HomeMy WebLinkAboutCommittee of the Whole April 26 20051
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DISCLAIMER: This document contains the Whatcom County Council or Committee
minutes, as approved. However, unless an attested signature page is attached, they
are not the final approved minutes.
WHATCOM COUNTY COUNCIL
Committee Of The Whole
April 26, 2005
Council Chair Laurie Caskey- Schreiber called the meeting to order at 6:30
p.m. in the Council Committee Room, 311 Grand Avenue, Bellingham, Washington.
Present: Absent:
Barbara Brenner None
Dan McShane
Sam Crawford
Seth Fleetwood
Sharon Roy
L. Ward Nelson
1. DISCUSSION WITH CHIEF CIVIL DEPUTY PROSECUTOR RANDALL
WATTS REGARDING THE RISK POOL (AB2005 -018)
Randall Watts, Chief Civil Deputy Prosecutor, introduced representatives from
the risk pool.
Dave Goldsmith, Washington Counties Risk Pool Managing Co- Director, the
risk pool was created 17 years ago. The State risk manager oversees the risk pool.
It is audited by the State auditor.
The mission is to provide comprehensive and economic risk coverage for
insurance premium cost; to reduce the frequency of severe loss; and to decrease
the costs incurred in managing and litigating claims. He explained the history of
the risk pool. In the State of Washington, there is virtually no immunity left. The
legislature has taken most of it away. Washington has joint and several liability,
which allows that each defendant in a legal action is responsible for the entire
amount of damages that a plaintiff is seeking, regardless of their relative degree of
responsibility for the damages involved. Also in Washington, there are no limits on
pain and suffering.
Brenner asked what the legislature did regarding limits. Goldsmith stated
the theory is that an injured party needs to be made whole and, if the government
has some role in the injury of that party, it should stand up and make that person
whole. In reality, anytime the government can be brought in, there is an attempt
to make the settlement bigger than whole. The lack of limit to pain and suffering is
a big piece of that.
The Civil Rights Act says that if there is an opposing attorney in a civil rights
cause of action, then the attorneys fees are paid to the individual who wins. Many
Committee of the Whole, 4/26/2005, Page 1
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DISCLAIMER: This document contains the Whatcom County Council or Committee
minutes, as approved. However, unless an attested signature page is attached, they
are not the final approved minutes.
cases who would be in state courts are moved to federal courts to get away from
this act. It's a lot of pressure on insurance.
The risk pool provides third party liability, broad coverage for counties,
provides up to $20 million per occurrence. The pool self- insures the first $100,000,
then sells the risk in the secondary market, but it must follow their form. The
counties have deductibles of $100,000. They work hand -in -hand with staff to co-
manage those claims.
There is a difference between an occurrence -made policy and a claims -made
policy. This is an occurrence -made policy. Any claim is covered by the policy.
Watts stated that in the early 1990's, they were only able to get claims -made
policy. There is a claim that was generated in 1991. The claimant was a minor
then, and the statute of limitations doesn't run out until they turned 18, plus an
additional three years. The County doesn't have insurance coverage, even though
it was in the pool, because it had a claims -made policy. To get coverage from the
claims -made policy, the claim has to come in at the time the County has insurance.
Although the County maintained a tail for three or four years after it switched to an
occurrence -made policy, the tail isn't in effect now. Other than the $500,000 from
the risk pool, the County doesn't have coverage for the amount in the claim, which
is millions. An occurrence -made policy is the best one can get. The claimants
aren't even 18 yet.
Goldsmith stated there are three kinds of insurance. There is commercial
insurance that can refuse to renew insurance at any time if they believe there is too
much risk. The pool can't kick them out. Self- insurance is another kind of
insurance.
The pool anticipates what the claims will be. They try to collect that much
money plus overhead. In the early years of the pool, there was quite a bit of extra
cash in the bank that was returned to the counties. However, during a three -year
period of time in the 1990's, the claims were higher than anticipated and the
premiums did not cover the claims. The pool collected a retro- assessment for
those years. Now, the pool is working to build more equity for the members. They
need to have enough of a cushion that the pool won't have to collect a retro-
assessment. It may be better to have a small policy increase now rather than a
retro- assessment in the future.
The pool includes the medium- and small -sized counties. There are 28
counties from Washington in the pool. Other counties are in other risk pools. The
cities have their own pools. The risk pool covers 15,000 county employees,
including law enforcement. The insurance covers vehicle activity, including boats
up to 49 feet and road equipment. Law enforcement is a huge area of exposure.
Facilities create opportunity for liability. There is lots of exposure from County
roads and bridges. Land use is an issue that didn't come up until the middle
1990's.
Committee of the Whole, 4/26/2005, Page 2
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DISCLAIMER: This document contains the Whatcom County Council or Committee
minutes, as approved. However, unless an attested signature page is attached, they
are not the final approved minutes.
Whatcom County has 1.6 million worker hours. There are 952 miles of
County- maintained roads. The County has $100,000 deductible. The pool must
report any claim over $50,000 to the insurance people. The smaller counties have
a $10,000 deductible and must report anything over $5,000. A couple of counties
self- insure up to $500,000.
The experience modifier is based on the number of dollars put in and spent
on claims. The modifier factor says that those counties that don't do well are
charged a little bit of an extra premium. Those counties that do well get a little
break on the premium. For Whatcom County, $.95 is being paid out to claims on
every $1 it puts into the pool. From 1998 through 2001, $1.01 was paid out for
every dollar put in.
Crawford asked if the County would be better if self- insured. Goldsmith
stated that the County would save a nickel for every dollar if self- insured right now.
Now, that's building into a members equity fund that the pool retains.
Watts stated the exposure on a claim is limited to $100,000. If self- insured,
the claim would not be limited.
Caskey- Schreiber asked if the pool is billing Island County for its modifier or
if the county can raise its deductible. Goldsmith stated the modifier goes against
the premium.
Crawford asked if those counties with claims under $1 per dollar spent put
the extra payment into the rainy day fund. Goldsmith stated that's correct. Over
all the counties, the total claim payout is $1 for every $1 put into the pool.
Crawford asked if they deduct overhead. Goldsmith stated they do.
Susan Looker, Washington Counties Risk Pool Claims Manager, stated the
claims are tracked based on worker hours and the vehicle count. Whatcom County
is compared to five other counties of comparable size. Whatcom County is second
in terms of the size of these six counties, and is in second place for average cost of
claims.
The average claim from 1988 to the present is $11,000 and includes auto,
jail, and employment liability. For auto liability claims, Whatcom County is tracking
second, consistent with its size. The average claim is $11,925. For jail liability,
Whatcom County is tracking fourth, which is excellent. The average claim is about
$9,140. For employment liability, it's not been a good year. Whatcom County is
tracking first, with an average claim of $118,000. Over all time, Whatcom County
has only had 11 employment claims. The claim from last year really hammered
them hard.
Watts stated a lot of the cost was defense costs.
Committee of the Whole, 4/26/2005, Page 3
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DISCLAIMER: This document contains the Whatcom County Council or Committee
minutes, as approved. However, unless an attested signature page is attached, they
are not the final approved minutes.
Looker stated the case last year with the seven claimants really tweaked
Whatcom County's employment liability numbers.
Goldsmith stated each county has a seat on the board. The board meets
three times per year to determine the coverages and kinds of policies offered, to
adopt the annual work budget, and determines the premium rates. All 28 counties
make that decision.
The Executive Committee oversees the daily functions. It allows the
settlement authority for staff up to $50,000. Any settlement over that amount has
to go before the Executive Committee. Four standing committees include the
Finance Committee, Personnel Committee, Risk Management Committee, and
Underwriting Committee. The pool is committed to best practices. There are four
full -time staff working on claims management. Claims are litigated or settled as
quickly as possible. The pool hosts different trainings in areas where there is the
biggest exposure.
Crawford asked the amount of money the pool manages annually. Goldsmith
stated the total premiums are about $12.5 million.
ADJOURN
The meeting adjourned at approximately 7:00 p.m.
Jill Nixon, Minutes Transcription
The Council approved these minutes on
ATTEST:
Dana Brown - Davis, Council Clerk
. 2005.
WHATCOM COUNTY COUNCIL
WHATCOM COUNTY, WASHINGTON
Laurie Caskey- Schreiber, Council Chair
Committee of the Whole, 4/26/2005, Page 4