125-97 OrdinanceRECORD OF ORDINANCES
Dayton Legal Blank Co. Form No. 30043
Ordinance No.__ 125-97_____ - Passed----------------- -------19__ _--
AN ORDINANCE ACKNOWLEDGING PRESENTATION OF A
DISCLOSURE STATEMENT AND JOINT POWERS AGREEMENT
& BY-LAWS REGARDING THE FORMATION OF A
LIABILITY/PROPERTY JOINT SELF-INSURANCE POOL AND THE
CITY' S PARTICIPATION IN SUCH POOL, AND AUTHORIZING THE
CITY MANAGER TO ENTER INTO THE JOINT POWERS
AGREEMENT ON BEHALF OF THE CITY OF DUBLIN, AND
DECLARING AN EMERGENCY.
WHEREAS, after exploring the feasibility of forming a liability/property joint self-insurance
pool, the City Manager has recommended that the City of Dublin participate in the formation
of such a pool, to be known as the Central Ohio Risk Management Association (CORMA); and
WHEREAS, pursuant to Section 2744.081 (A)(2) of the Ohio Revised Code, there has been
full, prior public disclosure of all terms and conditions of the Joint Powers Agreement & By-
Laws and all representations made in connection with any possible savings, losses, and potential
liabilities to the City of Dublin;
NOW, THEREFORE BE IT ORDAINED by the Council of the City of Dublin, State of
Ohio, ~ of the elected members concurring that:
n 1 The full, prior public disclosure as referenced above has indeed occurred and the
above referenced Joint Powers Agreement & By-Laws have indeed been presented at the
Council Meeting held on September 3, 1997, pursuant to the requirements of Section
2744.081(A)(2) of the Ohio Revised Code.
Section 2• At the second reading of this Ordinance on September 15, 1997, the City Manager
has hereby been authorized to enter into the above mentioned Joint Powers Agreement on
behalf of the City of Dublin.
Section 3. The Clerk of Council has hereby been authorized and directed to: (A) maintain
custody of the above described disclosure material and Joint Powers Agreement and By-Laws
and to make the same available for public inspection and pending contract award proceedings
thereon; and (B) to send a certified copy of this Ordinance to legal counsel for CORMA, John
H. Gibbon, Walter & Haverfield, 1300 Terminal Tower, 50 Public Square, Cleveland, Ohio
44113-2253 and to CORMA, upon its adoption.
Section 4. That this Ordinance is hereby declared to be an emergency measure necessary for
the preservation of the public welfare and for further reason that the CORMA pool would
become operational on October 1, 1997. Therefore, this Ordinance shall take effect and be in
force immediately upon passage.
Passed this 1~ day of G /nbCl~ 1997.
r -Presiding Officer
I hereby certify thot copies of this Ordinance/R were posted in
{ity of Dublin in accordance with Section 731.25 of the Ohio Revised ~~;
ATTEST:
~jClerk o founc Dublin, h' ~ ~ ~'
Clerk of Council
tf~a
~.
AGREEMENT AND BYLAWS
CORNIA SELF-INSURANCE POOL, INC.
(A Central Ohio Risk Management Association
and Self-Insurance Pool for Political Subdivisions)
Effective October 1, 1997
TABLE OF CONTENTS
Page
ARTICLE I PURPOSE :....................................................... 1
ARTICLE II. DEFINITIONS :.................................................. 2
ARTICLE III. POWERS A1~1D DUTIES OF THE ASSOCIATION ................... 4
ARTICLE IV. NIEMBERSHIP• TERM OF MEMBERSHIP;
COMMENCEMENT OF THE ASSOCIATION ............................. 5
ARTICLE V. BOARD OF TRUSTEES .......................................... 6
ARTICLE VI. MEETINGS OF THE BOARD OF TRUSTEES ..................... . 9
ARTICLE VII. ASSOCIATION OFFICERS .................................... 10
ARTICLE VIII. FISCAL YEAR FINANCES AND RISK MANAGENIENT POOL ... 12
ARTICLE IX. SCOPE OF LOSS PROTECTION ................................ 15
ARTICLE X. EXCESS INSURANCE .......................................... ~
ARTICLE XI. OBLIGATIONS OF MEMBERS ................................. 17
ARTICLE XII. LIABILITY AND IDENTITY OF TRUSTEES OR OFFICERS ....... 18
ARTICLE XIII. ADDITIONAL INSURANCE ................................... 19
ARTICLE XIV. OPTIONAL DEFENSE BY MEMBERS .......................... 20
ARTICLE XV. CONTRACTUAL OBLIGATION ................................ 21
ARTICLE XVI. EXPULSION OF NIEVIBERS .................................. 22
ARTICLE XVII. TERtVIINATION OF THE ASSOCIATION ...................... 23
soo~~-~
AGREEMENT OF AND BYLAWS OF
CORNIA SELF-INSUR~~iCE POOL, INC.
(A Central Ohio Risk Management Association
and Self-Insurance Pool)
ARTICLE I PURPOSE:
The purpose of this Agreement is to establish and maintain a Joint Self-Insurance Pool under
Chapter 27=1=1.081 of the Ohio Revised Code and under contract with a nonprofit corporation for
administration of the Pool (to be known as CORiti1A SELF-I~tSURANCE POOL, INC. and also
referred to as the "Association") for the public purpose of enabling the subscribing political
subdivisions to obtain insurance coverage, to provide methods for paying claims and to provide for
a formalized, jointly administered Self-Insurance fund for its iVlembers. ivlembershia in the Pool and
the Association is intended to enable Members to take advantage of any economies to be realized
from an insurance pool and to provide more Member control over claims than is normally available
with traditional insurance coverage. This Agreement shall constitute the Joint Self-Insurance Pool
and shall also constitute the Bylaws of the Association and an Agreement between the Joint Self-
Insurance Pool and the Association. A copy of the Articles of Incorporation of CORMA SELF-
INSURANCE POOL, Inc. is attached hereto as Appendix A and is incorporated herein.
As set forth in this Agreement and Bylaws, the Members of the Joint Self-Insurance Pool
shall also be Members of the Association and the Members shall appoint the Board of Trustees of
the Association.
The Association shall utilize funds contributed by the Members to defend and protect the
Members against stated liability or loss and to otherwise do all things necessary to fulfill its purposes
and exercise its powers on behalf of the Members as set forth in this Agreement and Bylaws, the
Laws of Ohio governing nonprofit corporations and Joint Self-Insurance Pools and such other
powers and duties as may be assigned to it by the vlembers. Included within its powers and
obligations is the right to purchase Specific Excess Insurance (as is hereafter defined) and Annual
soo~~-i
Aggregate Stop Loss Insurance (as is hereafter defined) to supplement the Joint Self-Insurance Pool
funds.
All funds contained within the Joint Self-Insurance Pool shall be funds directly derived from
its Members which are political subdivisions within the State of Ohio. It is the intent of the Parties
in entering into this agreement that, to the fullest extent possible, the scope of Risk Management
undertaken by them through a Joint Self-Insurance Pool using governmental fiends shall not waive,
on behalf of any political subdivision or public officials or employees, any defenses or immunities
provided to public subdivisions or their officials or employees under Ohio law. Specifically, the
Members of this Pool and/or Association intend to effect no waiver of immunities through their
contribution of public funds retained within the Joint Self-Insurance Pool and not used to purchase
Specific Excess Insurance or Annual Aggregate Stop Loss Insurance policies. It is further intended
by the Parties that the Association shall make no profit and that the funds contributed by the
Members and utilized by the Association to fulfill its purposes and obligations shall not be
considered income to the Association.
ARTICLE II. DEFII~TITIONS:
As used in this Agreement, the following terms shall have the meaning hereinafter set out:
ANNUAL AGGREGATE STOP LOSS INSURANCE -Insurance purchased by the
"J"' Association on behalf of the Members and Joint Self-Insurance Pool providing coverage for
that portion of a valid claim to be paid from the Self-Insurance Fund and not covered by
~~" Specific Excess Insurance in the event that a series of claims in any year exceeds the
maximum aggregate amount in the Self-Insurance Fund as established by the Board of
Trustees.
ASSOCIATION - A nonprofit corporation known as CORIviA SELF-INSURANCE POOL,
Inc. created pursuant to the Agreement and pursuant to Chapter 1702 of the Ohio Revised
Code for the purpose of administering the Joint Self-Insurance Pool. This Agreement and
Bylaws shall constitute and become the initial Bylaws of the Association.
BOARD OF TRUSTEES -Those persons who, from time to time, are duly appointed and
serving as the Board of Trustees of the Association and having the powers and duties
described in Article V of this Agreement and Bylaws.
aoo~~-~
w
CITY OF DUBLIN
Mem o
"~'~' Office of the City Manager
5200 Emerald Parkway
Dublin, Ohio 43017-1006
Phone: 614-761-6500
Fag: 614-889-0740
To: Members of Dublin City Council
From: Timothy C. Hansley, City Manager
Date: August 27, 1997
Re: Formation of a Local Liability/Property Self-Insurance Pool (Ordinance No. 125-97)
By: David L. Harding, Director of Human Resources c4c Procurement I~.
As you are aware, stafffrom several Central Ohio municipalities (Dublin, Westerville, Worthington,
Upper Arlington, and Delaware) have been exploring the feasibility of forming a local
liability/property joint self-insurance pool as an alternative to each City purchasing its own individual
liability/property insurance through the commercial insurance market. As part of the ongoing
assessment process, a formal feasibility study was conducted, on behalf of the Cities comprising the
study group, by Watson, Wyatt & Company, which concluded that formation of such a local joint
self-insurance pool was indeed a viable and effective alternative to the commercial insurance market.
~' " On August 1, 1997, stafffrom the Cities of Dublin, Westerville, and Upper Arlington agreed to take
the next step in pursuing formation of a joint self-insurance pool, to be known as the Central Ohio
Risk Management Association (CORMA). Forming such a pool, however, requires prior public
disclosure and certain legislative action on the part of each jurisdiction's City Council, as mandated
by Section 2744.081 of the Ohio Revised Code. Section 2744.081(A)(2) of the Ohio Revised Code
governs the formation of joint self-insurance pools and requires full, prior, public disclosure, at a
meeting of the political subdivision, of all terms and conditions of any Agreement to form such a
pool and all representations made in connection with any possible savings, losses, and potential
liabilities to the political subdivision. Section 2744.081(A)(2) further requires legislative
authorization, at a second meeting of the political subdivision no less than one week later, to enter
into such a joint self-insurance pooling Agreement.
Pursuant to the requirements of Section 2744.081(A)(2) of the Ohio Revised Code, attached for
your consideration is Ordinance No. 125-97 regarding the formation of a local liability/property self-
insurance pool (CORMA) and the City's proposed participation in such pool. Also attached is a
copy of Section 2744.081 of the Ohio Revised Code, a copy of the proposed Joint Powers
.,
Page 2
Agreement and By-Laws for the CORMA pool, and other informational materials disclosing all
representations made in connection with any possible savings, losses, or liabilities to the City of
Dublin.
The formation of public entity joint self insurance pools, as a risk management strategy, is by no
"""' means a new or revolutionary concept to the field of Risk Management. In fact, Watson Wyatt &
Company, who performed the feasibility study on behalf of the entities in the study group, estimate
~' that 40-50% of municipalities in Ohio are members of such pools. The formation of such pools
proliferated in the mid 1980's due primarily to the "hard market" which for many public entities
made commercial liability insurance coverage virtually unaffordable or unavailable. Many public
entitles who never again wanted to be "at the mercy of the market", formed such pools to ensure
future stability in their risk management programs. Although the commercial insurance market has
stabilized during the 1990's and has been "very soft", with all forms of liability coverage readily
available at very affordable prices, pooling is still an effective strategy in managing the risk
exposures of public entities because of the local control it offers municipalities in defending/settling
claims and providing loss control services. Equally, if not more important, is the fact that pooling
provides security from a "hard market" should such occur again in the future. One of the primary
concerns behind the study group's exploration of pooling as an alternative, was in fact the group's
collective uncertainty regarding the re-emergence of another "hard market" in the future. Forming
a local pool at this time would enable the pool membership to exercise control over its own destiny
and never again be "at the mercy of the market".
The proposed CORMA pool would provide the City with coverage limits of $20,000,000.00 and
a coverage package at least equivalent to the City's existing insurance program. (At present, the
City's limits are $10,000,000.00). In addition, the pool would provide adequate safeguards against
catastrophic losses through the use of specific and aggregate stop loss levels. The CORMA pool
would be administered through a third party administration agreement with Arthur 7. Gallagher,
which is recognized as a leader nationally in forming-and administering pools and is regarded as one
of the top servicing agents for public entities in the country. (Attached for your reference is a three
page document entitled "Concept and Structure of Pooling", which has been provided by Watson
Wyatt & Company, which may be helpful in understanding the concept behind pooling, the
structuring of pools and the principals inherent to pooling, and the advantages of pooling.) The two
most important factors influencing Stars recommendation to participate in the formation of the
CORMA pool are the following:
- greater control in defending/settling claims and in the provision of loss controUrisk
management services; and
- long term stability in the insurance program and security from a "hard market".
As a side note, it should be mentioned that participating in the CORMA pool would not require the
appropriation of additional funds beyond the funding level already adopted in the 1997 Operating
Budget. Sufficient funds exist within the budgetary account identified for insurance coverage.
~.
Page 3
Mr. Tim Howell, Area President with Arthur 7. Gallagher will be in attendance at the September 3,
1997 Council Meeting to provide a brief presentation or answer questions (whichever is the pleasure
of Council) regarding. the formation and operation of the proposed pool.
Please note the Ordinance No. 125-97 has not been drafted as emergency legislation. However,
"' given the desire of Arthur 7. Gallagher and the other proposed pool members to have the pool be
operational on October 1, 1997, Staffwill petition Council at the second reading on September 15,
"' 1997 to consider adopting Ordinance No. 125-07 as emergency legislation.
TCH/DLH/ksf
Attachments
t~pa~kstb~«\wp61\mh\th014
CORMA Costs
City of Dublin
(each city retains own losses up to its stop loss)
Item Minimum Expected Worst Maximum
(5 Yr Avgl (5 Yr Worst)
Current Costs
Fixed 134,600 134,600
Retained losses* 0 5.000
Total 134,600 139,600
*estimate for Law and General Liability
Pool Costs
Fixed 73,403 73,403
Own losses 0 25,842
Share of others 0 0
Total 73,403 99,245
Savings 61,197 40,355
45% 29%
134,600 134,600
10.000 15000
144,600 149,600
73,403 73,403
46,748 46,748
0 included
120,151 120,151
24,449 29,449
17% 20%
Description
Expected Average annual losses over last 5 years.
Worst Actual worst year in last 5 years.
Worst possible Worst possible losses.
This is not an actuarial study. It is based only on actual losses as reported.
Cor-Dubl
9-3-97
DISCLOSURE STATEMENT OF THE CITY OF DUBLIN IN
ANTICIPATION OF AUTHORIZING AND AWARDING A CONTRACT
FOR THE FORMATION AND ADMINISTRATION OF A
LIABILITY/PROPERTY JOINT SELF-INSURANCE POOL PURSUANT TO
OHIO REVISED CODE SECTION 2744.081(A)(2), TO BE KNOWN AS
CORMA (CENTRAL OHIO RISK MANAGEMENT ASSOCIATION)
Attached is a copy of the summary proposal from Arthur J. Gallagher & Co., ("Gallagher Report"),
. a copy of Section 2744.081 of the Ohio Revised Code, and a copy of the proposed Agreement and
Bylaws ("Agreement") for forming aself-insurance pool to be administered by a nonprofit
corporation organized under Ohio Revised Code Chapter 1702.
~T'he above referenced and attached documents and the following paragraphs satisfy the requirement
of Section 2744.081(A)(2) of the Ohio Revised Code to disclose all representations made to the City
of Dublin in connection with any possible savings and losses resulting from the Agreement, and any
potential liabilities to the City of Dublin. In that regard, it is understood that the possible savings and
losses reflected are based upon current data of actual premiums paid and that future fluctuations in
the insurance market, which are beyond the control of the City and cannot be accurately predicted,
may lead to the possible result of future years during which conventional insurance costs may be
lower than pool costs for the same coverage and that this has occurred infrequently with other similar
self-insurance pools established earlier and operating for some time outside of the State of Ohio. We
understand that savings over conventionalinsurance have been realized consistently and/or over the
long term by most of such pools by adherence to the risk management programs to be undertaken by
the proposed pool members.
The City further understands that the proposed pool will provide a defense and pay claims for
members thereof only within the scope of coverage and limits stated in the Agreement and that the
City is and will remain responsible for: (1) defending and paying claims made outside the scope of
pool coverage and (2) paying the deductible and amounts beyond the risk retention funds and
insurance coverage limits of the proposed pool with respect to claims made within the scope of pool
coverage. In this regard, the entire Agreement, especially Appendices D, E and F to the Agreement,
define the initial scope of coverage and limits thereof. It is further understood, however, that the
scope of coverage and limits may be modified in future years by the Members of the Pool through
their Trustee representatives. Within the scope of coverage to be provided by the Agreement initially,
the City will be liable for: (1) the first $500.00 or $1,000.00 of any property (includes crime and
automobile physical damage) type claim; and (2) for any loss or claim amounts above the excess
insurance limits, i.e., $20,000,000.00 for liability, on any claim for which the City would otherwise
be liable.
The City further understands that the initial and future contributions for which the City will be
obligated by the Agreement to pay into the pool and fund are set forth in the Agreement. Appendices
B and C to the Agreement set forth the initial budget and obligations of pool member or
contributions. It is further understood, however, that the pool budgets and contribution factors must
be determined annually and the provisions controlling such determinations maybe modified in future
years by agreement of the pool Members through their Trustee representatives.
Cper'kctb t5ce\wpu 1linsuranc~disclosue
occur, and in the case of third-party claims that are held valid and not barred by available
immunities, and to purchase some insurance to protect against catastrophic or aggregate
losses.
SELF-INSURANCE FLND -The fund established by the Association for payment of
Association self-insured claims.
SPECIFIC EXCESS INSURANCE -Insurance purchased by the Association on behalf of
r.. the Members and Joint Self-Insurance Pool providing certain coverage for losses exceeding
the amount covered by Self-Insurance up to a maximum amount of coverage.
SUPPLEMENTARY PAYMENT -Payment(s) that may be required from the Members in
addition to the Regular Annual Payment in order to provide additional monies for the Self-
Insurance Fund or the Association's costs.
ARTICLE III. PO`VERS Ai~iD DUTIES OF THE ASSOCIATION
The powers of the Association to perform and accomplish the purposes set forth above and
in its Articles of Incorporation shall, within the budgetary limits established, the procedures and
provisions set forth in these Bylaws and the Articles of Incorporation of the Association, be the
following:
(a) To retain independent contractors including, without limitation, attorneys,
accountants and insurance service providers, and/or employ agents, or employees;
(b) To lease or purchase real property and to purchase or lease equipment, machinery,
or personal property necessary for the carrying out of the purpose of the Association;
(c) To carry out educational and other programs relating to risk reductions;
(d) To oversee the collection of funds for, and to administer a Joint Self-Insurance Pool;
(e) To purchase Specific Excess Insurance and Annual Aggregate Stop Loss Insurance
on behalf of and for the benefit of the Joint Self-Insurance Pool;
(~ To establish reasonable and necessary loss reduction and prevention procedures to
be followed by the Members;
(g) To provide for the defense and settlement of claims;
(h) Solely within the budgetary limits established by the Members, to carry out such
other activities as are necessarily implied or required to be carried out under the
purposes of the Association specified herein, under Ohio law, or the Articles of
Incorporation of the Association and to perform any and all other activities which are
soo~~-? 4
not inconsistent with the provisions of Chapter 1702 and Section 2744.081 of the
Ohio Revised Code, including without limitation, the exercise of all powers of the
Joint Self-Insurance Pool and its Members authorized now or hereafter by Ohio
Revised Code Chapter 2744, or otherwise.
ARTICLE IV. MEMBERSHIP: TERiti~I OF MEMBERSHIP:
CONiN1ENCENIENT OF THE ASSOCIATION
(a) All initial Members of the Association, unless expelled as provided in Article XVI
of these Bylaws, shall remain iVlembers of the Association for a period of at least one (1) year after
the Association has commenced its operations. After the initial one (1) year term, the Members may,
as provided below, extend the term of the Association for additional terms, each term not to exceed
one (1) year.
(b) So long as the Association continues to exist, any ne~v ;vlember joining the
Association shall remain a Member for the remaining period of the then-current term. After the
initial one (1) year term of the Association, any iVlember of the Association may withdraw from the
Association at any term anniversary date upon ninety (90) days prior written notice. Such notice
shall be addressed to the President of the Association and shall be accompanied by a resolution or
ordinance of the governing body of the Member determining to withdraw from the Association. To
the extent that there are surplus funds in the Association that are allocable to the withdrawing
Member, the sluplus fiords shall be distributed to the withdrawing i~fember (after taking into account
reserves for future liabilities pursuant to this Agreement).
(c) The Association will commence its term at 12:01 a.m. on October 1, 1997, if by that
rw
date the Councils of the three (3) initial Members have adopted resolutions or ordinances obligating
the political subdivisions to join the Joint Self-Insurance Pool and the Association in accordance
with these Bylaws and have executed and delivered this Agreement. After the date of com-
mencement of the Association, new Members may only be admitted in the manner set forth in these
Bylaws and upon such other terms and conditions as may be determined by the existing Members
and the Board of Trustees.
.:
sao~~-~ 5
ARTICLE V. BOARD OF TRUSTEES
(a) The Association shall have a Board of "Trustees in accordance with Ohio nonprofit
corporation laws. Each Member shall be entitled to nvo (2) Trustees and alternate representatives
to serve if the Trustees appointed by that Member are unable to carry out his or her duties as
Trustee. Each Trustee shall have one (1) vote. Unless otherwise designated by resolution or
ordinance of council, the Trustees and altemates shall be the Members' chief administrative officer
and/or his or her designee. Once such appointments are made known to the Association, the persons
appointed shall remain in office until the Association receives evidence of the appointment of their
successors. The Association shall be the judge of the proper appointment of Members of the Board
of Trustees and alternates and in case of dispute shall utilize general principles of Ohio law.
Trustees and alternate Trustees need not be elected officials of the Member.
(b) The Board of Trustees shall determine the policy of the Association to be followed
by the Association officers, agents, employees and independent contractors. Among other duties,
the Board of Trustees shall be responsible for:
(1) Hiring Association agents, employees, if any, and independent contractors, whose
employment and contracts shall be at the will and pleasure of the Board of Trustees
and subject to termination without cause, unless a term of employment or contract
is otherwise specifically approved by the Board of Trustees;
(2) Setting compensation for all persons, firms and corporations employed by the
Association;
(3) Setting fidelity bonding requirements for employees or other persons not otherwise
provided for in these Bylaws;
(4) Recommending amendments to these Bylaws;
(~) Recommending approval of the acceptance of new Members;
(6) Expelling Members;
(7) Approving and amending the Association's annual budget;
(8) Resolving disputes over the scope of pooled Self-Insurance coverage provided by the
Association;
(9) Approving educational and other programs relating to risk reduction;
,, ,,
soo~~~-z
6
(10) Approving reasonable and necessary loss reduction and prevention procedures to be
followed by all iVlembers;
(11) Approving Regular Annual Payments and Supplementary Payments for each
Member;
"""" (12) Establishing rules and regulations, as appropriate from time to time, regarding the
payout of funds from the Pool, including the deterniination of persons who may settle
~„ claims against the Pool or Members and the monetary levels at which such persons
may settle claims; and
(13) Performing such other duties as shall be necessary to carry out the Purposes of the
Association under these Bylaws, the Articles of Incorporation, this Agreement and
Ohio Law.
(c) Each Trustee shall be entitled to one (1) vote on the Board of Trustees except that the
President shall have an additional vote in the event of a tie. Voting shall be conducted by voice vote.
A roll call vote shall be required for those matters under the Bylaws that require atwo-thirds (2/3)
majority of all the Trustees on the Board for passage. A roll call vote shall also be required if one
(1) or more Trustee requests a roll call vote.
(d) Trustees shall serve on the Board at the pleasure of, and for a term determined by,
each Member's appointing authority. The failure of a Member to designate or appoint a Trustee or
the failure of that Trustee to participate shall not affect the responsibilities or duties of a Member
under this Agreement and Bylaws.
(e) The Board of Trustees shall have the authority to establish both standing and ad hoc
committees. The President may also establish ad hoc committees that do not conflict with those
established by the Board. unless the Board of Trustees shall establish some other procedure, the
selection of persons to serve on such committees and chair them shall reside with the President. The
President may appoint persons who are not Trustees to serve on committees of the Association. The
Board of Trustees may assign to a committee the authority to authorize the expenditure of fiords and
to settle claims or suits brought against Members within the scope of coverage provided'by the
Association. The Executive Director, President or Claims Administrator may also be granted such
authority. The Board of Trustees may authorize the establishment of an Executive Committee. `l'1"i~.
Board of Trustees may grant the Executive Committee the authority to approve expenditures,
aoo~?_, 7
authorize settlement of claims and suits and take such other action as shall be specifically delegated
to it.
(f) The Board of Trustees may establish rules governing its o~vn conduct and procedure
not inconsistent with these Bylaws.
(g) The presence of at least two-thirds (2/3) of the entire Membership of the Board of
Trustees shall constitute a quorum. Except as provided in Subsections (h) and (i), herein, or
elsewhere in these Bylaws, a simple majority vote of the Members present at the meeting at which
a quorum is present shall be sufficient to pass upon all matters.
(h) Atwo-thirds (2/3) vote of the entire membership of the Board of Trustees shall be
required for the following matters:
(1) Expulsion of a Member (see Article XVI herein).
(2) Establishment and Amendment of budgets or scope of loss coverage.
(3) Changes in a Member's deductible.
(4) Changes in a Member's required contribution to insurance premiums.
(~) Changes in a Member's required contribution to the loss fund.
(6) Returns to Members of unused loss funds.
(7) Changes in the Members' rate of contribution for administrative and
insurance related services.
(8) Any establishment of or changes in a Member's pool contribution or
Pool Contribution Factor.
(9) Calls for Supplementary Payments.
(10) Termination of the Association.
(11) Such other matters as the Board of Trustees by a rivo-thirds (2/3) vote
may establish within its rules to require atwo-thirds (2!3) vote.
(i) An approving Resolution passed by the governing bodies of at least rivo-thirds (2./~)
of the Members after recommendation by two-thirds (2/3) of the Board of Tntstees shall be required
for the following matters:
soo~~-z 8
(1) Admission o f new Members.
(?) Amendment of these Bylaws.
(j) No one serving on the Board of Tnistees shall receive any salary or other payment
from the Association and any salary, compensation, payment or expenses for such representative,
shall be paid by each I~lember separate from this Agreement. The aforesaid notwithstanding, the
Association may reimburse Association officers for expenses incurred in pursuit of their duties as
officers of Association upon approval by the Board of Trustees.
(k) A Trustee shall perform his or her duties as a Trustee, including duties as a member
of any committee of the Board, in good faith, in a manner each reasonably believes to be in or not
opposed to the best interests of the Pool, and with the care that an ordinary prudent person in a like
position would use under similar circumstances. In performing his or her duties, a Trustee is entitled
to rely on information, opinions, reports or statements, including financial statements and other
financial data, that are prepared or presented by: (1) One or more Trustees, officers or employees
of the Pool whom the Trustee reasonably believes are reliable and competent in the matters prepared
or presented; and (2) Legal counsel, public accountants, actuaries, insurance experts or other persons
as to matters that the Trustee reasonably believes are within the person's professional or expert
competence.
ARTICLE VI. MEETINGS OF THE BOARD OF TRUSTEES
(a) Regular meetings of the Board of Trustees shall be held at least quarterly. The dates
of regular meetings of the Board shall be established at the beginning of each fiscal year. Any item
of business may be considered at a regular meeting. Special meetings of the Board of Trustees may
be called by its President, or by any three Trustees. Seven (7) days written notice of special
meetings shall be given to each Trustee and an agenda specifying the subjects to be considered shall
accompany such notice. Business conducted at special meetings shall be limited to those items
specified in the agenda.
(b) To the extent not contrary to these Bylaws, and except as modified by the Board of
Trustees, Roberts Rules of Order, latest edition, shall govern all meetings of the Board of'l~ru!~.es.
Minutes of all regular and special meetings of the Board of Trustees and all committee meetings
shall be sent to all Trustees.
soa~~7-~ 9
(c) Notice of any meeting of the Board of Trustees may be waived in ~,vriting by any
Trustee before or after any such meeting or by attendance at such meeting ~vitl~out protest prior to
its commencement.
(d) Any action that maybe taken at a meeting of the Board of Tnistees may be taken by
written resolution of the Trustees without a meeting as permitted by Ohio law.
ARTICLE VII. ASSOCIATION OFFICERS
The Association shall have a President, Vice President, Treasurer and Secretary and such
other officers as maybe determined necessary by the Board of Trustees. The office of Treasurer and
Secretary may be held by the same person. The officers shall be elected annually by the Board of
Tnistees to hold office for a term of one (1) year. The Board shall fill any vacancies which may
occur in such offices for the remainder of the term.
(a) The President of the Board of Trustees shall be the President and the Chief
Administrative Officer of the Association and shall in general supervise and control the day-to-day
operations ofthe Association and shall carry out the policy of the Association as established in these
Bylaws and by the Board of Trustees. The President shall preside at all meetings of the Board or the
Executive Committee at which the President is present. The President may request information from
any officer of the Board or the Association or any employee or independent contractor of the
Association. The President shall vote on all matters that come before the Board or Committees on
which the President serves. The President shall be a nonvoting ex-officio Member of all committees
of the Association on which the President does not directly serve. The President shall have such
other powers as are set forth in these Bylaws and such other powers as he may be Qiven from time
to time by action of the Board. Without limitation, among his duties shall be the foilowing:
1. He may sign, with such other person authorized by the Board o f Trustees, any
instruments which the Board of Trustees has authorized to be executed and,
in general shall perform all duties incident to the office of President and such
other duties as may be prescribed by the Board of Tnistees from time to time.
2. He shall prepare a proposed annual budget, proposed Regular Annual
Payments to be made by the Members, and, where required, Supplementary
Payments to be paid by the Members and shall submit sucfl proposals to the
Board of Tntstees.
soo~~-~ 10
3. He shall, where necessary, make recommendations regarding policy
decisions, the creation of other Association officers and tl~e employment of
agents and independent contractors. At each regular meeting of the Board of
Trustees and at such other times as he shall be required to do so, he shall
present a full report of his activities and the fiscal condition of the
Association.
4. He shall report or cause reports to be made quarterly to all Members on all
claims filed and payouts made.
S. He shall perform the duties of a Executive Director unless otherwise
delegated by the Board of Trustees and he shall, within the constraints of the
approved or amended budget employ all secretarial, clerical and other similar
help and expend funds for administrative expenses.
(b) The Vice President shall carry out all duties of the President of the Board during the
absence or inability of the President to perform such duties and shall carry out such other functions
as are assigned from time to time by the President.
(c) The Treasurer or, at the direction of the Board, the Executive Director stall:
1. Have charge and custody of and be responsible for all funds and securities of
the Association; receive and give all receipts for moneys due and payable to
the Association from any source whatsoever; deposit all such moneys in the
name of the Association in such banks, savings and loan associations or other
depositories as shall be selected by the Board of Trustees; invest the funds of
the Association as are not immediately required in such securities as the
Board of Trustees shall specifically or generally select from time to time; and
maintain the financial books and records of the Association; provided,
however, that all investments of the Association funds shall be made only in
those securities which may be purchased by the Association under Ohio or
other applicable law and within policies established by the Board of Trustees.
2. In general, perform all the duties incident to the office of Treasurer and such
other duties as from time to time may be assigned to hire by the President or
the Board of Trustees.
(d) The Secretary, or his designee, shall keep the minutes of the meetings of the Board
of Trustees in one or more books provided for that purpose; see that all notices of meetings are duly
given in accordance with the provisions of these regulations, or as required by law, provided,
however, that any persons calling such meetings mav, at their options, themselves give such notice;
soo~~-a 11
be custodian of the Corporate records; and, in general, perform all duties incident to the office of
Secretary and such other duties as from time to time may be assigned by the Board of Trustees.
(e) The Board may select a financial institution to carry out some or all of the functions
which would otherwise be assigned to the Treasurer and may select a person or entity to serve as
Claims Administrator and to make recommendations to the President, Executive Director, the Board
or any committee of the Board regarding the settlement of claims, the annual budget, Regular Annual
Payments and Supplementary Payments to be made by the Members and other matters as the Board
or the President shall deem appropriate.
(f) The Association may purchase such fidelity bonds as the Board of Trustees
determines to be appropriate to assure the fidelity of the President and Vice President of the Board,
the Treasurer, the Secretary, and any other officer, committee member, or employee ~vho shall have
the right to authorize the transfer or payment of Association funds. Without amendment of these
Bylaws, the Board of Trustees, by motion, may increase or decrease the amount of the bonds or the
persons covered.
ARTICLE VIII. FISCAL YEAR. FINANCES AND RISK MANAGEMENT POOL
(a) The fiscal year of the Association shall commence on October 1 of each year and end
on September 30 of the following year.
(b) The Board of Trustees shall approve a final budget for the administration of the
Association during the upcoming fiscal year by September 1 of each year. Copies of the final budget
shall be promptly mailed to each Trustee and to any additional persons designated by any Member.
At the time of adopting a final budget, the Board shall also determine the amount of Regular Annual
Payments to be made by each Member and the date or dates upon which payment is due. The budget
for the first year of operations and the Regular Annual Payments to be made by each Member during
the first year are set forth in the attached Appendix C. Failure of the Board of Trustees to approve
a final budget within the time set forth in this Section shall not relieve the l~lembers of the obligation
to make Regular Annual Payments or Supplementary Payments to the Association as long as such
budgets are finally adopted and the 1~Iembers are given at least thirty (30) days after passage of the
final budget in which to make payments to the Association.
soo~~~-? 12
(c) In subsequent years the Board of Trustees shall establish a Pool Contribution Factor
For each Member in accordance with the procedure set forth in Appendix B. The Board may require
Members to submit updated underwriting information or audited information for its review prior to
establishing the Pool Contribution Factor. Written notice of this Pool Contribution Factor shall be
delivered to each Member. If a Member wishes to contest the determination, it may request a
hearing before the Board. The decision by the Board after such a hearing shall be final.
(d) Budgets, including the Regular Annual Payment for each Member, may be amended
at any time by two-thirds (2/3) vote of the Board. Calls for Supplementary Payments may be made
by the Board of Trustees. The Board may call for Supplementary Payments from Members,
including withdrawn or expelled 1~lembers for the years of their membership. Members shall
forward such Regular Annual Payments and Supplementary Payments within a time specified in
notices to the Members, which time shall be not less than thirty (30) days. Supplementary Payments
shall only be required by the Board of Trustees in a situation in which there is a reasonable concern
that the sum remaining from the Regular Annual Payments will not be sufficient to meet the
responsibilities of the Association. Members shall be responsible for Supplementary Payments
during the entire life of the Association when claims or expenses must be paid that are attributable
to any year of membership when the event out of which the expense or claim occurred.
(e) The Board of Trustees may permit the Regular Annual Payments or Supplementary
Payments to be made on a periodic basis, as determined by the Board. The amount of such Regular
Annual Payments and any Supplementary Payments required shall be based upon the Pool
Contribution Factor established annually. The funds derived through application of the Pool
Contribution Factor shall be sufficient to annually produce a sum of money within the Joint Self-
Insurance Pool adequate in amount to fund the Administrative expenses of the Association and to
create adequate reserves to pay losses not covered directly by the Member or by Specific Excess
Insurance or Annual Aggregate Stop Loss Insurance.
(f) If all claims for any particular year have been paid or provided for, the Board of
Trustees may, at its discretion, distribute all or part of the surplus funds to the Members who were
Members of the Pool during that particular year; provided that such Members are also Members of
the Pool in the year in which the distribution is made. The distribution of surplus funds, if any, shall
be made after first deducting reasonable administrative and other non-allocated costs incurred or
.~
soo~~ ~ 1 ~
projected to be incurred by the Association in the processing of those claims. The distribution
among the ivlembers shall be in the same proportion to the total as was their Regular Annual
Payment for that year to the Regular Annual Payments of all Members. In lieu of distributing any
such surplus funds to the Members, the Board may apply such surplus funds to the iVlember's
Regular Annual Payment for subsequent years.
(g) The Association shall provide to the Members an annual audit of the financial affairs
of the Association in accordance with generally accepted auditing standards. The audit shall be
conducted by a certified public accounting firm. The annual audit report shall be delivered to each
Member.
(h) The Association shall be provided with a report at least semiannually from all agents
and independent contractors including attorneys with regard to the status of their work for the
Association, problems encountered during the performance of their duties and recommendations for
improvements in the performance of the Association including their efforts on the Association's
behalf.
(i) As required by law or as otherwise determined necessary by the Board of Trustees,
the Association shall, on an annual basis employ a person or company ~vho, as an independent
contractor, shall prepare an actuarial audit of the affairs of the Association. Such actuarial audit shall
be authorized within a reasonable period of time after the end of each fiscal year. The entity chosen
to carry out the actuarial audit shall be a member of the American Academy of Actuaries. The audit
may be a part of the financial audit of the Association but shall specifically direct itself to the
adequacy of the pooled funds maintained by the Association in relationship to claims made and those
actuarially expected to be made in the fiiture.
(j) The Board of Trustees shall cause an annual analysis to be made of the manner in
which the pooled funds of the Association are invested, so as to reasonably assure their security and
availability for the payment of claims and other expenses. An analysis shall also be made of the
interest revenues produced by the investment of such funds, in order to determine if the investment
has provided a reasonable return. In performing these analyses, national indices or other similar
standards for the investment return on funds invested on behalf of public bodies shall be utilized.
Unless the Board of Tnistees specifically directs that these analyses be conducted in another manner,
they shall be carried out in the manner chosen by the President.
xoo~~-~
14
ARTICLE IX. SCOPE OF LOSS PROTECTION
In addition to the Self-Insurance Fund, the Association shall provide loss protection within
the terms of the Specific Excess Insurance and Annual Aggregate Stop Loss Insurance policies held
from time to time by the Association for the benefit of its Members. The initial scope of protection
to be furnished by the Association shall be substantially as provided in Appendix D attached to and
made a part of this Agreement.
Any Member of the Association may request that the Board of Trustees take action to affirm
or reverse a decision by the President, Executive Director or other officer, employee or independent
contractor of the Association that a particular matter is or is not within the scope of coverage
provided by the Association. The iViember requesting such consideration by the Board of Trustees
shall have a full opportunity to explain its position. The decision of the Association shall be final
unless the Association institutes legal proceedings to further resolve the issue.
After having reviewed a claim forwarded to the Association for coverage, the Executive
Director shall decline to provide coverage for such claim if, in his opinion, the claim is not within
the scope of coverage afforded by the Association. The Executive Director may also agree to accept
the claim and provide a defense but reserve the right of the Association to withdraw from the defense
or refuse to provide indemnification against the claim in the event it is subsequently determined that
the claim is not properly within the scope of protection accorded by the Association.
ARTICLE X. EXCESS INSURANCE
The Association shall purchase Specific Excess Insurance from a company approved or
authorized by the Department of Insurance to write such coverage in Ohio. The amount and limits
of such Specific Excess Insurance shall be initially as set forth in Appendix E attached hereto.
In addition to the stated Specific Excess Insurance coverage, the Association shall obtain
Annual Aggregate Stop Loss Insurance from a company approved or authorized by the Department
of Insurance to write such coverage in Ohio. Annual Aggregate Stop Loss Insurance shall pay
additional claims otherwise paid from the Self-Insurance Fund in the event that, in any single year,
the Association's payment for claims covered by the Self-Insurance Fund has exceeded the maximu_r_
aggregate sum that the Board determined to be necessary for the payment of such claims. The
purpose of the Annual Aggregate Stop Loss Insurance is to ensure that no Member shall pay for t~~::
.,
30007-2 1 ~
loss of any other Member in excess of the Regular Annual Payments and Supplementary Payments,
if any, required by this Agreement and the Board of Trustees to fund the Self-Insurance Fund.
Annual Aggregate Stop Loss Insurance shall be intitally provided as set forth in Appendix F attached
hereto.
The sequence of the obligations of the Member, the Association and the excess insurer for
a claim resulting in liability within the scope of~the Self-Insurance shall be as follows:
(1) A Member or Members against which a claim is made shall pay an initial amount,
if any, approved by the Board known as the ivlember's "deductible."
(2) The Association shall pay from the Self-Insurance Fund (if applicable to an
individual Member) that remaining portion of the claim covered by the Self-
Insurance Fund up to the limit at which Specific Excess Insurance coverage
commences.
In the event that the Association determined in a particular year to create aSelf-
Insurance Fund from Regular Annual Payments that produces a sum less than the
amount at which Specific Excess Insurance and Annual Aggregate Stop Loss
Insurance coverage commences, and if additional funds are required for payment of
claims from the Self-Insurance Fund, the Association may call for Supplementary
Payments attributable to that year.
(3) The excess insurer shall pay the remaining portion of a claim up to the limit covered
by Specific Excess Insurance, if any loss exceeds the amount of coverage provided
by the Self-Insurance Fund (or Self-Insurance in the event that a Member does not
participate in the Self-Insurance Fund).
(4) An individual Member or Members against which a claim is made shall be obligated
to pay any remaining portion of a claim that exceeds the amount of coverage
provided by the Self-Insurance Fund and the Specific Excess Insurance.
This sequence of obligations shall apply to all claims within the scope of coverage of the
Joint Self-Insurance Pool and Association from its inception on October 1, 1997 and shall apply to
all Yfembers for those claim years during which they were Members. The Association shall make
payments from the Self-Insurance Fund and the Specific Excess Insurance and Annual Aggregate
Stop Loss Insurance proceeds in the order in which the judgments against a Member have been
entered or settlements of claims have been reached.
,~,
soo~,~ ~ 16
ARTICLE XI. OBLIGATIONS OF iVIEMBERS
The obligations of Members of the Association shall be as follows:
(a) To appropriate or budget for, where necessary, to levy for and to promptly pay all
annual and supplementary or other payments to the Risk Management Pool at such times and in such
amounts as shall be established by the Board of Trustees ~.vithin the scope of this Agreement. Any
delinquent payments shall be paid with a penalty which shall be equal to the highest interest rate
allowed by statute to be paid by an Ohio political subdivision on the date of delinquency.
(b) To appoint persons to serve on the Board of Trustees and to appoint alternate
Trustees.
(c) To allow the Association reasonable access to all facilities of the Member and all
records including but not limited to financial records which relate to the purpose or powers of the
Association.
(d) To allow attorneys employed by the Association to represent the Member in
investigation, settlement discussions and all levels of litigation arising out of any claim made against
the Member within the scope of loss protection famished by the Association.
(e) To furnish full cooperation with the Association's attorneys, claims adjusters, the
Executive Director and any agent, employee, officer or independent contractor of the Association
relating to the purpose and powers of the Association.
(f) To follow in its operations all loss reduction and prevention procedures established
by the Association within its purpose and powers.
(g) To furnish to the Association updated underwriting information of all revenues
received by the Member for any fiscal year of the Member for which figures are requested by the
Association and to furnish any other information required by the Association to assist it in making
its determination of a Pool Contribution Factor, which information may include, but is not limited
to, providing appraisals of the Members' properties. When requested by the Board of Trustees, the
Member shall provide the Association with the above-stated information in a form satisfactory to
the Board of Trustees.
(h) To report to the Claims Administrator within the time limit specified the following
Items:
,,,, soo~~-~ 17
(1) To report immediately (but in no event more than ten (10) days after receipt)
a statutory notice of claim, a summons, formal complaint or other formal
pleading on a matter for which coverage from the Association is sought.
(2) To report, within thirty (30) days of receipt, a written demand for monetary
relief for which coverage from the Association is sought.
(3) To xeport to the Claims Administrator at the earliest practicable moment any
information of an occurrence received by the Member and from which the
Member could reasonably conclude that coverage from the Association will
be sought.
In the event that the items set forth above are not submitted to the Claims Administrator within the
time periods set forth above, the Board of Trustees of the Association, by a vote of a majority of a
quorum of the Board, at a regular or special meeting, may in whole or in part decline to provide a
defense to the Member or to extend the funds of the Association for the payment of losses or
damages incurred. In reaching its decision, the Board shall consider whether and to what extent the
Association was prejudiced in its ability to investigate and defend the claim due to the failure of the
Member to promptly furnish notice of the claim to the Claims Administrator. The decision of the
Board of Trustees shall be final.
(i) A minimum non-refundable deposit ("New Member Fee") in an amount to be
determined by the Board of Trustees at the time the Member joins the Pool, shall be paid to the
Association by all Members joining the Pool after October 1, 1997. Members joining the Pool prior
to October 1, 1997 shall not be required to pay the New Member Fee.
ARTICLE 1II. LIABILITY AND IDENTITY OF TRUSTEES OR OFFICERS
Trustees shall be immune from personal liability to the extent provided by law including
Section 1702.30 of the Ohio Revised Code.
The Association shall indemnify any Trustee or officer or any former Trustee or officer of
the Association against reasonable expenses, judgments, decrees, fines, penalties or amounts paid
in settlement actually and necessarily incurred by him in connection with the defense of any pending
or threatened action, suit, or proceeding, criminal or civil, to which he is or may be made a party by
reason of being or having been such Tn-stee or officer, provided it is determined in the manner
hereinafter set forth: (1) that such Trustee or officer was not, and is not adjudicated to have been,
- soo~~-~ 18
negligent or guilty of misconduct in the performance of his duty to the Association; (2) that he acted
in good faith in what he reasonably believed to be the best interest of the Association; (3) that, in any
criminal action, suit, or proceeding, he had no reasonable cause to believe that his conduct was
unlawful; and (4) in case of settlement, that the amount paid in the settlement was reasonable. Such
determination shall be made either: (1) by the Trustees of the Association acting at a meeting at
which a quorum consisting of Trustees who are not parties to or threatened with any such action, suit
or proceeding is present; or (2) in the event of settlement, by a written opinion of independent legal
counsel selected by the Trustees.
Funds to cover expenses with respect to any pending or threatened action, suit, or proceeding,
may be advanced by the Association prior to the final disposition thereof upon receipt of an
undertaking by or on behalf of the recipient to repay such amounts unless it shall ultimately be
determined that he is entitled to indemnification hereunder.
The indemnity hereinabove provided for shall not be deemed to be exclusive of: (1) any
other rights to which any person may be entitled under any agreement, any insurance acquired with
funds in the Pool or provided by the Association, or otherwise; (2) any immunity, qualified or
otherwise, afforded a Trustee or officer pursuant to Chapter 1702 and Section 2305.38 of the Ohio
Revised Code; or (3) the power of the Association to indemnify any person who is or was an
employee of the Association to the same extent and in the same situations and subject to the same
determinations as are hereinabove set forth with respect to a Trustee or officer. The Association may
purchase and maintain insurance on behalf of any person ~vho is or was a Trustee, officer, or employ-
ee against any liability asserted against him or incurred by him in any such capacity or arising out
of his status as such whether or not the Association would have the power to indemnify him against
such liability under the provisions of this Article.
ARTICLE VIII. ADDITIONAL INSURANCE
Membership in the Association shall not preclude any Member from purchasing any
insurance coverage above those amounts purchased by the Association. The Association may make
its facilities available to advise Members of the types of additional or different coverages availa~~~_:
to political subdivisions.
soo~~-~ 19
ARTICLE XIV. OPTIONAL DEFENSE BY MEiyIBERS
Whenever the Association proposes to settle any pending claim or suit ~.vhere the amount
of that proposed settlement shall exceed Ten Thousand Dollars (510,000.00), the Member involved
in the pending claim or shit shall be given advance notice of that settlement. The officers and
.a.
employees of the Association shall endeavor to give specific oral or written notice to a Member of
the exact amount of any proposed settlement in excess of Ten Thousand Dollars (~ 10,000.00) at least
fourteen (14) days prior to the date at which the Association proposes to bind itself to pay such
settlement amount. The Members recognize that under some circumstances the Association may not
be able to give fourteen (14) days prior oral or written notice of the proposed settlement. The
officers, employees or independent contractors of the Association shall attempt to give the Members
as much notice of the settlement as possible under the circumstances of each case.
If a Member involved in the pending claim or suit disagrees with the amount at which the
Association proposes to settle the claim or suit, that Member may notify the Executive Director of
the Association, through its Law Director, Chief Administrative Officer, Trustee or alternate Trustee,
that the Member exercises its right to veto the Association's proposed settlement. A Member
exercises its right to veto the Association's proposed settlement at its o~vn risk as described in this
Article XIV. The Executive Director may require that the veto be submitted in writing. If the
Association does not settle a case based upon the Member veto, the Association shall continue to
provide a defense to the defendants unless the Member determines to undertake the defense itself.
If the case or claim is eventually resolved through a settlement or judgment in an amount that
is less than the amount of the Association's proposed settlement, a Member that has undertaken the
costs of its own defense shall be entitled to its additional actual costs, including attorneys' fees, up
to the level at which its costs and the prior allocated costs of the Association, including attorneys'
fees, equal the amount at which the case could have been settled by the Association. If the case or
claim is resolved through settlement or judgment at an amount that is greater than the amount of the
Association's proposed settlement, the Member shall be obligated for that portion that exceeds the
Association's proposed settlement amount, including all allocated costs of the Association. If at any
time the amount of the allocated costs of the Association devoted to the case shall equal or exceed.
the amount at which the case could have been settled, the Association may require periodic
Supplementary Payments from the Member if the Member wishes to have the Association continue
soo~~-z 20
to provide the defense. The Member shall pay its portion of the judgment or settlement directly to
the plaintiff and the Association shall not be required to pay the Member's portion of such judgment
or settlement.
Allocated costs shall mean -those costs which are allocated to individual cases under the
bookkeeping and accounting system utilized by the Association. The Association may establish the
amount at which it could have settled the case through a written settlement offer by the plaintiff or
through other competent evidence of the availability of the settlement at a particular sum.
To the extent that payment shall be made with funds derived from Specific Excess Insurance,
Annual Aggregate Stop Loss Insurance or other insurance carrier, the provisions of this Article XIV
shall prevail when not contrary to those insurance contracts.
ARTICLE XV. CONTRACTUAL OBLIGATION
This document shall constitute a contract among those political subdivisions that become
vfembers of the Joint Self-Insurance Pool and bet~,veen the Joint Self-Insurance Pool and the
Association. The obligations and responsibilities of the Members set forth herein, including the
obligation to take no action inconsistent with these Bylaws as originally written or validly amended,
shall remain a continuing obligation and responsibility of the iVlember. The terms of this Agreement
maybe enforced in a court of law by the Association or any of its Members.
The mutual promises and agreements of the Members set forth herein shall be the
consideration for the duties imposed upon the Members by these Bylaws to take certain actions and
to refrain from certain other actions. This Agreement and Bylaws may be executed in duplicate
originals and its adoption by political subdivisions shall be evidenced by a certified copy of an
ordinance or resolution passed in accordance with law. Provided, however, that except to the extent
of the limited financial contributions to the Association agreed to herein or such additional
obligations as may come about through amendments to these Bylaws, no Member agrees or contracts
by this Agreement and Bylaws to be held responsible for any claims in tort or contract made against
any other Member. In the creating of the Joint Self-Insurance Pool and Association, the contracting
Parties intend to establish an organization for joint risk management only within the scope set ford
in these Bylaws and have not created as between Member and vlember any relationship of surety,
indemnification or responsibility for the debts of or claims against any Member.
soo~~~-z 21
ARTICLE XVI. EXPULSION OF iyIEMBERS
By the vote of two-thirds (2/3) of the entire membership of the Board of Trustees, any
Nlember may be expelled. Such expulsion may be carved out for one or more of the following
reasons:
~. (a) Failure to make any payments due to the Association, including failure to pay any
Regular Annual Payments or Supplementary Payments;
(b) Failure to undertake or continue loss reduction and prevention procedures adopted
by the Association,
(c) Failure to allow the Association reasonable access to all facilities of the Member and
all records which relate to the purpose or powers of the Association,
(d) Failure to furnish full cooperation with the Association's attorneys, claims adjusters,
the Executive Director and any agent, employee, officer or independent contractor
of the Association relating to the purpose and powers of the Association,
(e) Poor loss experience;
(f) Failure to carry out any obligation of a Member which impairs the ability of the
Association, to carry out its purpose or powers.
No Member may be expelled except after notice from the Association of the alleged failure along
with a reasonable opportunity of not less than thirty (30) days to cure the alleged failure provided,
however, that if the failure is a failure to make a Regular Annual Payment or Supplementary
Payment, such failure must be cured within ten (10) days of written notice of cancellation. The
Member may request a hearing before the Board before any decision is made as to whether the
expulsion shall take place. The Board shall set the date for a hearing which shall not be less than
ten (10) days after the expiration of the time to cure has passed. A decision by the Board to expel
a Nlember shall be final. The Board of Trustees may establish the date at which the expulsion of the
Member shall be effective at any time not less than sixty (60) days after the action expelling the
Nlember has been made by the Board of Tnistees. If the motion to expel the Member made by the
Board of Trustees or a subsequent motion does not state the time at which the expulsion shall take
place, such expulsion shall take place sixty (60) days after the date of the vote by the Board of
Trustees expelling the Member.
soo~~-~ 22
After expulsion, the former Member shall continue to be fully obligated for its portion of any
claim against the assets of the Joint Self-Insurance Pool that was created during the term of its
membership along with any other unfulfilled obligation as if it was still a Member of the
Association. The expelled I/lember shall, after expulsion, no longer be entitled to participate or vote
on the Board of Trustees. To the extent there are surplus funds allocable to the expelled Member,
such surplus funds shall be distributed to the expelled Member after the Association has properly
accounted for any liabilities of such expelled Member pursuant to this Agreement.
ARTICLE XVII. TERiyIINATION OF THE ASSOCIATION
If, sixty (60) days prior to the conclusion of any fixed term of the Association, the Board of
Trustees does not vote to continue the existence of the Association, then the Association shall cease
its existence at the close of the then current fiscal year. Under those circumstances, the Board of
Trustees shall continue to meet on such a schedule as shall be necessary to wind up of the affairs of
the Association. It is contemplated that the Board of Trustees may be required to continue to hold
meetings for some substantial period of time in order to accomplish this task.
All Members of the Association, including those that have withdrawn or been expelled, shall
remain fully obligated for the payment of Supplementary Payments attributable to the years during
which they were Members of the Association. Such Supplementary Payments may include, but are
not limited to, sums sufficient to pay claims, retain reserve levels and pay for continuing claims
administration. In addition, all such Members shall continue to be responsible for all other
obligations of membership attributable to such prior years.
If anv Member withdraws from the Association while the Association continues in operation,
the ~vithdra~ving Member shall continue to hold membership on the Board of Tnistees but only for
the purpose of voting on matters effecting its limited continuing interest in the Association for such
vears as it was a Member of the Association. After all claims and liabilities have been properly paid
or reserves established payment of any such claim, any surplus funds of the Association shall be
distributed to the Members in proportion to their interest in the surplus funds.
?~
soo~~-~ '
IN WITNESS WHEREOF, the parties have hereunto set their hands and executed this Agreement
and Bylaws this day of , 1997, in Franklin County, Ohio, pursuant to the
authority of ordinances or resolutions as hereinafter certified.
By
Approved as to Legal Form
Sharon Psancuff, Law Director
CITY OF UPPER ARLINGTON
Yvonne E. Simon, Mayor
By
Pursuant to Ord./Res. No.
Passed on
CERTIFICATION
I certify that the money required to meet this contract has been lawfully appropriated for such
purpose and is in the treasury or in the process of collection to the credit to this fund free from any
previous obligation or certification as required by Ohio Revised Code §§5705.01 to 5705.47.
r.
Cathe Armstrong, Director of Finance
..:
err r~no~a~~i~w~t~,~
IN WITNESS WHEREOF, the parties have hereunto set their hands and executed this Agreement
and Bylaws this day of 1997, in Franklin County, Ohio, pursuant to the
authority of ordinances or resolutions as hereinafter certified.
Approved as to Legal Form
By
Bruce Bailey, Law Director
CITY OF WESTERVII.LE
By
City Manager/Mayor
Pursuant to Ord./Res. No.
Passed on
CERTIFICATION
`~"~~ I certify that the money required to meet this contract has been lawfully appropriated for such
purpose and is in the treasury or in the process of collection to the credit to this fund free from any
previous obligation or certification as required by Ohio Revised Code §§5705.01 to 5705.47.
Jack Winkel, Director of Finance
,~
r~n~~~~i~~~~~~~
IN WITNESS WHEREOF, the parties have hereunto set their hands and executed this Agreement
and Bylaws this day of 1997, in Franklin County, Ohio, pursuant to the
authority of ordinances or resolutions as hereinafter certified.
Approved as to Legal Form CITY OF DUBLIN
By
Stephen J. Smith, Law Director
By
Timothy C. Hansley, City Manager
Pursuant to Ord./Res. No.
Passed on
CERTIFICATION
"" I certify that the money required to meet this contract has been lawfully appropriated for such
purpose and is in the treasury or in the process of collection to the credit to this fund free from any
.,,~,, previous obligation or certification as required by Ohio Revised Code §§5705.01 to 5705.47.
Marsha I. Grigsby, Director of Finance
t~pe~kstb&ce\wp6l~u~surenc~diaclosuc
CORI~IA SELF-INSURANCE POOL, Inc.
By:
President
CERTIFICATION
Whereupon under the authority granted to me by Resolution Number ,passed by
on the day of , 1997, the Secretary does hereby attest
participation in a Joint Self-Insurance Pool and administration thereof by the CORMA SELF-
INSURANCE POOL, Inc., for a term commencing October 1, 1997, in accordance with this
Agreement and Bylaws in its executed form and as it may subsequently be validly amended.
By:
Secretary
sobsa-i
APPENDICES
TO
AGREEMENT AND BYLAWS
CORMA SELF-INSURANCE POOL, INC.
A. Articles of Incorporation
B. Pool Contribution Factor
C. ~ Initial Budget and Pool Contributions
D. Scope of Coverage
E. Excess Coverage
F. Stop Loss Coverage
so~s~-i
ARTICLES OF INCORPORATION
OF
CORitiIA SELF-INSURANCE POOL, INC.
AN OHIO CORPORATION NOT FOR PROFIT
The undersigned, desiring to form a corporation, not for profit, under Section 1702.01, et
seg., of the Ohio Revised Code, does hereby certify that:
FIRST: The name of the corporation shall be CORlVi~, SELF-Ii`iSURANCE
POOL, IivC.
SECOND: The place in the State of Ohio where the principal office of the
Corporation is to be located is the City of Cleveland, Cuyahoga
County.
THIRD: The purposes for which the corporation is formed are as follows:
(1) To administer a Joint Self-Insurance Pool ("Pool") which was
established pursuant to Section 2744.081 of the Ohio Revised Code;
(2) To collect and invest funds, solely in the capacity as fiscal agent of
the Pool, from the Members of the Pool (said funds and all earnings
thereon to be used for the exclusive benefit of the Members of the
Pool);
(3) To provide Risk Management services to the Pool including, but not
limited to, the defense of and settlement of claims;
(4) To establish reasonable and necessary loss reduction and prevention
procedures for the Pool, said procedures to be followed by the
Members of the Pool;
(5) To purchase, on behalf of and for the exclusive benefit of the
Members of the Pool, Excess Insurance and Stop Loss Insurance to
supplement the Pool;
(6) To sponsor educational and other programs relating to risk
reductions, said programs to be for the exclusive benefit of the
Members of the Pool;
(7) To lease or purchase real property and to purchase or lease
equipment, machinery, or personal property necessary for the
carrying out of the purposes set forth hereinabove;
(8) To perform such other activities as are necessarily implied or required
to be carried out under the purposes set forth hereinabove; and
87598-I
APPENDIX A
(9) To perform any and all other activities which are not inconsistent
with the provisions of Chapter 1702 and Section 2744.081 of the
Ohio Revised Code, including without limitation, the exercise of all
powers of the Pool and its Members authorized now or hereafter by
Ohio Revised Code Chapter 2744, or otherwise.
FOURTH: The following persons, not less than three (3), shall serve the
Corporation as initial Trustees until their respective successors and/or
any additional Trustees are duly elected or appointed.
Mr. Michael J. Wasylik
Assistant City Manager
City of Westerville
21 S. State Street
Westerville, Ohio 43081-9990
Mr. Dave Harding
Director of Human Resources and Procurement
City of Dublin
6665 Coffrnan Road
Dublin, Ohio 43017-1006
Mrs. Bonnie Cross
Assistant City Manager
City of Upper Arlington
3600 Tremont Road
Upper Arlington, Ohio 43321
FIFTH: The following entities shall be the initial Members of the Corporation.
CITY OF UPPER ARLINGTON
CITY OF WESTERVILLE
CITY OF DUBLIN
IN WITNESS WHEREOF, I have hereunto subscribed my name on this day of
1997.
John H. Gibbon, Incorporator
a 87598-t -2-
CORNIA SELF-INSURANCE POOL, INC.
PROCEEDINGS OF INCORPORATOR
ORIGINAL APPOINTMENT OF AGENT
On , 1997, John H. Gibbon, the Incorporator, appointed John H. Gibbon, 50
Public Square, 1300 Terminal Tower, Cleveland, Ohio 44113, a resident of Cuyahoga County, Ohio,
as the person upon whom any process, notices and demands against CORMA Self-Insurance Pool,
Inc. might be served, and said Statutory Agent did, in writing, acknowledge his acceptance of said
appointment.
INCORPORATOR
John H. Gibbon
ACCEPTAlvCE OF AGENCY
The undersigned hereby accepts appointment, as Statutory Agent, for CORMA Self-
Insurance Pool, Inc., upon whom process, notices and demands maybe served.
John H. Gibbon
~,,~
87598-1
Appendix B
Pool Contribution Factor in Future Years
Each Member's relative percentage share of pool costs (Fixed and Variable) shall be
reviewed annually and adjusted at anniversary, if appropriate. The intent is to:
1) reward favorable loss experience
2) encourage sound loss control and other risk management practices
Determination of the Pool Contribution Factor for each Member in years subsequent to the
initial years shall be made by the Board of Trustees.
The Executive Director or his/her designee shall provided the Board of Trustees with
suggested Pool Contribution Factors based on:
1. Relative Loss Experience
This may include, but not necessarily be limited to:
number and type licensed vehicles
number of police officers
General Fund expenditures
property insurance premiums
unusual exposures
Member deductibles / retentions
Other exposure factors and/or risk management factors may be used as
appropriate.
2. Relative Loss Experience
This may include, but not necessarily be limited to:
loss frequency
total amount of losses
incurred pooled losses
paid pooled losses
forgiveness factor for large losses
The total percentage of Fixed Costs and Variable Costs must total 100%, but these
percentages may not be the same for a given Member.
Cor-by-8
Appendix B
Pool Contribution Factor in Future `r``e~~~:~i
Each Member's relative percentage share of pool costs (Fixed ar~~:; ~/~_.r~~i:}Ic) _r~~~ii be
reviewed annually and adjusted at anniversary, if appropriate. The intent is to:
1) reward favorable loss experience
2) encourage sound loss control and other rise management ~~ractices
Determination of the Poo( Contributicn Factor for each Nlember in years subsequent to the
initial years shall be made by the Board of Trustees.
The Executive Director or his/her designee shall provided the Board of Trustees with
suggested Pool Contribution Factors bawd on:
1. Relative Loss Experience
This may include, but not necessarily be limited to:
number and type licensed vehicles
number of police oriicers
General Fund expenditures
property insurance premiums
unusual exposures
Member deductibles / retentions
Other exposure factors and/or risk management factors may be used as
appropriate.
2. Relative Loss Experience
This may inc}ude, but not necessarily be limited to:
loss frequency
total amount or losses
incurred pooled !oss~s
paid pooled losses
forgiveness factor for laroe losses
The total percentage of Fixed Costs and Variable Costs must total 100%, but these
percentages may not be the same for a given Nlember.
c~~-sy-a
Appendix C
Budget and Regular Annual Payments for First Year
(1 of 2)
Budget for first year of CORMA (October 1, 1997-98) is:
I. Fixed Costs
Excess Insurance
Primary Package 158,028
Excess Liability ~ 20,777
Boiler & Machinery 9,860
188,605
Insurance Services
Claims Administration 33,000
Loss Control 11,250
Administration 34,000
78,250
Others
" Actuary & CPA 7,800
Office Supplies 200
8, 000
Pool Bond 2,500
Total Fixed Costs 277,415
I1. Variable Costs
Total Loss Fund 125.000
Grand Total Fixed 8~ Variable Costs 402,415
car-by-C
Appendix C
Budget and Regular Annual Payments for First Year
~~.,
(2 of 2)
Regular annual payments for first pool year are:
Member Fixed Costs Variable Costs Total
Dublin 73,403 46,748 120,151
Westerville 116,135 71,138 187,273
Upper Arlington 87,877 7.114 94.991
Totals 277,415 125,000 402,415
cor-byc2
Appendix D
Initial Scope of Protection
~"'~`" The initial Scope of Protection (insurance) provided by the Association shall be as per
proposal dated August 1, 1997 from Arthur J. Gallagher & Co. This Protection may be
changed in the future as determined by the Board of Trustees.
Protection provided includes:
Damage to or loss of Member property
Property Insurance
. Crime Insurance
Automobile Physical Insurance
Boiler & Machinery (separate insurance, not pooled)
Legal /Contractual Liability to third parties
Automobile Liability
General Liability
Law Enforcement Liability
Public Official Liability
Protecticn is not provided for all potential claims /losses. See August 1, 1997 proposal
including specimen policies for full details.
'~ Unless speciT~cally and additionally agreed to and provided for by the Members or Board
of Trustees, pooled Protection (Level m2) is provided and applies only if excess insurance
purchased by the Association (Level #3) would apply, but for the Self-Insured Retention
of the Pool. Some uninsured areas (this is not an ail inclusive list, significant uninsured
areas are not listed) are:
The following apply only to extent that insurance is not provided by the Specific Excess
Insurance.
Causes or" action seeking only non-monetary claims such as injunctive and declaratory
relief
Payment of attorney's fees of opposing counsel or other costs where a judgement
providing no other monetary relief to the plaintiff is entered
Causes of action where plaintiff seeks no damages but only return of tax funds or any
other funds alleged to have been paid to or received by the Member in error or without
authority by law
Liability from Inverse condemnation and imminent domain
Causes of action grounded solely in contract except for validly extended contractual
obligations of Members to indemnify third-parties
Workers' Compensation, Employee Benefits type insurance, Aircraft
Liability from Utility Service Interruption
Damage to tragic signs & equipment, sewer and other underground pipes, land, water,
roads, sidewalks, bridges, dams, transmissions lines, and utility lines. Except
coverage is provided for:
Westerville underground sewers, traffic signals & control units, signs, sirens,
electric utility wires, transformers, poles
Dublin roads, sidewalks, underground pipes
Joint Ventures
Injury to volunteers
Tax interruption
Damage to Member facilities location in Flood in Zone A, unless Federal Flood
insurance is purchased
Cor-by-D
Appendix E
Amount and Limits of Specific Excess Insurance
':. The initial amounts and limits of Specific Excess Insurance shall be as per proposal dated
August 1, 1997 from Arthur J. Gallagher & Co. (attached). These amounts and limits
may be changed in the future as determined by the Board of Trustees.
A summary of the amounts and limits of Specific Excess Insurance is on following pages
of this Appendix.
Claims are paid in four levels:
1) Deductible
2) Pooled Losses
3) Specific Excess Insurance
4) Above insurance limits
paid by individual Member
paid by Association
paid by insurance company
paid by individual Member
The amounts of these levels are:
1) Deductible
Property, Crime, and Automobile Physical Damage
$500 per occurrence except $25,000 for Upper Arlington parked vehicles
X500 amount increases to X1,000 if Annual Aggregate Stop Loss if exceeded
Except X25,000 for Flood and 5% deductible for Earthquake
Liability
X100,000 per occurrence -Upper Arlington only
2) Pooled Losses (amounts excess of Level #1)
Property, Crime, and Automobile Physical Damage
X25,000 per occurrence
Liability
$50,000 per occurrence
Maximum for Combined Occurrence
X50, 000
Note, Upper Arlington liability losses and Automobile Physical Damage to parked
vehicles are not included in this Level.
3) Specific Excess Insurance (amounts excess of Level #1 + #2)
Claims excess of above Level #2 to limits of Specific Excess Insurance
Note, Upper Arlington liability claims are excess of $100,000 and Automobile
Physical Damage to parked vehicles are excess $25,000.
4) Above Insurance Limits (amounts excess of Level #1 + #2 + #3)
Loss amounts greater than total of Levels #1 plus #2 plus #3 are the sole
responsibility of the Member who had the loss.
Boiler & Machinery losses are not pooled
Level #1 deductibles are:
Damage to Object
Transformers
All other objects
Contingent Loss
Electric substation
All other
Only levels #1, #3, and #4 apply.
100 per KVA subject to $5,000 minimum
$1,000
$5, 000
12 hour waiting
Level #3 is generally $50,000,000. See proposal dated August 1, 1997 from Arthur
J. Gallagher & Co. for details.
Level #4 is excess of level #3.
Cor-by-E
~~
Amounts and Limits of Specific Excess Insurance
~""` Type Insurance Limits
Property 95, 000, 000
Flood 5,000,000 (a) (b)
Earthquake 5,000,000 (a)
Other (c) 15,993,000
Crime
Employee Dishonesty (d) 1,000,000
Money & Securities 100,000
Depositor's Forgery 500,000
Automobile Liability 1 000 000
Automobile Physical Damage see below (e)
General Liability (f) 1 000 000
Law Enforcement Liability in General Liability
Public Official Liability 1 000 000 (a)
Excess Liability 20 000 000 (a)
Boiler & Machinery 50,000,000 (g)
(a) annual aggregate per Member
(b) excess coverage in Flood Zone A
(c) includes Inland Marine/ Mobile Equipment /Contractor's Equipment,
EDP Equipment /Media /Extra Expense, Valuable Papers, Fine Arts,
Accounts Receivable, Extra Expense/Business Interruption, Transit
(d) includes Faithful Performance
(e) Actual Cash Value except P.epair /Replacement cost endorsement for
Fire Trucks and Ambulances
(f) includes Employee Benefit Liability, Ohio Stop Gap, EMT, Fire
(g) Insurance is not included in pool
cor-bye2
,~,_,a
.~
Appendix F
Aggregate Stop Loss Insurance
The Aggregate Stop Loss Insurance provided by the Association shall be as per proposal
dated August 1, 1997 from Arthur J. Gallagher & Co. This may be changed or eliminated
in the future as determined by the Board of Trustees.
Initial Aggregate Stop Loss Insurance shall be $125,000 aggregate per year.
This limits maximum Association payment under Level #2 (Appendix E) to $125,000 for
all claims or loss combined during the pool (insurance policy) year.
Cor-by-F
,~;,..~
ti;`f. -1 i' 9t1(FR(I 1~ ~ 12 W~TSOV WY~TT TELL 1 810 ,iS8 i i01 P. 009
ENCLOSUit2E 3
' ' Concept and Structure of Pooling
. ,
Conceptually, there are se~leral methods of financing losses -- i.e., paying claims. On one end
of the spectrum is retentio.~ of losses by an individual organization. On the other end of the
spectnun, is transferring tosses to a third party such as an insurance company. In between is
pooling. Pooling is a sliar~ing of risk anions pool members. In actual practice, most
organizations use a combuiation of loss financing techniques to provide coverage.
Insurance policies normall~ have a deductible. Therefore, the policyholder would both be
retainins risk and transferring risk, the main difference being a difference of degree.
Similarly, pool members v~.~ould share risk up to a specified level, normally known as the
attachment point. Above that level, excess insurance or reinsurance generally would be
purchased to protect the ~fu nds of the pool from an undtily large loss.
i
Therefore, from the individual member's standpoint, a loss financing packave put together by
the pool would include:
• Retention of 'risk (deductibles on some coverage)
• Sharing of risk Ibelow attachment point of excess insurance)
• Transferring of (risk (above attachment point)
From the group's standpoint, the process of poolins entails a purchasing cooperative
negotiating instuance co~e~age in excess oFa collective deductible.
Reinsurance or excess ins;~rance is a safeguard for pools -- as it is for insurance companies.
There are two types of reinurance/excess insurance -- specific and aggregate.
Specifec reinsurance wi~l lirovide coverage on those portions of a loss which exceed a
specified level -- i.e., attaclunent point.
Aggregate reinsurance ~~iil pay claims once an accumulation of claims (not reaching the
specific attachment point}:caches a specified level during the policy period. This level is
variously referred to as the (loss fund or aggregate retention.
Features of pooling which ~re commonly acknowledSed as advantages include the following:
Ease of formati~ n because of lower capitaliza[ion cost required in comparison with
insurance conlp3r-ies
• Reduction or elimination of overhend items -such as:
- Agent's commissions
i
.;
w:~
'ytaY. -1 i' 4~6IFRI1 1,i:1? W,aTSON WY~TT TEL:1 810 ~S8 i i01 P. 010
ENCLOSURE 3
- Premium taxes
- Profits tl outride shazeho]ders
- Income tar
• Interest earning; from pool contributions accrue to members
• Greater poteriticl .for involvement by individual members in shaping loss
prevention p o~~rams
.~. ~
• More flexibtltt~~l in handling claims
• Group purchasi Ing power for excess/reinsurance coverage
• Greater speciali~iation, leading to better control; i.e., pools tend to focus on one
industry group, (whereas most insurers attempt to deal with multiplicity of
industries.
.~
Features often cited by rns~i ranee industry spokespersons as disadvantages of pools include
the following items:
• Lack of proven track record
• Less financial skrength than insurance companies because of smaller size
• Assessibility pr~ivisions
`"~` • Lack of regulallion
~i
• Lack of basis! o:i comparison; i.e., no standardized rating service, such as Bests or
uniform accoun~mg system
To some extent these itein:~ have proven to be overrated and/or mitigated by recent
developments. These items are discussed in the following section entitled Performance of
Pools. '
i
Performance of Pools
I
There have been htmdreds ~f casualty-property pools formed in the United States over the past
20 years. 1 am not aware of any public entity casualty/property pools which have gone
barilaupt: Most pools enecluntering financial difficulties appear to have been employee benefit
pools.
The first casualty/property pools in Ohio began in the mid-eighties. We believe there are
approximately a dozen pools operating in Ohio under the enabling legislation which would
apply to yo«r program. j
I
' I
~'°~ Cuncntly, we estimate poo~s provide coverage to approximately 40 - 50% of municipalities in
the State oPOllio.
'I
i
.~ ,
.~Y. -1 iy 9F,(FRI 1 1~:1~ W:~TSOV WY~TT TEL:1 810 ~~8 -r i01 P. Ol t
r
ENCLOSURE3
II
Overall developments hav+i diminished this significance of some features previously cited as
disadvantages -- as outlined below:
Track Record -- While still young by insurance company standards, pools have made
believers out of members. (They have exhibited greater premium stability than commercial
insurers. There have been ycry few withdrawals by members.
Less Financial Strengtlc -~~ Size remains smaller than most insurers. Generally, balance sheets
seem to be improving. (2uality of reinsurance seems to be improving, with insurers providing
coverage to muricipalit~{ i~idividually now also providing reinsurance and excess coverage to
pools. This is probably bo~.h recognition that pools are here to stay and manifestation of the
current soft market.
i
Assessibiliry Provisions ~-- I bile commonly noted as a de ficiency, these provisions do provide
an element of. security to' tl~e survival of pools. There have been limited cases of assessment.
The effect on member fma~icial statement is generally similar to a rate increase by insurance
companies. ~
Lack oJRe~ulation -- Rec I nt trends have been for states to tighten up resulations pertaining to
pools.
.,. Lack of Basis of Compari,~;on -- Effective June 15, 1990, accounting standards issued by the
Governmental Accounting Standards Board through GASB Statement 10 take force. As of
~...• yet, there is nothing comparable to Best's Ratings applicable to pools. However, most
reinsurer/excess insurers providing coverage to pools can be researched in Bests and other
rating services.
! Gallagher as a Pool Provider
Nationally, Arthur 7. Gallaher is among the top servicing agents for public entities in the
country. I have reviewed r"uthur J. Gallagher and their affiliate Gallagher Bassert's services
and work products as a risl~~ manager fora 28 school district pool (the MA1SL Trust) and as a
consultant for municipaliti+~s and school districts. While in the role of risk manasement
consultant for individua]iclients. I have not always recommended Gallagher. However, in
virtually all instances I can recall involving Gallagher, they have submitted proposals
deserving consideration.! Luring my eight years tenure as risk manager with the MAISL Trust,
I have observed a very h:gli level of satisfaction. This has been reflected by the absence of
attrition and very high rrtar!~ s given in client satisfaction questionnaires.
;~
~~
I
POLITICAL SUBDIVISION TORT LIABILITY
The Ohio Municipal League Joint Self•
Insurance Pool, John E. Gotherman. 40 Cities
do Villages 7 (March 1992).
Pcesent Wrong, Prior Wrongdoing-Cur•
rent Municipal Insurer htay Be Liable, David
Motes of Decisions and Opinions
Collective bargaining I
Payment 3
Self-Insurance 2
1. Collective bargaining
Even though the state employment rela-
tions board has held that the issue of whether
a public employer should buy liability insur-
ance Eor its employees or insure them itself is
not a mandatory subject of collective bargain-
ing, it is mandatory Eor the employer to bar-
gain about the effects of this decision on work-
ing conditions; refusal to bargain is an unfair
labor practice under RC 4117.11(A)(1) and
4l 17.11(A)(5). Ohio Assn of Public Employees
v Wilmington City School Dist Bd of Ed, 1989
SERB 4-70 (CP, Franklin. 4.21.89).
While the purchase of liability insurance by
a school board to cover its employees is not a
mandatory subject Eor collective bargaining,
the board's election under RC 2744.08 of a
policy of insurance orself-insurance is a deci-
sion affecting a "term or condition" of
employment, and the school board's refusal to
bargain on the matter is thus an unfair labor
practice under RC 41 1 i.l 1. In re Wilmington
City School Disc Bd of Ed, SERB 87.005
(4.9.87).
2. Self-insurance
A county agricultural society established
under RC 1711.01 may, pursuant to RC
274-3.08(A)(2)(a), establish and maintain aself-
insurance program relative to its and its
employees' potential liability in damages in
civil actions based on an act or omission of
2744.081
E. Cruikshank, Esq. 3 Gothcrman's Ohio Muni
Sere 57 (M1tay/June 1991).
Subrogation against Political Subdivisions,
Stanley B. Kent. 61 Clev Bar 1 373 (October
1990).
the society or its employees in connection
with a governmental or proprietary function.
oAC ss-o34.
3. Payment
The cost of insurance covering liability that
may be imposed upon a county under RC
2744.02(B)(1) or RC 274-i.02(B)(2) for acts or
omissions of the county engineer or his
employees while operating motor vehicles or
ocher heavy equipment or machinery in con-
nection with the engineer's statutory responsi-
bilities is a "cost of operation of the office of
county engineer" For purposes of RC
315.12(A). Pursuant to RC 2744.08(A)(2)(a),
the cost of that insurance may be allocated to
and paid out of the portion of the county engi•
neer's budget that is fundCd with state motor
vehicle license tax and motor vehicle fuel
excise tax revenues under RC 315.12. OAG
94-031.
Pursuant to RC 315. t 2(A), state motor vehi-
cle license tax revenues distributed to a
county under RC -3501.0 may be expended in
satisfaction of costs incurred in connection
with a county self-insurance program that are
allocated and charged to the county engi-
neer's office in accordance with the terms of
RC 2744.08(A)(2)(a). OAG 33.067.
Pursuant to RC 315.12(,0, motor vehicle
Fuel excise tax revenues distributed to a
county under RC 5735.27 may be expended in
satisfaction of costs incurred in connection
with a county self-insurance program that are
allocated and charged to the county engi-
neer's office in accordance with RC
2744.08(A)(2)(a). OAG 33-067.
2744.081 Joint self-insurance pools; reports; joint risk-management
programs
A Re ardless of whether a olitical subdivision, under section 2744.08 of
the Revised Code secures a po icy or po icies o to t tty tnsurance, esta is es
claims, ex ense, loss, and damage that arises, or is claimed to have arisen,
From an act or omission o the politica su ivision or anv o its employees in
991
2744.081 COURTS-GEiiIERAL PROVISIONS- SPECIAL RE~~IEDIES POLI
~;.
~~,
connection with a governmental or proprietary function and to indemnify or prove:
hold harmless the subdivtsion's employees against such loss or damage joint s
All of the Following apply to a joint self-insurance pool under this section: (C)
(1) Such funds shall be reserved as are necessary, in the exercise oFsound any a'
and prudent actuarial judgment, to cover potential political subdivision and Eor th,
employee liability, expense, loss, and damage. A report of amounts so reserved pool. l
and disbursements made From such funds, together with a written report of a to the
member of the American academy of actuaries certifying whether the amounts other I
reserved conform to the requirements of this division, are computed in actor- joint se
dance with accepted loss reserving standards, and are Fairly stated in actor- legal e
dance with sound loss reserving principles, shall be prepared and maintained insurat
in the office of the pool administrator described in division (A)(2) of this admini
section. The report shall be prepared and maintained on or before the last day to this
of Ntarch for the preceding calendar year or, if the joint self-insurance pool's (D)
Fiscal year is other than a calendar year, not later than ninety days after the obligat;
' close of the pool's Fiscal year. and m~
~ The report required by this division shall include, but not be limited to
~ Hance c
,
disbursements made for the administration of the pool, including claims paid PurPos,
,
costs of the legal representation of political subdivisions and employees
and expense
,
Fees paid to consultants. othenvi
~ The pool administrator described in division (A)(2) of this section shall fishing
reset-~~e
make the report required by this division available Eor inspection by any of the R
person at all reasonable times during regular business hours, and, upon the
'l I
i
request of such person, shall make copies of the report available at cost within
~ n
ts
a reasonable period of time a politic
.
~ A contract ma be awarded, without the necessity of competitive bid- procedu
an electi
ding to an erson, olitical su ivision, non ro t co oration or anize
under Cha ter 1702. of the Revised Co e
or re iona council of the bone
exceedir
,
overnments
created undec Cha ter 167. of the Revised Code or u oses o administration
' bonds fe
of a
oint self-insurance ool. No such contracts al e entered into wit out
f
ll
i
bl Bond
u
,- .r
ot, u
ic disclosure o all terms an con itions. uc isc osure s a 1
'nclude
at a minimu
i lacing th~
,
m, a statement
stinQ a re resentanons ma e in connec-
-ton with anv possible savings an osses resu ling om sue contract and 133.0, 1
potential liabiluy of anv polutcal subdtvtston or employe The proposed con- Revised
tact and statement shall be disclosed and resented at a meeting of the
political subdivision not less than one wee
ri (E)(1)
i
~
p
or tot e me ina at whic~ t e
~ol,tical subdtvtston authorizes the contract
~ nsurance
. anv one c
(3) A joint self-insurance pool shall include a contract with a member of the Eor the pt
American academy of actuaries for the preparation of the written evaluation of pool:
the reserve funds required under division (A)(1) of thi
i (a) Pul:
s sect
on.
(4) A joint self-insurance pool may allocate the costs of funding the pool (b) Ind
among the Funds or accounts in the treasuries of the political subdivisions on against of
the basis of their relative exposure and loss e
i and use o
xper
ence.
(B) Ttvo or more political subdivisions may also authorize the establishment (c) Airc
and maintenance of a joint risk-management program, including but not lim- with the c
iced to the employment of risk managers and consultants, Eor the purpose of (d) Fide
992
POLITICAL SUBDIVISIO~~I TORT LIABILITY 2744.081
preventing and reducing the risks covered by insurance, self-insurance, or
joint self-insurance programs.
(C) A political subdivision is not liable under a joint selF-insurance pool for
any amount in excess of amounts payable pursuant to the written agreement
. Eor the participation of the political subdivision in the joint self-insurance
pool. Under a joint self-insurance pool agreement a political subdivision may,
to the extent permitted under the written agreement, assume the risks of any
other political subdivision, including the indemnification of its employees. A
joint self-insurance pool, established under this section, is deemed a separate
legal entity for the public purpose of enabling the members of the joint selE-
insurance pool to obtain insurance or to provide Eor a Formalized, jointly
administered self-insurance fund Eor its members. An entity created pursuant
to this section is exempt from all state and local taxes.
(D) Any political subdivision may issue general obligation bonds, or special
obligation bonds which are not payable from real or personal property taxes,
and may also issue notes in anticipation of such bonds, pursuant to an ordi-
nance or resolution of its legislative authority or other governing body for the
purpose of providing funds to pay judgments, losses, damages, and the
expenses of litigation or settlement of claims, whether by way of a reserve or
otherwise, and to pay the political subdivision's portion of the cost of estab-
lishing and maintaining a joint self-insurance pool or to provide Eor the
reserve in the special fund authorized by division (A)(2)(a) of section ?744.08
of the Revised Code. -
In its ordinance or resolution authorizing bonds or notes under this section,
a political subdivision may elect to issue such bonds or notes under the
procedures set forth in Chapter 133. of the Revised Code. In the event of such
an election, notwithstanding Chapter 133. of the Revised Code, the maturity of
the bonds may be for any period authorized in the ordinance or resolution not
exceeding twenty years, which period shall be the maximum maturity of the
bonds Eor purposes of section 133.?? of the Revised Code.
Bonds and notes issued under this section shall not be considered in calcu-
lacing the net indebtedness of the political subdivision under sections 133.04,
133.05, 133.06, and 133.07 of the Revised Code. Sections 9.98 to 9.983 of the
Revised Code apply to bonds or notes authorized under this section.
(E)(1) A joint selF-insurance pool, in addition to its powers to provide selE-
insurance against any and all liabilities under this chapter, may also include
any one or more of the Following Forms of property or casualty selF-insurance
Eor the purpose of covering any other liabilities or risks of the members of the
pool:
(a) Public general liability, proFessional liability, or employees liability;
(b) Individual or fleet motor vehicle or automobile liability and protection
against other liability and loss associated with the ownership, maintenance,
and use of motor vehicles;
(c) Aircraft liability and protection against other liability and loss associated
with the ownership, maintenance, and~use of aircraft;
(d) Fidelity, surety, and guarantee;
993
2744.081 COURTS-GENERAL PROVISIONS- SPECIAL REiViEDIES
(e) Loss or damage to property and loss of use and occupancy of property by
fire, lightning, hail, tempest, E1ood, earthquake, or snow, explosion, accident,
or ocher risk;
(F) Marine, inland transportation and navigation, boiler, containers, pipes,
engines, Elyw•heels, elevators, and machinery;
(g) Environmental impairment;
(h) Loss or damage by any hazard upon any other risk to which political
w subdivisions are subject, which is not prohibited by statute or at common law
from being the subject of casualty or property insurance.
(2) A joint self-insurance pool is not an insurance company. Its operation
does not constitute doing an insurance business and is not subject to the
insurance laws of this state.
(F) A public official or employee of a political subdivision who is or
becomes a member of the governing body of a joint self-insurance pool in
which the political subdivision participates is not in violation of division (D) or
(E) of section 102.03, division (C) of section 102.04, or section 2921.42 of the
Revised Code as a result of the political subdivision's entering under this
section into the written agreement to participate in the pool or into any
contract with the pool. -~
(G) This section shall not be construed to affect the ability of any political
subdivision to self-insure under the authority conferred by any other section of
the Revised Code.
(1994 H 213, eff. 10-6-94; 1993 H 1~2, eft. 7.1-93; 1989 H 230; 1986 H 875)
Historical and Statutory Notes
Amendment I~[ote: 1994 H 213 deleted
"political subdivision" before "joint self-insur-
ance pool" throughout; designated division
(D); redesignated former division (D) as divi-
sion (E); added division (E~; and redesignated
former division (E) as division (G).
Amendment [Mote: 1993 H 152 substi•
cured "prepared and maintained in the ofnce
of the pool administrator described in division
(A)(2) of this section. The report shall be pre•
pared and maintained on or before the last
day of March for the preceding calendar year
or, iE the joint self-insurance pool's fiscal year
is other than a calendar year, not later than
ninety da}•s afte- the close of the pool's fiscal
near" For "submitted, on or before the last day
of March for the preceding calendar year, to
the superintendent of insurance for his
approval. The superintendent shall review the
report for the purpose of determining whether
the reserves of the pool are adequate in accor•
dance with reserve standards that would be
applicable to a private insurance company
writing the same coverages. The joint self-
insurance pool shall pay the reasonable costs
and expenses incurred in the review of the
actuarial report or in any other investigation
that the superintendent considers necessary.
The superintendent may adopt any rules
under Chapter l l9. of the Revised Code that
he considers appropriate Eor accomplishing
the purpose of division (A)(1) of this section.
The superintendent shall inform the reporting
authority of his approval or disapproval of the
report. [n the case of a disapproval, the super
intendent shall order the reporting authority
to comply with this division within a reasona-
ble period of time under the circumstances to
be determined by the superintendent" in the
first paragraph of division (A)(1); and added
the final paragraph oFdivision (A)(1).
Cross References
Determination of net indebtedness of an_v sub-
division, securities issued, 133.04
99.3
POLITIC
Political sui
annual re
Counties +~
htunici-a! Cc
Schcois ~~
WFSTL•~«' T
C.J.S. Counti
C.J.S. `tunic[
C.J.S. Schoo
seq.
Political sub
Pools with o
1. Political s
A count: .
under RC ~l'
2744.03 l (A), j•
sions in es;ab
self-insurance
damages in c
2744.09
This chaF
following:
(A) Civil ;
or anv of its
(B) Civii a
of an emolc
arises out c
political sub
(C) Civil a
cal subdivisi
employ-meat
(D) Civil <
surety bonds
(E) Civii c!
of the Unite.
Revised Code
(19b~ H l-~
Counties ~ = I~
~titunicioai Corac
Schools ~ 39.
WF_STLa«' Topic
~:
CLAIMS ADMINISTRATOR - A person or group of persons, under the supervision of the
Executive Director, ~vho are employed either as employees or independent contractors to
administer the claims made against the Members and other duties which may be assigned by
the Board of Trustees.
°'° ° EXECUTIVE DIRECTOR - A person or group of persons designated by the Association to
perform certain duties related to Risk Management and administration of claims made
against the I/Iembers. The President of the Association shall perform the duties of the
~"" Executive Director unless otherwise assigned or delegated by the Board of Tnistees.
JOINT SELF-INSURANCE - ASelf-Insurance program in which political subdivisions
agree to contribute annual and, where required, Supplementary Payments to support a Risk
Management program, a Joint Self-Insurance Pool and administration of a Joint Self-
Insurance Pool.
JOINT SELF-INSURANCE POOL orPOOL- A legal entity established pursuant to Section
2744.081 of the Ohio Revised Code by the Members for the public purpose of enabling the
Members to obtain insurance or to provide for a formalized, jointly administered Self-
Insurance fund for its Members.
MEMBERS -The Political Sttbdivisions which initially subscribe to or such political
subdivisions as later enter into the intergovernmental Joint Self-Insurance Pool established
by this Agreement and which shall be Members of CORMA SELF-NSURANCE POOL,
Inc. until Termination of membership as hereinafter provided.
POOL CONTRIBUTION FACTOR -Each Member's required portion of the costs of and
the contributions to the Joint Self-Insurance Pool and the Association expressed as a
percentage of total costs and contributions. The procedure to be used and the items to be
considered in determining a Pool Contribution Factor for each Member together with the
initial Pool Contribution Factors for each member are set forth in Appendix B. The Mem-
bers' Pool Contribution Factors shall be reviewed and adopted as part of the annual
Association budget in June of each year.
REGULAR ANNUAL PAYMENT -The total annual contribution computed using the
relevant Pool Contribution Factor of each Member set forth and established in the annual
Association budget for any particular fiscal year for payment of all estimated costs, whether
fixed, variable or otherwise classified, regardless of the amount billed or paid therefore.
RISK i~IA1~IAGEMENT - A program attempting to reduce or limit casualty losses to political
subdivision properties and injuries to persons or property caused by the operations of
political subdivisions.
SELF-INSURANCE -The decision by a political subdivision not to p~irchase insurance
coverage for risks below certain limits; to seek all immunities provided by Ohio law for a
non-insured political subdivision; to rely upon its financial capabilities to pay any losses that
~,~,
-,
soo~~-? ~