Title
Receive a report on the General Liability and Workers’ Compensation Programs for FYE 2017-18 and FY 2018-19 Mid-Year.
Report
RECOMMENDATION:
It is recommended that the Budget Committee receive a report on the General Liability and Workers’ Compensation Programs for FYE 2017-18 and FY 2018-19 Mid-Year.
SUMMARY/ DISCUSSION:
Attached is an overview of the Insurance Policies, General Liability (GL) and Workers’ Compensation (WC) programs for Fiscal Year Ending (FYE) 2017-18 and Mid-Year Fiscal Year (FY) 2018-19 as of December 31, 2018. This report is in response to the Board of Supervisor’s request for a semi-annual update on the trends of claim frequency and severity for GL and WC.
The County of Monterey is a certified State of California Self-Insured Public Entity. Pursuant to the State Controller’s guidelines for self-insured California Counties, Risk Management contracts with an independent actuarial firm, Bickmore Risk Services, to conduct annual studies and provide reports for both the General Liability and Workers’ Compensation programs.
These independent actuarial reports determine and reflect:
- The County’s liabilities for current and future claims;
- The Internal Service Fund’s assets available to pay these liabilities; and
- The cost allocations to be charged to each department, to fund liabilities at the 70% confidence level.
Insurance:
Insurance placement and binder for FY 2019-20 is in the beginning stages of the renewal process. The estimated costs for the premiums are expected to increase:
- California State Association of Counties - Excess Insurance Authority (CSAC-EIA) - Excess Workers’ Compensation premium estimated to increase as much as 20%.
- CSAC-EIA - Property Insurance premium was estimated to increase 25%, however the FY 2018-19 premium increased 23.%. Only the actual policy cost is allocated to departments.
- Marsh Risk & Insurance - General Liability Excess Insurance premium initially estimated an increase of 15%, as the carrier was able to hold FY2017-18 premium to a 4% increase; it is not expected that we will be able to continue that trend with the increase in claims and severity of claims.
o Carriers are pushing for a higher Self-Insured Retention (SIR) than our current $1.5 million
- BETA Health Group (BETA) - is estimated to increase 22% over the 6% increase experienced in FY 2017-18.
General Liability:
FY 2019-20 GL Claims Allocations are decreasing a combined average of (0.72%) to a total of $12,088,000 from FY2018-19 Funding:
- Recoverable is decreasing (0.17%) to $5,762,000
- Non-Recoverable is decreasing (1.22%) to $6,326,000
o FY18-19 Non-Recoverable funding was actually reduced by 50% to help balance the FY18-19 budget, the combined FY19-20 allocation is an actual increase of 35% over the actual FY18-19 funding amount of $8,974,000.
o The County program Recoverable Loss Rate is $0.200/$100-of-Payroll which is lower than the average other Excess Insurance Authority (EIA) Members of $0.516/$100-of-payroll.
FYE 2017-18:
- 132 new claims had been filed.
- 150 claims were closed through dismissal, settlement or verdict with an average Total Cost of $8,154/claim.
- 119 claims are still in the open/pending status at an average Incurred Cost of $195,389/claim.
FY 2018-19 as of December 31, 2018:
- 56 new claims had been filed.
- 65claims were closed through dismissal, settlement or verdict with an average Total Cost of $29,729/claim.
- 113 claims are still in the open/pending status at an average Incurred Cost of $228,503/claim.
The Incurred Cost of a claim includes legal expenses (e.g. filing fees, court reporting fees, attorney fees, etc.) for actual payments and potential exposure for the life of the claim (i.e. Reserves).
Workers’ Compensation:
FY 2019-20 WC Allocations are increasing 1.4% to $20,782,000
- The County WC Loss Rate is $2.441/$100-of-Payroll which is 0.2% higher than the average other Excess Insurance Authority (EIA) Members of $2.002/$100-of-payroll where the highest rate is $3.915/$100-of-payroll.
FYE 2017-18:
- 545 new claims were filed.
- 602 claims were closed, at an average Total Cost of $14,919/claim
- 898 claims are still in open/pending status, at an average Incurred Cost of $152,431/claim
FY 2018-19 as of December 31, 2018:
- 204 new claims were filed.
- 287 claims were closed, at an average Total Cost of $15,187/claim.
- 909 claims are still in open/pending status, at an average Incurred Cost of $164,0771/claim.
The Incurred Cost of a Workers’ Compensation claim includes all medical costs, legal costs, temporary disability payments made to date and potential exposure for the life of the Claim (i.e. Reserves).
OTHER AGENCY INVOLVEMENT:
N/A
FINANCING:
Accepting this report and presentation has no funding impact to the General Fund.
BOARD OF SUPERVISORS STRATEGIC INITIATIVES:
Check the related Board of Supervisors Strategic Initiatives:
___ Economic Development - Through collaboration, strengthen economic development to ensure a diversified and healthy economy.
X Administration - Promote an organization that practices efficient and effective resource management and is recognized for responsiveness, strong customer orientation, accountability and transparency.
___ Health & Human Services - Improve health and quality of life through County supported policies, programs, and services; promoting access to equitable opportunities for health choices and healthy environments in collaboration with communities.
___ Infrastructure - Plan and develop a sustainable, physical infrastructure that improves the quality of life for County residents and supports economic development results.
___ Public Safety - Create a safe environment for people to achieve their potential, leading business and communities to thrive and grow by reducing violent crimes as well as crimes in general.
Prepared by:
___________________________________
Valerie Shapton, Finance Manager, x. 5685
Approved by:
___________________________________
Leslie J Girard, Chief Assistant County Counsel, x. 5365
Attachments:
PowerPoint Presentation - FY18-19 Mid-Year & FY17-18 Year End GL & WC Report