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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~~-? ~