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2 <br /> an increase from $300,000 to $500,000 in FY 2023-24. Additional BOCC approval was not <br /> necessary then given the LOC limit was not to exceed $500,000. The FY 2024-25 renewal <br /> requested an additional $250,000 LOC, but Travelers agreed to forgo an increase in FY 2025 to <br /> give more time to access loss experience. <br /> For the County's FY 2025-26 renewal, Travelers is requiring an additional $500,000 to the letter <br /> of credit, representing a total letter of credit of $1,000,000. <br /> Claims Summary FY 2023 to FY 2025 <br /> As shown below, paid losses for worker compensation claims only total $936,471 through 2025 <br /> to date. Total incurred losses are $1,579,951. A large part of the collateral calculation for LOC is <br /> based on the number of losses incurred by the County, subsequently increasing Travelers duty <br /> to pay obligation if the County fails to pay these claims. <br /> Fiscal Year <br /> Row Labels Sum of Incurred Dollars Sum of Paid Dollars Sum of Outstanding Dollars Count of Line of Insurance <br /> 22-23 $ 180,029.00 $ 180,027.49 $ - 43 <br /> 23-24 $ 759,299.00 $ 467,517.76 $ 291,779.28 53 <br /> 24-25 $ 640,623.00 $ 288,926.49 $ 351,696.96 55 <br /> Grand Total $ 1,579,951.00 $ 936,471.74 $ 643,476.24 151 <br /> Letter of Credit Protocol <br /> This additional request for letter of credit with Truist Bank requires BOCC approval because it is <br /> a contingent liability having potential for the draw down of County funds. The process and <br /> requirements of a letter of credit is outlined as follows: <br /> • Bank sets aside a portion of the County's credit capacity (not actual cash) as a guarantee. <br /> • Travelers (the beneficiary) holds the LOC as a security to ensure performance or payment. <br /> • The funds remain at the bank unless Travelers makes a claim to draw. <br /> If Travelers requests to draw on the LOC: <br /> • Travelers submits a valid draw demand to the County's bank. <br /> • The bank transfers the funds to Travelers, fulfilling the LOC obligation. <br /> • The County then reimburses the bank for the amount paid out. <br /> FINANCIAL IMPACT: There is no immediate financial impact associated with this item. However, <br /> if the County fails to pay a deductible, Travelers will have the ability to make a claim against the <br /> County's letter of credit, and the County would be responsible for paying Truist Bank that amount <br /> with interest accumulating at a rate of 0.5%. <br /> ALIGNMENT WITH STRATEGIC PLAN: This item supports: <br /> • GOAL 2. HEALTHY COMMUNITY <br /> OBJECTIVE 5. Invest in, support, train, and retain our community safety, health, and <br /> emergency services employees and direct care workforce. <br /> RECOMMENDATION(S): The Manager recommends the Board: <br /> 1) Authorize the County Manager or his designee, the Chief Financial Officer, to execute the <br /> increase of $500,000 to the Letter of Credit for Travelers Indemnity Company; and <br />