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HomeMy WebLinkAboutCommittee of the Whole - 06 Mar 2023 - Agenda - Pdf CITY OF RENTON AGENDA - Committee of the Whole Meeting 6:00 PM - Monday, March 6, 2023 7th Floor Council Chambers/Videoconference 1. RISK MANAGEMENT 502 INSURANCE REVIEW a) Presentation 2. RETIREMENT SAVINGS AND HEALTH INSURANCE PLAN REVIEW a) Presentation If you would like to attend this week's meeting remotely, you can do so by going to https://us02web.zoom.us/j/86753290028?pwd=M2pOc09HWWNrY05uVnlIWnpGS1E4UT09 Zoom Meeting ID: 867 5329 0028, Passcode: 881839 You can call through Zoom at (253) 215-8782 and use the Meeting ID. Risk Management 502 Insurance Fund Review -2022 March 6, 2023 Kelsey R. Urban, MBA, ARM-P, PHR Risk Manager AGENDA ITEM #1. a) 502 Insurance Fund History Total Expenditures •2018 $3,043,070 •2019 $3,206,310 •2020 $2,719,753 •2021 $3,880,421 •2022 $4,363,304 AGENDA ITEM #1. a) 502 Insurance Fund The 502 Fund is an Internal Service Fund that is used for four main purposes: 1.Claim Costs •Workers’ Compensation •Unemployment •Liability Claims •Property Damage Losses 2.Premiums for Excess Insurance Coverage and Insurance 3.Administrative Expenses, including Litigation 4.Recovered Funds/ Subrogation AGENDA ITEM #1. a) 1. Claims and Losses Self-Insured Retentions (SIRs) & Deductibles •Workers’ Compensation ($750,000/$1M SIR) •Liability ($300,000 SIR) •Auto Liability ($300,000 SIR) •Property ($50,000 Deductible)AGENDA ITEM #1. a) Workers’ Compensation •Workers’ Compensation Statutory coverage of employees plus the optional coverage of volunteers for occupational injuries and illnesses as directed by the Washington Department of Labor & Industries. •Partnership between HR Benefits and Risk Management. •Use of Third-Party Administrator, Eberle Vivian Inc, to process and manage. •Excess insurance begins at $750K/$1M per claim •100% Employer Paid –Employees do not contribute toward benefits.AGENDA ITEM #1. a) Workers’ Compensation Claims Claims and Costs •2018 $306,537 56 claims •2019 $327,314 42 claims •2020 $258,567 32 claims •2021 $567,810 30 claims •2022 $592,138 90 claims AGENDA ITEM #1. a) •Unemployment Unemployment insurance benefits provide temporary financial assistance to workers unemployed through no fault of their own that meet Washington's eligibility requirements. •The HR Labor Division manages Unemployment. •100% Employer Paid –Employees do not contribute toward benefits. Unemployment AGENDA ITEM #1. a) Unemployment Claims Comparison 2022:7 Claims $21,001 *Pandemic-related separations of supplemental employees $53,371 $47,860 $141,860 $59,376 $21,001 2018 2019 2020*2021 2022 Unemployment Claims Costs AGENDA ITEM #1. a) Property •Property Insurance Protection to city-owned property from perils such as fire, theft, vandalism, flood, earthquake, and weather damage. Property covered includes the insurable portions of buildings, contents, public artwork, and equipment. •Value of Insured Property:$381,265,178 •$50,000 Deductible, Scheduled Property •$500,000 Deductible, Unscheduled Property •Risk Management Division AGENDA ITEM #1. a) Renton Property Loss Costs •2018 •2019 •2020 •2021 •2022 $169,269 $113,969 $35,636* $102,701 $656,048 AGENDA ITEM #1. a) Liability •Liability Coverage Helps protect the city’s financial assets from the risks imposed by tort lawsuits and claims of negligence; damage to third parties-typically injury & property (including auto). •$300,000 Self-Insured Retention •Excess Liability Insurance begins at $300,000, per claim. •Risk Management Division AGENDA ITEM #1. a) Number of Liability Claims Average 60 Claims/Year 59 80 37 60 65 0 10 20 30 40 50 60 70 80 90 2018 2019 2020 2021 2022 Number of Claims AGENDA ITEM #1. a) City’s Cost of Liability Claim Trends $467,279 $344,093 $466,277 $523,215 $543,208 2018 2019 2020 2021 2022 Liability Costs by Year AGENDA ITEM #1. a) Auto Claims and Costs –Closed in 2022 •Total Claims Closed/Settled:71 •% MVAs 50.7% •Total Settlement Costs: $146,428 •Average Cost of all MVA Claims: $4,067 •Average Cost of MVA Claims with Liability: $12,202 MVAs 54% MVA COSTS OF ALL CLAIMS MVAs 51% MVA NUMBERS OF ALL CLAIMS AGENDA ITEM #1. a) Lines of Coverage/Excess: •Liability – •General Commercial •Automobile •Public Officials •Employment Practices •Law Enforcement •Property •Flood and Earthquake •Workers’ Compensation •Airport •Pollution •Stop-Gap Medical •Boiler and Machinery •Employee Fidelity/Crime Bonds •Underground Storage Tank •Drone •Cyber 2. Insurance Premiums AGENDA ITEM #1. a) Property Insurance Premiums Property •2022: Property Insurance Costs $938,746 •2021: $757,792 premium, 23.9% increase •Hardening of the Insurance Market •Property Insurance, including Cyber, is expected to go up another 20-30% for our July 1, 2023 renewal. AGENDA ITEM #1. a) Liability Insurance Premiums General Excess Liability •2018: $276,916 (2%) •2019: $305,834 (10%) •2020: $328,105 (7%) •2021: $393,687 (20%) •2022: $463,437 (17.7%) •Renton has experienced a very good loss run record for the last 5 years, with 1 loss over $300,000 (2021).AGENDA ITEM #1. a) 3. Administrative Expenses Broker Fees •Broker, Alliant Insurance Services •Services Total Cost: $51,415, +2% Liability Claim Management •21% Third Party Administrator, Carl Warren Company •79% by Risk Management •Services Total Cost: $9,184 Litigation Defense •$270,770 Defense Costs 2022 +118% •Resolved 5 Cases, 2 Remain Open Risk Mitigation Measures •Safety "Loss prevention yields greater results than loss control."AGENDA ITEM #1. a) 4. Recovery of Costs/ Subrogation Subrogation Recovery of costs incurred to repair damage to city- owned vehicles and property from responsible third parties and insurance. •Risk Management Division •Average >$100,000/year or 50% •Last 5 Years $460,000 •2022* $57,288 *Still collecting; 3-Year Statute of Limitation AGENDA ITEM #1. a) Top Risk Concerns •Aging Subsurface Infrastructure •Police Liability •Joint and Several Liability •Public Records Violations AGENDA ITEM #1. a) Additional Information •Council approves: January 1, 2016 departure from WCIA Risk Pool •Savings: Insurance Premiums >$200,000/year, Administrative Costs Savings, Control of Liability Claim and Litigation Outcomes •Increased involvement by City Attorney’s office on liability claims with litigation potential. •In-house Risk Mitigation (Safety, Claim Management and Risk Strategies) remains key to savings.AGENDA ITEM #1. a) Questions What questions may I answer?AGENDA ITEM #1. a) Employee Benefits Review Retirement Savings & Health Insurance Plan March 2023 Erika Eddins, PHR, SHRM-CP Benefits Manager AGENDA ITEM #2. a) Deferred Compensation 457(b) Retirement Savings Plan AGENDA ITEM #2. a) Deferred Compensation Plan •In addition to the WA State pension plans, the City offers a Deferred Compensation Plan (DCP) for retirement savings under IRS code 457(b). •Multi-employer plan with the Renton Regional Fire Authority. •The plan is governed by the DCP Committee who are the named fiduciaries. Fiduciaries are to act solely in the best interest of plan participants. •The Committee selects and monitors investment options, negotiates plan fees, and selects and monitors the work of a record keeper and investment advisor. AGENDA ITEM #2. a) Governance Structure Committee Voting members: •City CAO •City HRRM Administrator •City Finance Administrator •RFA Fire Chief •The Committee meets quarterly. Union members and non- represented staff regularly attend Committee meetings. •The Committee maintains due diligence through the quarterly review meetings and relies on services of a co-fiduciary investment advisor. Fiduciary training is provided to voting members by the investment advisor. •The Committee bases their work on adopted: •Investment Policy Statement •Operating Guidelines AGENDA ITEM #2. a) Investment Options The Committee ensures there are investment options encompassing a variety of risk/return characteristics. Participants self-direct their portfolio based on time horizon and/or risk tolerance. •Multi-Asset Target Date Funds -Default investment •Core Funds (number of funds in category) •(2) Stable Value / Money Market •(4) Bond •(4) Large Cap US Equity •(3) Mid Cap US Equity •(2) Small Cap US Equity •(4) International Equity •(1) Specialty –Real estate •Brokerage Window AGENDA ITEM #2. a) •The Committee negotiates fees and expenses with service providers. •Fees are paid by participants through withdrawals from their accounts. •Benchmark –CAPTRUST composite for similar size plans in 2022 Deferred Compensation –Fees 0.00% 0.10% 0.20% 0.30% 0.40% 0.50% 0.60% City/RFA 2019 City/RFA 2020 City/RFA 2021 City/RFA 2022 Benchmark 2022 Fees & Expenses to Benchmark Weighted Average Fund Expense Record Keeping Expense Plan Admin Expense AGENDA ITEM #2. a) Plan & Participant Profile Year end 2022 AGENDA ITEM #2. a) Questions What questions do you have?AGENDA ITEM #2. a) Health Plans AGENDA ITEM #2. a) •The City offers a self-funded medical, prescription, dental, and vision plan administered by HMA, with Stop Loss insurance set at a $250,000 limit per individual claimant per year. •Kaiser is offered as an alternative to the self-funded plan. •The Renton Employee Health Plan (REHP) board sets plan design and sets premium contribution rates based on actuarial projected future claims, other expenses, and the current reserve balance. •Voting members of REHP are the CAO and the two union presidents. •Premium cost share between the City and employees is determined through collective bargaining and is currently 91%/9%. •Other Health & Wellbeing benefits offered are Life and Long-Term Disability insurance, an Employee Assistance Plan (EAP), Flexible Spending Accounts (FSA), and Employee Wellness Program. Health Benefits Plan Overview AGENDA ITEM #2. a) Medical •Added benefits: •Behavioral Health network to MDLIVE telehealth services •Cochlear Implants Dental •No changes Vision •No changes Plan Design Changes AGENDA ITEM #2. a) Administrative Fees (approved by Council) •HMA +3.6% •Kaiser Permanente +5 .82% •Stop Loss +9.0% •Costco Health Services (CHS) Pharmacy Benefit +3.0% Premiums (approved by Renton Health Plan Board) •Medical +1.8% •Dental +0.4% •Vision +4.6% Other Benefits •Life and Long-Term Disability (LTD):No change •Employee Assistance Program:No change •Flexible Spending Account:No change •Employee Wellness Program: Budgeted Expenses and Premiums AGENDA ITEM #2. a) Annual Administrative Fees HMA KAISER PERMANENTE COSTCO - RX 2020 2.50%5.10%3.00% 2021 2.30%5.00%3.00% 2022 3.00%5.20%3.00% 2023 3.60%5.82%3.00% 0.00% 2.00% 4.00% 6.00% 8.00% 10.00%AGENDA ITEM #2. a) Stop Loss Premiums -10.00% 0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00% 2019 2020 2021 2022 2023 AGENDA ITEM #2. a) Medical •Paid claims ratio 93.6%(2021 was 96.0%) •Stop Loss had 2 claimants and total of $178K reimbursed (2021 had 4 claimants with $822K reimbursed) •Pharmacy accounts for 21%of total claims (2021 was 18.5%) Dental •Paid claims ratio 96%(2021 was 87.5%) Vision •Paid claims ratio 106.1%(2021 was 98.2%) Enrollment/Claims processed •625 enrolled employees •1440 total members (employees + eligible dependents) •30,704 total claims processed Claims Overview 2022 AGENDA ITEM #2. a) Claims and Cost Trend Cost Per Employee Per Month 8.4% 1.0% 8.0%6.3%12.5% 3.4%8.5% $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 $1,800 20222021202020192018201720162015201420132012 Med/Vis Rx Dental Excess/Admin City Prog -5.4%-5.6% -1.4% -2.0% Percent difference from prior year AGENDA ITEM #2. a) Plan Financials Target Reserves for 2023 Expected Claims $12,510,612 Target Reserves 40.0% Target Reserves Amount $5,004,245 Change in Reserves during 2022 1/1/2022 Reserve Balance $6,133,682 Plus:Premiums Paid $12,169,221 Less:Expenses -$12,103,554 Plus:Stop Loss Reimbursement $178,085 12/31/2022 Reserves $6,377,434 Change in Reserves $243,752 Actual Reserve to Begin 2023 Reserves/Expected Claims 50.9% Excess Reserve Amount $1,373,189 AGENDA ITEM #2. a) Plan Reserve Trend Target reserve 40% of actuarial expected claims Minimum reserve 30% of actuarial expected claims Rate holiday WAC 200-110-040 requires reserves of approximately 30% of actuarial projected expenses for the year. The Board targets reserves at 40% and set contributions based on both actuarial projected expenses and reserve balances. Reserves will increase or decrease each month, depending on whether actual expenses are higher or lower than contributions. $0 $1,000,000 $2,000,000 $3,000,000 $4,000,000 $5,000,000 $6,000,000 $7,000,000 Rate Holiday Rate Holiday AGENDA ITEM #2. a) Questions What questions do you have?AGENDA ITEM #2. a)