sewer Program Update • Police Training & Equipment • Defensive Driving • Risk Management Training

  19. Risk Assessment BRS Proposal • Safety Perception Assessment • Loss Analysis & Savings Projections • Risk Assessment Site Surveys • Risk Assessment Report • Safety Video Library & Reference Material • Follow Up Consultation & Training

  20. Risk Assessment • BRS Proposal Option B (p. 14) • $106,000/yr. for 2 years to complete • $20,000 for follow up as needed • Total Funding Request = $232,000 • Recommended as presented with addition of cancellation provision.

  21. 7. Loss Prevention Programs • Sewer Program - Update • Training Sessions Completed • Maintenance, Prevention & Response • Verbal Judo • Model Ordinances being implemented • Public Education Brochures Completed • Pop-Up Matching Grant Program > 2,000 • Total Spent $50,000 of $125,000 budget

  22. 7. Loss Prevention Programs • Sewer Program - FY 2003/04 • Training - first response and code issues • Maintenance Audit - Larry Rugaard • Public Service Announcements • Continue grant program for pop-ups • Complete inserts for remaining members • Claim specialist working with members • No new funds requested

  23. 7. Loss Prevention Programs • Police Risk Management • POST Funding Cut • South Bay has started mobile training • Escalation of Force training well attended • In-car Camera Matching Grants • Total Funding Recommendation = $103,962

  24. 7. Loss Prevention Programs • Defensive Driving - $5,000 • State of CA Program well received • Policy part of Risk Assessment • Risk Management Education - $10,000 • Up to $500 per member • PARMA, IEA, ARM courses, etc. • Board Motion to Approve Programs • Total Funding Request = $350,962

  25. 8.A. Investment Performance • Presented by Joseph Chan, Finance Director

  26. Investment PolicyObjectives • Safety of invested funds • Liquidity to meet cash flow needs • Yield is maximum possible consistent with above principles

  27. Investment Report

  28. Balance Sheet June 30, 2002

  29. Financial Report • Board Motion to accept the Investment Report and Audited Financials as of 6/30/02

  30. 9. Planning Meeting Progress • Previous Goals Identified • Funding Policy - Implemented • Staffing Plan - update in claims report • Evaluate Loss Control Approach - complete • Update Strategic Plan Annually - scheduled • Document Review - begun • Define Committee Roles - begun • Become Accredited? TBD

  31. 9. Planning Meeting Progress • Eight Goals from October 2002 & progress • Implement loss control approach • begin w/ risk assessment • Recommended practices/audit • begin w/ risk assessment • List of consultants and lists of model policies • Rent a risk manager • examiners & RM available, consultant? • Humiliate non-participants • see claim reports

  32. 9. Planning Meeting Progress • Eight Goals from October 2002 & progress • Good standing v. bad standing members • will grade based on risk assessment and losses • Current listing of board members and alternates • on site • Continue to evaluate the funding variables to update/revise funding policy • discussion & decisions today • MOC Revision to include one insuring agreement and one set of exclusions • at next retreat and by 7/1/2004

  33. 9. Planning Meeting 2003 • Governing Doc Revisions • MOC • Bylaws • Claim Policy • Review of Funding Policy • Full Day for Board 1/2 Day for Exec Cmte • Approval of meeting schedule & topics

  34. 10. Claims Committee Report • Staffing Plan Update • Claim Reports

  35. Staffing Plan • Needs of Members • Improved claimant communication • Follow up to ensure hazards remedied • Balance workload & staffing • Keep improving services • Minimize claim costs • Maintain & improve RM programs

  36. Staffing Plan • Needs of Staff • Improve examiner support • Improve risk management support • IT contact for RiskMaster • Web site support • Improve legal support • Improve member involvement

  37. Staffing Plan Update • Mixed results outsourcing sewer claims • Communication with claimants and members • Costs continue to escalate • Recovery workload and expansion of duties • Dedicated property expertise • Need to develop expertise in-house • New Hire = Bruce Carey. Property and Recovery Specialist

  38. Staffing Plan Update • More resources devoted to sewer claims • New Hire • More Training • Test case for code defense • Public education and back flow devices • Continue addressing needs - improving service and minimizing claim costs

  39. Claim Reports

  40. Claim Reports

  41. Claim Reports

  42. Claim Reports

  43. Claim Reports

  44. Claim Reports

  45. 11. Admin Budget 2003-04 • Total Expenses = $1,873,578 • 11% Increase from FY02-03 • 14% Increase in Personnel, driven by increased overhead, including benefits and new hire • Total Funding = $1,800,000 • Difference of $73,578 from reserve • Used $160,000 of reserve in FY 02-03 • Board Motion to Approve Admin Funding

  46. Other Business? • Questions? • Comments? • Announcements? • Motion to adjourn

  47. THANK YOU! • From the ABAG staff - thanks for your support and assistance. • We look forward to working with you in FY 03-04.

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