HomeMy WebLinkAboutAGENDA REPORT 1992 0617 CC REG ITEM 08NTO:
FROM:
DATE:
SUBJECT:
Background
ITEM g•N•
MOORPARK
799 Moorpark Avenue Moorpark, California 93021 (805) 529 -6864
HONORABLE CITY COUNCIL
RICHARD HARE, DEPUTY CITY
June 12, 1992
Consider Payment
Liability Deposit
Powers Insurance
'.!CCRDARK, CALIFORNIA
City COU Cil Mee`ng
of 199
ACTION:
MAMA by
of Retroactive General and Auto
to the Southern California Joint
Authority
The City of Moorpark self - insures against general liability and
auto liability claims as part of a pool of cities which formed
the Southern California Joint Powers Insurance Authority
(Authority). Each year the Authority reviews the claims filed
and the amount of reserve required to meet the potential
liability involved. This reserve is referred to as the loss
development reserve (LDR). The City would be going through the
same exercise on its own in the event the City self - insured
outside of the Authority.
The LDR is established to avoid having an abrupt impact upon the
City's operating funds in the event all of the claims settled
within one fiscal period anticipating that the cost of claims
increases with the passage of time. The calculation in this case
encompassed fiscal year (FY) 1989/90 through FY 1990/91.
The City's initial deposit in FY 1989/90 was $27,900. Per the
calculation of outstanding claims and their values, another
$5,149 should be deposited to cover FY 1989/90 claims and $87,885
should be deposited to cover FY 1990/91 claims. The calculation
indicated that the City should deposit an additional $93,034.
These funds remain the City's funds but are held in custody by
the Authority. They are pooled with other Authority funds and
the City receives interest earnings on its deposits. The
Authority's earning are comparable to the earnings received by
the City's investments.
PAUL W. LAWRASON JR. JOHN E. WOZNIAK SCOTT MONTGOMERY BERNARDO M. PEREZ ROY E. TALLEY JR.
Mayor Mayor Pro Tom Counciimember Councilmember Councilmember
_ Honorable City Council
June 12, 1992
Page 2
Recommendation (Roll Call Vote Required)
The funds would normally be treated as a designated portion of
the general fund reserve, therefore the staff recommends that the
Council appropriate $93,034 from the general fund reserve to
01.4.117.648 insurance services line item and authorize payment
of the invoice for retro- deposit to the Authority.
Attachment: Invoice
Process Outline
June 12, 1992 C: \WP51 \REPORTS \RETROGEN
Smo C
TO:
SOUTHERN CALIFORNIA
JOINT POWERS INSURANCE AUTHORITY
u H w Q) u (c JE
DATE:
CITY OF MOORPARK APRIL 15, 1992
GENERAL LIABILITY RETROSPECTIVE
DEPOSIT ADJUSTMENT
PER COMPUTATIONS ATTACHED
AMOUNT DUE: $93,034
DEPOSIT DUE ON OR BEFORE
JUNE 30, 1992
* * * * * * * * * * * * * * *
4952 LA PALMA AVENUE, LA PALMA, CALIFORNIA 90623 • (213) 402 -6372
SOUTHERN CALIFORNIA JOIM . 8WERS INSURANCE AUTHORITY
THE RETROSPECTIVE DEPOSIT COMPUTATION PROCESS
Step One Categorize incurred losses for coverage period into the following groups:
1. Retained losses - Incurred losses up to $20,000 per occurrence."
2. Experience Pooled Losses - Incurred losses from $20,000 to $500,000.
3. Exposure Pooled Losses - Incurred losses from $500,000 to $1 million.
4. Excess Losses - Incurred losses over $1 million. (Excess pool will be retrospectively adjusted separately.)
Step Two Establish each member's Experience Factor (percentage of retained losses to total of all members' retained losses). (Col. 2)
Step Three Calculate each members' share of experience pool by applying its experience factor to the experience pool total. (Col. 5)
Step Fou Calculate each members' Retro losses (Col. 6) for the coverage period by adding retained losses (Col. 1) to their share of the
experience pool $20,000 - $500,000 (Col. 5).
Stems Determine overhead and loss related expenses for the retro period.
Step SIX Establish each member's Exposure Factor (total payroll as a percentage of all members' total payrolls). (Cols. 2 & 5)
Ste Seven Calculate each member's share of overhead and loss related expenses by applying its Exposure Factor to the expenses and
reserve total. (Cols. 3 & 6)
Calculate each member's Retro deposit (Col. 9) by adding up the individual member's share of: loss related expenses (Col.
3); overhead related expenses (Col. 6); police surcharge, if applicable, (Col. 7); and retro losses (Col. 8).
Calculate each member's coverage period Deposit Adjustment (Col. 11) by applying the member's initial deposit (Col. 10),
against the Retro Deposit (Col. 9) to determine if return or (additional) deposit is required for the coverage period.
SteI2 Ten Upon completion of steps one through eight for each coverage period the member belonged to the SCJPIA. The coverage
period Deposit Adjustments for each member are then carried forward to the statement of equity balances, earnings, and
recapitulation of Retrospective Deposit Adjustments and placed under the appropriate coverage period column. These
deposit adjustment amounts are then applied against each members' equity balance and equity earnings to determine
If return or (additional) deposit is required.
This is the amount the member will either receive a check or a bill for from the SCJPIA.
Prior to 1986 retained losses were $10,000 per occurrence
2