December 16, Time and Location MVRMA Office, 4625 Presidential Way, Kettering, Ohio. The meeting began at 9:40 am.

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1 MINUTES OF THE MIAMI VALLEY RISK MANAGEMENT ASSOCIATION BOARD MEETING December 16, 2013 Time and Location MVRMA Office, 4625 Presidential Way, Kettering, Ohio. The meeting began at 9:40 am. The following individuals were present when the meeting was called to order: Bill Kucera, Beavercreek; Mark Schlagheck, Bellbrook; Janine Cooper, Englewood; Nancy Gregory, Kettering; Dody Bruck, Miamisburg; Stacy Wall, Piqua; Ginger Adams, Sidney; John Green, Tipp City; Sue Knight, Troy; Julie Trick, Vandalia; Tom Reilly, West Carrollton; Danny Mongold, Wilmington; Rick Steddom, Seth Cole and Justin Swarbrick, Alliant Insurance Services; John Foehl, GEM; and Tom Judy, Craig Blair, Starr Markworth, Kathy St. Pierre and Terri Zalat, MVRMA. Due to inclement weather, Dave Couch and Dina Minneci, Indian Hill; Annalee Duganier and Thomas Moeller, Madeira; Mary Mueller, Mason; Jim Hanson, Montgomery; Jerry Thamann, Springdale; and Lynn Tetley and Gary Baldauf, Wyoming, arrived after the meeting began but before the Risk Management Committee Report. The cities of Blue Ash and Centerville were not represented at this meeting. Mr. Judy introduced Terri Zalat, who has accepted the position of Office Coordinator and will begin work January 20, Consent Agenda Approval Motion by Ms. Gregory, seconded by Ms. Knight, to approve the Consent Agenda. Motion carried. GEM Progress Report John Foehl, GEM President and CEO, provided a Power Point presentation titled GEM A Progress Report. Mr. Foehl s report reviewed the history of GEM, its current status, financial position, and future direction. He pointed out that MVRMA was one of the founding members of GEM, which has grown to seventeen members. MVRMA s $750,000 capital contribution has grown to over $1.2 million due to the growth of GEM. Mr. Foehl advised that, due to MVRMA s excellent loss history, it is the only GEM member to have been offered a three-year contract with a rate lock. Risk Management Committee Report Ms. Markworth provided a training update. She noted there was a variety of training in 2013 with more than 1000 participants overall. Training included such topics as worker safety, supervisory issues, parks and recreation liability, fire liability and a law enforcement legal update. Twelve different members hosted training, a number she 1

2 hopes to increase in Evaluations for some of the more recent training were included in the agenda packet. They were very favorable, as was the ratio of expenses to revenue for all training to date (79.7%). The goal for 2013 was to have 75% of training expenses covered by revenue. A tentative 2014 training was also included in the agenda packet. These topics were culled from participant recommendations as well as loss history for the pool. Mr. Judy referred to the list of Risk Management Requests/Issues included in the agenda packet for the period August 28, November 20, He reviewed several including the following: Kettering He advised the city that Liability Endorsement covers claims from administrative acts of EMS Medical Directors, but not malpractice. Sidney When the July 4 fireworks were postponed at Sidney, the city stored the truck containing the fireworks on city property in anticipation of a later display. The city was advised to let the fireworks company store its own fireworks in the future in order to avoid the additional liability. Miamisburg and Sidney Both cities had questions about liability for traffic design issues. Legal counsel advised that traffic design is a governmental function for which there are strong immunity defenses. Miamisburg The city currently rents the land for Mound Park from the state. It was recently considering a management agreement rather than a rental agreement. Because there was the possibility of losing recreational immunity with the management agreement, Mr. Judy recommended the continuation of the rental agreement. Mr. Blair distributed an amended Open Claims and Incurred Losses Report at the meeting. He reminded everyone this report is protected by attorney-client privilege and should be redacted if a public request is made for a copy of the agenda packet. This report is not subject to disclosure under the Ohio Public Records Act. Motion by Ms. Wall, seconded by Mr. Thamann, to approve the Open Claims and Incurred Losses Report. Motion carried. Mr. Judy referred to the attachment included in the agenda packet concerning insurance requirements for recreation instructors. This document is available as a best practice on the MVRMA website. Mr. Judy highlighted the following insurance requirements for recreation instructors: 1. They should provide commercial general liability with limits no less than $500,000 per occurrence. 2. Automobile liability and workers compensation are rarely needed. Workers compensation would be required if the instructor has employees. 2

3 3. If the instructor is using his homeowner s policy to provide coverage, verification of the coverage should be provided to the city. 4. If the instructor has no coverage, he can apply for special event coverage through MVRMA. This coverage would insure the instructor and name the city additional insured. This coverage is relatively inexpensive. A premium of $97 would cover a class with 125 or fewer participants. 5. Always execute a written contract containing a hold harmless clause with these instructors and always require signed participant waivers. Mr. Judy reviewed the recent claims audit performed by Praxis Claims Consulting. The summary of the auditor s findings noted the following: 1. The MVRMA claims unit is well run. 2. The claims staff (Craig Blair) has the technical expertise, experience and sophistication necessary to competently handle claims. 3. All claim handling elements were found to be above average to superior when compared to the industry. 4. More expansive notes should be included in the future (a problem that will be corrected by the new claims software). 5. Higher settlement authority was recommended. Neither Mr. Judy nor Mr. Blair believes an increase in settlement authority is needed at this time. Mr. Judy reviewed the loss analysis reports included in the agenda packet. This information is now readily available because of the new claims software. The following information was discussed: 1. Claims by Type Auto claims had the highest frequency (56%) while EPL claims had the highest severity ($55,976/claim). 2. Auto Claims Frequency and Severity Non PD by member city Members were able to compare their claims with other members of the pool. Mr. Judy recommended driver training for those cities with auto claims higher than the pool average. 3. Auto Claims Frequency and Severity Police by member city Members were able to compare their claims with other members of the pool. Any city wishing more detailed information was asked to contact the MVRMA office. Finance Committee Report Ms. Cooper asked Mr. Judy to report on any changes to the 2014 Liability Coverage Document. He noted the following changes, all of which had been reviewed and approved by MVRMA s coverage counsel: 1. Under The Association s Limit of Liability D. 1. The Products-Completed Operation Hazard aggregate limit is $10M for Personal Injury and Property Damage. The word or was replaced by and to be more consistent with ISO forms. 2. Under Exclusions (L) (4) The word pollutants was removed from this section because pollutants are excluded under (K) (3). 3. Under Endorsement No The Main Street Program at Wilmington was deleted from the list of CICs because it is not a CIC. 3

4 Motion by Ms. Gregory, seconded by Mr. Hanson, to approve the 2014 Liability Coverage Document. Motion carried. Referring to the chart of Liability Re-Insurance Premiums in the agenda packet, Mr. Judy stated the only change since the September Board Meeting was the GEM premium. At that meeting, the premium was estimated to be $270,000. The actual premium is $268,884. With the Genesis premium of $165,550, the overall decrease in liability premiums for 2014 is 2.2%. Motion by Mr. Green, second by Ms. Trick to approve the 2014 liability renewal. Motion carried. Mr. Judy stated the 2014 premium for crime coverage is $18,616, which is $226 more than The coverage remains essentially unchanged except for the addition of a couple immaterial exclusions. Motion by Mr. Hanson, seconded by Ms. Cooper to approve the 2014 crime renewal. Motion carried. Mr. Judy reviewed the 2014 Budget Memo. He stated this document plus the summary statements for revenues and expenditures would provide a good budget summary for council or city officials. He highlighted the following information: 1. Budgeted operating expenditures for 2014 are $4,288,623, which is an increase of $26,015 or 0.6% more than the 2013 Budget. This increase is largely attributable to a $50,000 increase in loss year funding and $14,000 for investment advisor fees now charged as an expense rather than a reduction of investment income. The total for all other budget items decreased by about $36, The insurance program accounts for 87% of the budget, whereas administrative fees, which include the loss control program, account for only 13% of the budget. 3. The 2013 operating rebate, which will be deducted from members 2014 contributions, is $100,000. This rebate is due to: a) the savings incurred by leasing the new claims software rather than purchasing it; and b) a lesser property premium than originally budgeted. 4. A chart of excess insurance/re-insurance premiums for the period illustrated the decrease in liability premiums and the significant increase in property premiums for that period. The property increases were due to market conditions and several large losses. 5. Total 2014 member contributions will be about $37,000 less than the previous year. 6. MVRMA members have now received more than $12M from closed loss year refunds, and another refund of approximately $1M is anticipated for Refunds from closed loss years average 56% of the funds contributed. 7. At the end of 2013, MVRMA is expected to have cash fund balances of about $10M for the six open loss years in addition to about $3.2M in the Shock Loss Fund. With surplus of about 25 times the pool s liability SIR and 50 times its property SIR, MVRMA is well capitalized. A page by page review of the budget was not necessary since it had been previously reviewed by the Finance Committee, and no substantial changes had occurred since the Preliminary Budget was discussed at the September Board Meeting. The total amount to be paid by the members for 2014 is $4,163,334, which is less than the Preliminary 4

5 Budget and $37,000 less than Motion by Ms. Gregory, seconded by Mr. Hanson, to approve the 2014 Final Budget, PCF and Objectives/Work Plan. Motion carried. Mr. Judy explained the Flexible Capital Program which allows GEM members to invest alongside GEM using GEM s Investment Policy guidelines and its professional investment manager. The minimum initial investment is $500,000 and can be increased from there in increments of $100,000. Initial deposits may be made in January but incremental deposits can be made throughout the year. GEM s investments total $62M, and during the last three years earned 2.63%. Its portfolio is conservative and has a duration over 4. MVRMA s investments in the Flexible Capital Program would earn the same rate of return earned by GEM less a 0.25% administrative fee. Mr. Judy said that participation in the GEM program would be viewed as a long-term investment. Mr. Foehl offered comments on the conservative nature of GEM s investment practices. In order for MVRMA to participate in the GEM program, an amendment to the current Cash and Investment Policy is required. Under the section titled Investment Instruments, the following amendment was recommended by the Finance Committee: g) Capital contributions to the Flexible Capital Program of Government Entities Mutual (GEM). Although not part of the amended policy, the Finance Committee also recommends no more than 10% of the portfolio be invested in this program. Motion by Mr. Hanson, seconded by Ms. Knight, to approve the amended Cash and Investment Policy, and to restrict deposits to no more than 10% of the portfolio. Motion carried. Membership Services and Marketing Committee Report Mr. Schlagheck reported on the recent Membership Services and Marketing Committee meeting. He stated Mr. Judy has had a couple inquiries from municipalities interested in MVRMA. However, with no current Approved List, Mr. Judy wanted more direction from the Board about how to handle such inquiries. At its March 2014 meeting, the committee will explore the process for developing a Prospective Member List and discuss potential amendments to the Membership Selection Policy. Mr. Schlagheck suggested any members wishing to weigh in on this topic, should contact Mr. Judy. Nominating Committee Report Mr. Reilly, as Chair of the Nominating Committee, thanked this year s officers for their service and presented the 2014 nominations as follows: President: Nancy Gregory, Kettering Vice President: John Green, Tipp City Treasurer: Janine Cooper, Englewood Secretary: Julie Trick, Vandalia As there were no new nominations from the floor, there was a motion by Ms. Mueller, seconded by Ms. Knight, to elect the 2014 slate of officers as presented. Motion carried. Alliant Insurance Services Report Mr. Steddom stated the insurance industry hasn t changed a lot during the last 12 months. Capital and surplus is up to $614 billion, an all-time high. The combined ratio without 5

6 interest income is 97.9%. The insurance industry is growing, 50% due to rate increases (indicating a harder market) and 50% due to new business. Insurance industry investments are very conservative (only 20% in stocks). With the lower investment income, underwriters continue to be very cautious. Overall, Mr. Steddom envisions a slightly harder market for both liability and property going into Mr. Steddom asked if everyone understood what Products Completed refers to in MVRMA s liability document. He wanted everyone to know that the products being referred to include the water the cities distribute, food sold at fairs taking place on city property, etc. Mr. Steddom asked members to contact him with topics they wish explored in future issues of Risky Business. Executive Director's Report Mr. Judy noted a sign-up sheet for consideration for attendance at the 2014 Annual PRIMA Conference was circulated. The conference will be held in Long Beach, California June Mr. Judy provided the quarterly Board Meeting dates for 2014 as follows: Monday, March 17 Monday, June 16 Monday, September 22 (the 4 th Monday) Monday, December 15 President s Report Mr. Schlagheck reminded everyone that a sign-up sheet had been circulated for committee assignments in Anyone who was unable to attend the December meeting will be contacted. He reminded everyone the next Board Meeting will be held March 17. Round Table Discussion At the September Board Meeting, Ms. Wall reported the Ohio Attorney General s office will mediate public records disputes. Fortunately the massive request received by the City of Piqua was withdrawn. Having concluded its business for the day, the meeting adjourned at 11:17 am. Following the meeting a holiday luncheon was held at the Kohler Center Banquet Room where Starr Markworth presented the 2013 SPEC awards. The Ascension Award, given to the municipality with the most improved overall percentage of SPEC compliance was given to the City of Kettering. Pinnacle Awards, given to the municipalities with the best overall percentage of compliance (all with 100%) were presented to the Cities of Bellbrook, Centerville, Kettering, Miamisburg, Montgomery and Troy. 6

7 The luncheon was also a celebration of MVRMA 25 th anniversary. Mark Schlagheck, MVRMA s current president, hosted a short program. It included recognition of the original six members of MVRMA (Beavercreek, Kettering, Miamisburg, Vandalia, West Carrollton and Wilmington) when it was incorporated December 1, Past presidents were also recognized. In attendance were John Nielsen (1990), Jon Stoops (1994), Derrick Parham ( ), Jim Pfeffer ( ), Nancy Gregory ( ), Tom Judy ( ), Sue Knight ( ), Tom Reilly ( ) and Mark Schlagheck (2011-Present). Robert Surdyk, MVRMA s original corporate counsel, was in attendance and was recognized for his contributions. MVRMA s three Executive Directors were also present. John Nielsen (May February 1999) and Mike Hammond (July 2000-July 2012) each provided a short perspective of his years at MVRMA. Tom Judy (2012-present) provided final remarks to end the program. A program with highlights of the past 25 years as well as a coffee mug commemorating this milestone was given to everyone who attended. 7