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HomeMy WebLinkAboutMINUTES - 11271990 - 1.136 HOUSING /AUTHORITY OF THE COUNTY OF CONTRA COSTA TO: DATE: BOARD OF COMMISSIONERS November 27, 1990 FROM: c�. Perfecto Villarreal , Executive Director SUBJECT: CALIFORNIA HOUSING WORKERS' COMPENSATION AUTHORITY I. RECOMMENDED ACTION: ADOPT Resolution No. 3598 expressing intent to join the California Housing Workers' Compensation Authority and participate in the California Housing Workers' Compensation Authority (CHWCA) pooled workers' compensation self-insurance program provided the minimum program size of $950,000 annual premiums is met, as recommended by the Advisory Housing Commission. II. FINANCIAL IMPACT: CHWCA will provide initial premium savings to its members of up to 10% of State Fund rates, depending upon program entry date and premium payment terms. As the program matures and develops its own rate structure, the premium savings may increase. Additionally, the CHWCA Executive Committee may approve dividends six months after the expiration of the policy term. III. REASONS FOR RECOMMENDATION/BACKGROUND: Nearly all public housing authorities (PHA's) are insured with the State Compensation Insurance Fund (SCIF) . By law, all public agencies in California are required to obtain workers' compensation coverage from SCIF, unless permissibly self-insured. Three California PHA's are permissibly self-insured (Los Angeles, Oakland and San Francisco) . Of the 34 PHA's that responded to an initial feasibility study done by Advanced Risk Management Techniques, Inc. (ARM Tech) , the level of satisfaction with SCIF was mixed. Seventy-one percent (71%) of the respondents were not satisfied with safety services, seventy-eight percent (78%) responding that there were infrequent or no training programs. Safety services are known to have a large impact on control of future loss costs. More than fifty percent (50%) of the responses rates claims handling slow. Adjusters received a fifty percent (50%) favorable rating, with frequent employee turnover cited as a problem. Average dividends have decreased over the past four years. The feasibility study concluded that a pooled self-insurance program for California PHA's is feasible and is a cost effective method of financing future. CONTINUED ON ATTACHMENT: YES SIGNATU(tE: RECOMMENDATION OF EXECUTIVE DIRECTOR RECOMMENDATION OF BOARD COMMITTEE APPROVE OTHER SIGNATURE(S) ACTION OF BOARD ON NUJV 2 7 AM APPROVED AS RECOMMENDED OTHER VOTE OF COMMISSIONERS X UNANIMOUS (ABSENT ) I HEREBY CERTIFY THAT THIS A TRUE AND AYES: NOES: CORRECT COPY OF AN ACTION TAKEN AND ABSENT: ABSTAIN: ENTERED ON THE MINUTES OF THE BOARD OF COMMISSIONERS ON THE DATE SHOWN. CC: ATTESTED Nov 2 7 1990 Phil Batchelor, Clerk of the Board of Commissioners DEPUTY M362/7-98 BY 1 � ' Board of Commissioners November 27, 1990 Page -2- worker's compensation costs. The expected program loss ratio is 62%, an acceptable level which allows payment of dividends and accumulation of unencumbered reserve funds. Generally accepted advantages of a pooled self-insurance program for workers' compensation are: 1. Lower Administrative Costs. Cost savings may be achieved through lower overhead costs in handling claims and administering the program than are available through the purchase of insurance from the SCIF. 2. Interest Income from Cash Flow. Reserves established for claims that have occurred, but for which payments are to be made in the future, are not cash outlays to an insurer. Typically, such loss reserves represent a considerable sum of money which is not available for use to the insured. Under a self-insurance program, a self-insured entity holds the funds until losses are paid, earning interest income on these funds and thereby reducing costs. 3. Improved Claims Administration Services. Claims handling may be expedited and the quality of claims handling services improved by the administration firm selected by the pool . Improved claims handling will produce lower claims payments producing a direct cost benefit. The SCIF does not permit review and involvement of its policy holders in the claims handling process. Claim payments may be more effectively controlled, by adopting a firm stance on questionable claims. Under insurance, the SCIF establishes claims adjusting philosophies. 4. Improved Loss Control Services. Quality of loss control services can be improved and more easily directed to problem loss areas. The SCIF is not known for providing consistent high-quality loss control services to PHA's. 5. Fewer Employee Injuries. Employee morale may improve through reduction of losses facilitated by improved loss control programs and more efficient claims handling techniques. This, of course, requires a firm commitment by management to follow loss control programs which may be implemented. A formation committee of statewide PHA representatives was formed in February to develop the program implementation, organization and management structure, and propose a Joint Powers Authority Agreement and Bylaws. Additionally, the Formation Committee determined that due to lower expected administration costs, 16.69., compared to 35% for SCIF, initial premium reductions of up to 10% and potential dividends of up to 15% may be earned, with dividends being calculated six months after expiration of the policy term. At its Regular Meeting on Monday, November 19, 1990, the Advisory Housing Commission voted to recommend adoption of Resolution No. 3598 expressing intent to join the California Housing Workers' .Compensation Authority and participate in the CHWCA pooled workers' compensation self-insurance program provided the minimum, - program size of $950,000 annual premiums is met. IV. CONSEQUENCES OF NEGATIVE ACTION: Should the Board of Commissioners elect to not adopt Resolution No. 3598, expressing intent to joing CHWCA and participate in the CHWCA pooled workers' compensation program, the Housing Authority of the County of Contra Costa would forfeit the opportunity to lower its workers' compensation administrative,- costs, obtain interest income from cash flow and receive improved claims administration and loss control services. cc: County Counsel County Administrator Housing Authority THE BOARD OF COMMISSIONERS, HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA RESOLUTION NO. 3598 EXPRESSING INTENT TO JOIN THE CALIFORNIA HOUSING WORKERS' COMPENSATION AUTHORITY AND AUTHORIZING SELF -INSURANCE APPLICATION WHEREAS, California Government Code §990.8 provides that two or more local entities may, by a joint powers agreement, provide insurance for any purpose by any one or more methods specificed in Government Code §990.4 and such joint pooling of self-insured claims or losses is not considered insurance nor subject to regulation under the Insurnace Code; and, WHEREAS, the Board of Commissioners of the Housing Authority of the County of Contra Costa supports the efforts of the formation committee of California Housing Workers' Compensation Authority to reduce the workers' compensation insurance costs of its potential members through the implementation-of a pooled workers' compensation insurance program; and, WHEREAS, the Board of Commissioners of the Housing Authority of the County of Contra Costa desire to join together with like agencies for the purpose of jointly establishing self-insurance reserve funds, and jointly purchasing excess insurance risk management and administrative services: NOW, THEREFORE, the Board of Commissioners of the Housing Authority of the County of Contra Costa does hereby resolve, determine and order as follows: In consideration of the mutual advantages to be derived therefrom, the Board of Commissioners of the County of Contra Costa hereby expresses its intent to participate in such pooled workers' compensation insurance program provided there is a sufficient number of agencies entering the program and its is economically feasible to implement the program; Furthermore, the Executive Director is hereby authorized and empowered to make application to the Director of Industrial Relations, State of California, for a Certificate of Consent to Self Insure workers' compensation liabilities on behalf of the Housing Authority of the County of Contra Costa and to execute any and all documents required for such application. ADOPTED ON November 27 , 199 Oby the following vote of the Commissioners: AYES: Commissioners Powe:rs7, S-chro.der► McPe.ak_, Torlakson, Fanden NOES None ABSENT: None 1 hereby certify that this is a true and correct copy of ABSTAIN: None an action taken and entered on the minutes of the Board of Supervisorsqq,tha 101M.0ATTESTED: IY a y cc: County Administrator PHIL BATCHELOR,Clerk of the Board County Counsel of SwoeMsors and Courijly Administrator Housing Authority by �, , .__ __ ,Depute,