Agenda - 06-15-1982 - Laserfiche WebLink

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4F_ 1 t." aRN7E COUNTY BOARD c ' CCV.MISSICNE2S Action 1, enda Item No. 0-2 ACTION AGENDA. ITEM ABSTRACT MEEI7N.I.,1-G DATE JUNE 15, 1982 Subject: Worker's Compensation Self-Insurance Program Depart.m:ent: Purchasing and Personnel Public Hearing: yes _ xx.; no Attathrmnt(s): (I) Insurance proposals Infoi_waticn Contact: Mark Rees, ext# 498 (2) Resolution Beverly Whitehead, ext# 515 Ph011e 1.11-11te : 732-9361 Purpose: For the Board of Commissioners to adopt a resolution that would allow the County to join the North Carolina Association of County Commission (NCACC)Self-Insur- ante Program for worker's compensation. Orange County's worker's compensation premium has steadily increased over the past several years to an expected $54,800 in FY82-83. These increases are mainly due to three reasons: (1) increasing payroll on which the premium is based, (2) increases in worker's compensation rates granted by the State Industrial Commission and (3) in- creased claims. In an effort to contain worker's compensation costs, the County staff requested insurance proposals from three sources, our present carrier Collier Cobb & Associates-Great American Insurance Company, Chapel Hill Insurance Agency-Aetna Casuality and Surety Company, and NCACC Self-Insurance Program;-Fred S. James Company Servicing Company. The results of these proposals are attached. All three sources would provide adequate services to Orange County, such as loss prevention, safety programs, reporting functions, etc., but the bottom line is that the NCACC would provide a 10% additional self-insurance discount in the premium. lircact: This additional 10% discount is the result of the self-insurance program estab- lished by the NCACC. The way this particular self-insurance program works is that member counties, (there are sixty counties in the group including Wake, Chatham and Alamance counties), pool their money together to pay out worker's compensation claims, thereby eliminating insurance company profits and overhead costs. To protect against unexpected severe claims, two types of excess insurances are purchased to protect the plan. The first type is specific excess insurance-which covers the amount of any claim from one occurrence involving an employee in excess of a specified dollar amount. The second would be aggregrate excess insurance-that would come into effect if and when there was an unusually adverse run of experience which has depleted the reserve of the self-insurance pool. - Counties would have an incentive to keep claims low because they would still have the premium effected by an experience modification factor. The difference with this program would be that the experience modification factor would be based on the group norm, which is just North Carolina Counties rather than the entire North Carolina work complex, The disadvantage to this type of self-insurance program is that if the group norm increases more than the state norm, then the members may have to pay more in premiums than they presently are under a private carrier. The likeli- hood of this event occurring, however, is not very high. The present loss ratio in- cluding incurred but not reported claims, for the first nine (9) months the program is 28,3% of premiums paid in. In order for the group premium to increase this loss ratio would have to rise to more than 66% of premiums.