HomeMy WebLinkAboutCommittee of the Whole - 01 Apr 2019 - Agenda - PdfCITY OF RENTON
AGENDA Committee of the Whole Meeting
6:00 PM - Monday, April 1, 2019
Conferencing Center, 7th Floor, City Hall — 1055 S. Grady Way
1. Annual Risk Management Update
a)
2. Annual Benefits Update
a) Presentation
3. Emerging Issues
2018
RISK MANAGEMENT
502 Insurance Fund
Review
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502 Fund
The 502 Fund is an Internal Service Fund that pays the city's
premiums, claims costs within the deductible or self -insured
retention, and related administration expenses for the following
insurance coverage:
❑ Liability- General, Automobile, Public Officials, Employment
Practices, Employee Benefits, Airport, Cyber, Underground Storage
Tank Pollution, Stop -Gap, and Law Enforcement.
❑ Property — Buildings, Inland Marine (Equipment), and Public Art.
❑ Flood and Earthquake. n
❑ Automobile Physical Damage (not auto replacement). m
❑ Workers' Compensation. o
❑ Boiler and Machinery. n
❑ Employee Fidelity/Crime Bonds.
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❑ Unemployment Claims.
502 Insurance Fund History
Total Expenditures
2014 = $3,079,769
2015 = $316721618
2016 = $4,285,494*
2017 = $217611531
2018 = $3,041,360
*Includes 1-1/2 years of property insurance premiums and numerous workers' compensation claim settlements from previous
years.
WORKERS '
COMPENSATION
Definition:
Statutory coverage of employees plus the optional
coverage of volunteers for occupational injuries and
illnesses as directed by the Washington Department of
Labor & Industries.
Workers' Compensation Insurance
• City is self -insured.
• Excess insurance begins at $500,000 per claim.
• Excess insurance premium is based upon an actuarial
analysis of the past 10-years claim history.
• 100% employer paid —Employees do not contribute
toward benefits.
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• The City utilizes a Third Party Administrator to 0
process and manage its workers' compensation n
claims. Our third party administrator services remain �
with Eberle Vivian, Inc.
Workers' Compensation
Costs and Claims*
Valued as of 2/28/19
2014: $961,366
2015: $2,1094,1851
2016: $594,725
2017: $172,1940
2018: $306,537
96 claims
103 claims
71 claims
35 claims
56 claims
* Incurred costs - Total of all claim -related expenses, payments, and
reserves. Based upon date of injury.
Workers' Compensation Claim Numbers
by Department
50
45
40
35
30
25
20
15
10
5
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g 2015
02016
%- 2017
02018
Unemployment Claims Comparison
City -Wide 2014 — 2018
$100,000
$90,000
$80,000
$70,000
$60,000
$50,000
$40,000
$30,000
$20,000
$10,000
$0
2014 2015 2016 2017
2018
PROPERTY
Definition:
Property insurance provides internal financial
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
mobile equipment. n
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2018 Insured Property Value
City -Wide as of 7/1/I8
Structures:
Building Contents:
Automobiles:
$279,623,325
$18,547,170
Inland Marine (Equipment):
Public Art:
$9,024,367
$1,1500,400
$260,078
• Total Insured Property: $308,955,340
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Property Coverage Cost*
City -Wide 2014 - 2018
Insurance
Losses
Premium =
Total Cost
2014: $121,476
+ $298,720 =
$420,196
2015: $93,492
+ $327,783 =
$421,275
2016: $185,581
+ $500,451 =
$686,032
2017: $255,668
+ $317,826 =
$573,494
2018: $216,455
+ $359,925 =
$576,380
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* Property coverage includes
Buildings, Contents,
Mobile Equipment, and
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Public Art.
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- Property deductible was
$25,000 per claim in 2010-13
and increased to
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$50,000 per claim in 2014.
$100,000 deductible authorized in 2015 but not
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yet used due to favorable
pricing.
- 2016 premium is for 1-1/2
years coverage.
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LIABILITY
Definition:
Helps protect the city's financial statement from the
financial risks imposed by lawsuits and claims of
negligence.
Current insurance coverage includes a $250,000 per
claim self -insured retention.
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Numbers of Liability Claims
(City -Wide 2014-2018)*
2014:
67
2015:
66
2016:
50
2017:
77
2018: 57
Tota 1: 317 n
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* Based upon date of incident. Claims can be made o
within 3-years of the date of the incident. n
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30
25
20
15
10
5
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Numbers of Liability Claims by Service
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2018
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Incurred Annual General Liability Costs
Based Upon Date of Incident
(City -Wide, valued as of 1/31/19)
Claim Costs
+ Insurance
= Total Expected
(reserved plus paid)
Premium
Cost
2014:
$456,629
+ $484,447
= $941,076
(WCIA)
2015:
$550,180
+ $477,240
= $1,0271420
(WCIA)
2016:
$86,177
+ $272,039
= $358,216
(self -insured)
2017:
$409,181
+ $271,081
= $680,262
(self -insured)
2018:
$58,658
+ $276,916
= $335,574
(self -insured)
Recovery of Propert
Losses
• Recovery of costs incurred to repair damage to city -
owned vehicles and property from responsible third
parties and insurance:
2014: $ 68,638
2015: $104,045
2016: $190,761
2017: $186,898
2018: $282,391
CURRENT STATUS
• Renton's liability program became self -insured on 1/1/16,
following Council approval.
• Approximate savings of over $200,,000 per year. Total
savings since leaving WCIA on 1/1/16 is over $800,,000.
• liability third party administrator is used only when needed.
Risk Management settles 60% of liability claims, in house.
• Increased involvement by City Attorney's office on liability
claims with litigation potential.
• Workers' compensation self-insurance program has seen a
significant reduction in costs since the RRFA formation.
• New Risk Manager
TOP RISK CONCERNS
• Joint and Several Liability
• Police Liability
• Aging subsurface infrastructure
• Public Records Violations
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• QUESTIONS?.
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Employee Benefits
Retirement Savings Plan &
Health Plans
April 1, 2019
Deferred Compensation
457(b) Retirement Savings Plan
April 1, 2019
In addition to the pension plans offered by the State
Department of Retirement Systems, the City offers a
Deferred Compensation Plan for supplemental savings
toward retirement.
• Last year, the plan was finalized as a multi -employer
plan with the RFA, providing cost savings for both
employers.
• Governance and committee structure were updated.
• A new Investment Advisor was selected.
Updated Investment Policy
Changes to some of the investment options to higher
performing funds, and the elimination of revenue
sharing
Negotiation of lower record -keeping fees
Comprehensive participant communication plan
Administrative updates n
• Roth rollover amendment m
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• Small balance inactive accounts n
• Required Minimum Distribution
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$90.3 Million
As s ets
4.6% Year -over -Year
Contributions
$75312JI54
■ Emplo r 44.5% $3,254,760
■ Employee 43.4% $3,173,787
Matching 0.0% $0
Rollovers 1 i.1% $884,217
Distributions2
55605,41 l
11098
Participants with Balances
Participant Counts and
Average Balances
j Active 729 66% $83,939
Terminated 381 26% $911,316
Ober 88 8% $38,913
Engagement
(as of1213112018)
■ In-service 3.6% $201,771 � ■ Total Phone Calls (Transactional) 69
Terminated 91.9% $5,151,787 Advice 109
Other 4.5% $251,859 Increased contributions 224
Rebalanced ao
0.60%
0.50%
0.40%
0.30%
0.20%
0.10%
0.00%
Renton Average
Total Cost: Total Cost
0.46 % 0.49 %
1b Admin & Recordkeeping
■ Investment Expense
• We benchmark fees against the
National Association of
Government Defined Contribution
Administrators (NAGDCA)
• Our record keeping fee will further
decrease by 0.03% in 2020, when
the ICMA-RC transition fee
incurred in 2013 is fully amortized.
• We are leveraging new resources available through
our record keeper, TIAA at no additional cost
• Participant data is used to determinate most
appropriate messaging for individuals, and
delivered through multiple channels
• Messaging includes topics on knowing how much
to save and selecting risk appropriate investments
Employee engagement
Targeted education
The right knowledge for the right people at the right time
I _ TIAA
Sophisticated targeting 0 0 Data -driven content
Proprietary segmentation formula for more 99 Use of individual data as a powerful
precise targeting motivator
6�b Seamless multichannel Timely messaging
delivery +* What they need, when they need it
Personalized messaging
across channels n
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For institutional investor use only. Not for use with or distribution to the public. City Of Renton & RRFA 03/12/19 8
Employee engagement
999 9 Data -driven content
Use of individual data as a powerful motivator
Personalization
Behavior -based
targeting
TIAA A
Personalized information
Account status
Name, age, life segment
Web registration, eDelivery and
beneficiaries
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City Of Renton & RRFA 03/12/19
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Employee engagement
(D seamless, multichannel delivery
Personalized messaging across channels
' At work
In person Online
(email, web, social) 0000
At home
By mail By phone
On the go
For institutional investor use only. Not for use with or distribution to the public.
0 w, TIAA
X
Plan sponsor experience
0 w, TIAA
Customizing a plan based on your segmentation profile
# of participants
Average total assets'
Benchmark population2
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_JF:
Dollar
Stretcher Life Builder
99 202
$16,536 $32,323
19% 22%
Accumulator
320
$124,346
36%
F
Transitioner
130
$184, 987
15%
Established
14
$131,210 I
7% I
% of total population 13% 26% 42% 17% 2%
Segment as a % of total
population Total participant assets by segment
2% $45,000,000
$39,790,765
$40,000,000
13%
17% $35,000,000
$30,000,000
$25,000,000 $24,048,309
$20,000,000
$15,000,000
42% $10,000,000 $6,529,250
$5,000,000 $1,637,094 $1,836,933
All data as of 9/30/2018. $0 11 Emmmm
1. Average total assets is inclusive of all participant assets held with TIAA. e) Dollar Stretcher d) Life Builder c) Accumulator b) Transitioner a) Established
2. Benchmark population numbers are derived from Institutions within the Institutional Sector "Other NFP" and Assets Between $25M and $100M.
For institutional investor use only. Not for use with or distribution to the public. City Of Renton & RRFA 1 03/12/19 1
11
Heall
Apr
Kibble &Prentice USI Insurance (USI) is the new Broker/Advisor
• Role of a Broker
Liaison between employer and carriers
Supports compliance, including legal and actuarial
Advice on plan design using data analytics and best practices
• Why change
After a long-term relationship, the previous broker changed their
business model, and no longer met the City's needs
• Where we are in the process
RFP process January — mid -March 2019
Contract begins March 25
Kick off meeting with committee April 25
• Plan Design Changes for 2019
• Hearing aids from $500 to $4.,000 every 4 years
• Vision hardware from $550 to $650 every 2 years
• Massage therapy from 10 to 25
• Added HMA's Care Navigator $1.50 PEPM
• Premiums for 2019
• There was a 6% across the board increase for
medical, dental, and vision for all coverage levels c
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Vendor fees for 2019
• HMA 3% increase in administration
• Kaiser 29% decrease in fully insured premiums
• Stop Loss
• The incumbent proposed 36% increase
• Bid resulted in 2% decrease
• First Choice, Standard, BAC all had no change �
in fees Z
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There were significant service issues with m
Envision, our pharmacy benefit manager
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• January 2018 —Envision I s errors in plan set up created
service problems for some of our employees
• January 2019 - Envision terminated their contract with
Costco prescription mail order, and started their own mail
order service
• The rollout of Envision's mail order was a complete fail,
impacting many employees and retirees
• We worked to mitigate immediate issues for employees.
• We are now working with the new Broker for a longer
term solution.
1,800
1,600
1,400
1,200
1,000
800
600
400
200
Total cost — Per Employee Per Month
+12.5% -2.0% +6.3 % -5.4% +8.0%
+8.5% +3.4%
+8.3 %
+0.5%
2009 2010 2011
2012
2013
2014 2015
2016 2017
Med/ Vision
RX
Dental
Excess / Admin
■ City Prog
2018
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Target Reserves for 2019
Expected Claims $10,662,441
Target Reserve Percentage 30.0%
Target Reserves Amount $3,1981732
Actual Reserves
1/1/2018 Reserve Balance $4,193,442
Plus: Premiums Paid $10,400,205
Less: Expenses - $11,088,791
Plus: Stop Loss Reimbursement $301,256
12/31/2018 Reserves $ 3,806,112 n
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Change in Reserves (387,330) Z
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Actual Reserve Percent m
Reserves/Expected Claims 35.7%
Excess Reserve Amount $607,380 '"
What questions do you have?