HomeMy WebLinkAboutC.C. RES 03-077
RESOLUTION NO. 03-77
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TUSTIN,
CALIFORNIA, APPROVING REVISED GOVERNING DOCUMENTS FOR
THE CALIFORNIA INSURANCE POOL AUTHORITY
WHEREAS, the California Insurance Pool Authority (CIPA) was created in 1978 as
a joint powers agency to administer a program of risk management, self-insurance and
risk sharing; and
WHEREAS, said programs continue to offer significant advantages to the City in
terms of cost, liability protection, and services; and
WHEREAS, the efficient administration of CIPA requires periodic amendments to
the Joint Powers Agreement, By-Laws and Plan Document governing the operations of
CIPA; and
WHEREAS, these revised documents shall be effective immediately upon the
approval by the governing bodies of two-thirds of members of CIPA and may thereafter be
amended in accordance with their terms.
NOW, THEREFORE, the City Council of the City of Tustin, California does hereby
resolve as follows:
Section 1. The amended Joint Powers Agreement entitled "Joint Powers
Agreement for California Insurance Pool Authority" is approved in the form of Exhibit A; and -
Section 2. The revised By-Laws for CIPA entitled "By-Laws of the California
Insurance Pool Authority" is approved in the form of Exhibit B; and
Section 3. The revised Plan Document governing the general liability program
of CIPA entitled "General Liability Self-Insurance and Property Program Plan Document
for California Insurance Pool Authority" is approved in the form of Exhibit C; and
Section 4. The agreement entitled "Agreement Among California Insurance
Pool Authority Workers' Compensation Pool Members and California Insurance Pool
Authority EstabliShing CIPA Workers' Compensation Pool Program" is approved in the
form of Exhibit D.
PASSED AND ADOPTED at a regular meeting of the City Council of the City of
Tustin on the 2nd day of June, 2003.
ATTEST:
PAMELA STOKER, City Clerk
RESOLUTION CERTIFICATION
STATE OF CALIFORNIA )
COUNTY OF ORANGE )SS
CITY OF TUSTIN )
RESOLUTION NO. 03-77
Pamela Stoker, City Clerk and ex-officio Clerk of the City Council of the City of Tustin,
California, does hereby certify that the whole number of the members of the City Council
of the City of Tustin is five; that the above and foregoing Resolution was passed and
adopted at a regular meeting of the City Council held on the 2nd day of June, 2003, by the
following vote:
COUNCILMEMBERAYES: WORLEY, KAWASHIMA, BONE, DAVERT, THOMAS
COUNCILMEMBER NOES' NONE
COUNClLMEMBER ABSTAINED: NONE
COUNClLMEMBER ABSENT: NONE
PAMELA STOKER, City Clerk
OCCRMA-ClPA:Resolution03-77.doc
EXHIBIT A
CALIFORNIA INSURANCE
POOL AUTHORITY
J 0 INT POWERS AGREEMENT
FOR
CALIFORNIA INSURANCE POOL AUTHORITY
017.141266,3
1.0
ARTICLE 1.
ARTICLE 2.
ARTICLE 3.
ARTICLE 4.
ARTICLE
ARTICLE 6.
ARTICLE 7.
ARTICLE 8.
ARTICLE 9.
ARTICLE !0.
ARTICLE 11.
ARTICLE 12.
ARTICLE 13.
ARTICLE 14.
ARTICLE 15.
ARTICLE 16.
ARTICLE 17.
ARTICLE 18.
ARTICLE 19.
ARTICLE 20.
ARTICLE 21.
TABLE OF CONTENTS
JOINT POWERS AG~EMENT FOR
CALIFORNIA INSURANCE POOL AUTHORITY
Page
Definitions ............................................................................... 1
Separate Entity ' 3
System Established ..................................................................... 3
CIPA Powers ........................................................................... 3
Members; Board of Directors ....................................................... 4
Powers of Board ........................................................................ 4
Meetings of the Board ................................................................. 5
Quorum; Voting ........................................................................ 5
Executive Committee .................................................................. 5
CIPA Funds ............................................................................. 5
Term of Agreement .................................................................... 6
Membership Term; Withdrawal; Termination .................................... 6
Disposition of CIPA Property and Funds .......................................... 6
Enforcement ............................................................................. 7
Invalidity ............................................. , ................................... 7
Amendments ............................................................................ 8
Bylaws and Plan Document .......................................................... 8
Prohibition Against Assignment ............ ......................................... 8
Tort Liability ............................................................................ 8
Agreement Complete .................................................................. 9
Date Agreement Effective ............................................................ 9
017.141266.3
1.1
JOINT POWERS AGREEMENT
FOR
CALIFORNIA INSURANCE POOL AUTHORITY
This Agreement is entered into pursuant to the provisions of Chapter 5 (beginning with
Section 6500) of Division 7 of Title 1 of the Government Code authorizing specified local
public entities to exercise jointly the power to provide Risk Management, including insurance,
pursuant to the provisions of Chapter 3 (beginning with Section 989) of Part 6 of Division 3.6
of Title 1 of the Government Code.
WITNESSETH:
WHEREAS, the public interest requires and it is to the mutual interest of the parties
hereto to join together to establish and operate a cooperative program of risk management; and
WHEREAS, the operation of such a Cooperative program is of'such magnitude that it is
necessary for the parties to this Agreement to join together to accomplish the purposes
hereinafter set forth; and
WHEREAS, each of the local public entities which is a party to this Agreement has the
power to establish and operate a program of risk management; and
WHEREAS, Title 1, Division 7, Chapter 5 of the California Government Code
authorizes the joint exercise by two or more local public entities of any power which is
common to each of them; and
WHEREAS, each of the parties to the Agreement desires to join together with the other
parties for the purpose of minimizing risk through any, ali or any combination of the
following: pooling of risk, joint funding of insurance or risk reserves in any legal manner,
formation or rental of a captive insurer, establishing certain self-insured reserves against losses
and jointly purchasing insurance, excess insurance, re-insurance and administrative services in
connection with a cooperative program of risk management;
NOW, THEREFORE, for and in consideration of the mutual advantages to be derived
therefrom and in consideration of the execution of this Agreement by other local public
entities, each of the parties hereto does agree as follows:
ARTICLE 1. DEFINITIONS
The following definitions shall apply to the provisions of this Agreement and its
Bylaws'
(a) "Agreement" or "Joint Powers Agreement" shall mean this "Joint Powers
Agreement for California Insurance Pool Authority," as it may be amended from time to time.
017.14'1266.3
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November 8, 2001
(b) "Authority" or "CIPA" shall mean the California Insurance Pool Authority
created by this Agreement.
(c) "Board of Directors" or "Board" shall mean the governing body of the
Authority.
·
(d) "Claims management" shall mean the process of identifYing, controlling and
resolving demands by individuals, public entities or private entities to recover losses from an
insured, otherwise indemnified, or self-insured entity. Disposing of such demands for payment
requires skills in insurance, law, adjusting/investigation, loss control engineering and general
business. Claims management is the function of supervising legal, adjusting, investigation and
engineering services to resolve such demands.
(e) "Eligible Member" shall mean a Member Agency eligible to vote on a matter
coming before the Board in a given area of risk, due to the Member Agency's participation in
that area of risk. In the case of new areas of risk that CIPA'is considering, "Eligible
Members" shall be all' Members who reasonably expect to'participate in that area. of risk.
(f) "Executive Committee" shall mean the committee of the Board of Directors
responsible for management of the affairs of the Authority between meetings of the Authority.
(g) "General Manager" shall mean the person or entity appointed by the Board and
given responsibility for the management, administration and operation of the cooperative
programs of risk management of the Authority. -
(h) "Local Public Entity" shall mean city, county, public authority and such other
governmental entities as the Authority may determine.
(i) "Member Agency" or "Member" shall mean a Local Public Entity that is a
party to this Agreement.
(j) "Participation" or "Participating" shall mean a Member Agency's action or
state of taking part in the programs of the Authority by doing any, all or any combination of
the following through the Authority with respect to one or more risk areas:
(1)
(2)
(3)
(4)
(5)
(6)
purchase of risk management administrative services;
purchase of insurance or re-insurance;
purchase of claims administration services;
contribution to designated reserve', operating and other funds or costs as
required under the Authority's programs;
payment or providing for payment of assessments, defense costs, claim
and judgment costs and other related costs as required by this Agreement
or the Authority's Bylaws;
participation by the payment of premiums or contributions and entering
into requisite agreements in any pooling of losses, captive insurance
017.141266,3
1.3
November 8, 2001
program or other self-insurance program established and administered by
the Authority.
(k) "Rating Structure" shall mean the means by which premiums, assessments,
contributions to a fund, or allocated expenses are established for a risk area or insurance
program on the basis of conditions which affect the probability of loss.
(1) "Risk Area' shall mean an area of exposure to pure risk of financial loss. As
used herein, this term refers to one of the following fields of exposure: worker's
compensation, public liability, accident and health, unemployment compensation, property
damage and such other areas as the Board shall agree upon.
(m) "Risk Management" shall mean the process of identifying, evaluating, reducing,
sharing, transferring, and eliminating risks. Risk management includes various methods of
funding claims payments. Risk management includes elements of insurance, law,
administration, technology and general business utilized to effectively manage risks.
ARTICLE 2. SEPARATE ENTITY
There is hereby created a separate public entity, the full legal name of which shall be
"California Insurance Pool Authority", and may be referred to herein as "CIPA" or the
"Authority." The Authority is a public entity separate from the parties to this Agreement. The
debts, liabilities and obligations of the Authority shall not be the debts, liabilities or obligations
of the parties to the Agreement.
ARTICLE 3. SYSTEM ESTABLISHED
A risk management system consisting of the parties to this Agreement is hereby
established. This system represents a cooperative program of risk management which may
encompass, but is not limited to, the following risk areas: public liability, worker's
compensation, accident and health, property damage and unemployment compensation and
such other areas as the Board shall agree upon.
ARTICLE 4. CIPA POWERS
(a) CIPA shall have the power and the duty to establish and operate a program of
risk management and provide for its execution either directly by CIPA or by contract.
(b) CIPA is authorized to make and enter into contracts; to employ agents and
employees; to acquire, construct, manage, maintain or operate any building, works or
improvements; to acquire, hold or dispose of property, liabilities or obligations; establish risk
management related lines of credit, to incur indebtedness, liabilities or obligations, to sue and
be sued in its own name, and to exercise all powers necessary and proper to carry out the
terms and provisions of this Agreement, or otherwise authorized by law. The foregoing
017.141266.3
1.4
November 8, 2001
powers include, but are not limited to, those relative to contracting for excess insurance or
re-insurance, risk pooling, including formation of an owned or use of a non-owned captive
insurance company, funding of self-insurance in any legal manner, claims administration
services and consulting services.
(c) The day-to-day operations of CIPA shall be subject to, and shall be governed.by
the Bylaws adopted by the Board.
(d) The powers exercised by the AUthority shall be subject to the restrictions upon
the manner of exercising such powers of a general law city.
ARTICLE 5. MEMBERS; BOARD OF DIRECTORS
(a) Each Member Agency is entitled to the rights and privileges and is subject to the
obligations as provided for in this Agreement and the Bylaws.
(b) A new Member Agency .may be accepted upon application to CIPA and upon
acceptance by the Board by two-thirds vote, and subject to acceptance by the prospective
member of the financial arrangements and fund contributions specified by the then current
members.
(c) Each Member Agency shall be entitled to one voting representative to serve as a
director on the Board.
(d) Each Member Agency's representative shall be designated by appointment by
the member's city council or other governing body. Such governing body may delegate the
authority to appoint that member's representatives to its city manager or other chief executive
officer. Each member also may, in the same manner, appoint one alternate who may attend
meetings and vote in the event of absence of the representative. Each representative and
alternate shall be an officer or employee of the appointing Member Agency.
ARTICLE 6. POWERS OF BOARD
The Board shall have the following powers and functions:
(a) To approve the annual budget of the Authority and any assessments.
(b) To elect a president and vice-president, and establish and appoint such other
officers, including an auditor, clerk and treasurer, as may be necessary or desirable to carry
out the purposes of this Agreement, and to provide therefor in the Bylaws.
(c) To establish such committees as it may, from time. to time, deem necessary to
carry out its purposes, including, but not limited to underwriting and claims committees.
(d) To exercise all of the powers and duties of CIPA, including all business
assigned to the Executive Committee, in the absence of the Executive Committee.
017.!41266..3
1.5
November 8, 2001
(e) To approve all changes to the Bylaws. This authority may not be delegated.
(f) To perform such other duties and ~-.nc. tions as are provided for in this
Agreement.
ARTICLE 7. MEETINGS OF THE BOARD '
The Board shall establish a time and place to hold regular meetings not less often than
annually. Meetings shall be conducted pursuant to the most current edition of Roberts Rules of
Order or such other procedural rules as the Board shall adopt.
ARTICLE 8. QUORUM; VOTING
(a) A quorum for the transaction of business by the Board shall consist of a majority
of the directors, or of the Eligible Members, whichever is less.
(b) All matters within the purview of the Board of Directors may be decided by
majority vote of a quorum of the Board, except those matters which the Agreement or Bylaws
specify as requiring a two-thirds vote of the Board must be decided by a vote of two-thirds of
all representatives on the Board.
(c) 'Each director may vote on each matter brought before the Board for decision.
However, if the Board by majority vote designates a particular matter as one which pertains
only to a given risk area (e.g., workers' c_ompensation), or a specific insurance program (e.g.,
self insured pool), then only the representatives of those Eligible Members may vote upon the
matter. This limitation respecting who may vote on certain matters is not intended to prohibit
any Member from expressing its opinion as to how those qualified to vote should vote.
ARTICLE 9. EXECUTIVE COMMITTEE
The Board shall establish an Executive Committee of the Board of Directors which shall
consist of at least three members, as provided in the Bylaws. The president of the Board shall
be a member of the Executive Committee; the remainder of the members may be selected as
provided in the Bylaws. The Executive Committee shall exercise general supervisory and
policy control over the General Manager, and may exercise any and all powers of the Board
between Board meetings and when delegated by the Board, as provided in this Agreement and
the Bylaws. The Executive Committee shall meet at least quarterly.
ARTICLE 10. CIPA FUNDS
The Treasurer of the Authority shall be the depository of the funds of CIPA. The
Treasurer's selection, responsibilities, compensation and related matters shall be governed by
the Bylaws. The Auditor shall be the disbursing officer of CIPA and shall draw warrants
against the funds of CIPA in the treasury when demands are presented and authorized as
designated in the Bylaws. The Board shall require the Treasurer, Auditor and any other
017.141266.3
1.6
November 8, 2001
person delegated charge of CIPA funds, to' be bonded in amounts deemed reasonable by the
Board.
ARTICLE 11. TERM OF AGREEMENT
This Agreement shall continue in effect until it is rescinded by mutual consent of the
parties or terminated by the written consent of two-thirds of all Member Agencies; provided
that this Agreement and CIPA shall continue to exist for the purpose of disposing of all claims,
distributing assets and performing ali other functions necessary to wind up the affairs of CIPA.
The Executive Committee shall be vested with all powers of CIPA for the purpose of winding
up and dissolving the business affairs of CIPA.
ARTICLE 12. MEMBERSHlP TERM; WITHDRAWAL; TERMINATION
(a) A party to this Agreement shall remain a Member Agency for two years from
the date it first joined CIPA; thereafter the Member Agency may withdraw by giving written
notice to the Board or its designee, on or before the next succeeding March 1, of the intent to
withdraw as of 12:01 a.m. on the next July 1.
(b) On the July 1 specified in the notice the withdrawing party shall cease to be a
member of CIPA; however, the withdrawing party shall remain responsible to contribute its
share of premiums, contributions or assessments, as described in Article 13, and shall continue
to comply fully with the terms and conditions of this Agreement as to any claims outstanding
which are likely to involve the Authority. Withdrawal of a party from CIPA shall
automatically concurrently terminate any and ali coverages obtained by and through CIPA as to
the withdrawing party and all additional insureds and named insureds affiliated with the
withdrawing party, excepting only: (1) commercial insurance policies specifically naming the
withdrawing party or related insureds; (2) tail or extended reporting coverage offered by CIPA
and accepted by the withdrawing party; (3) pending covered claims that are being litigated; and
(4) continuation of any coverage provided on an occurrence basis.
(c) The Board shall have the right to terminate, for good cause, any Member
Agency's participation in the Authority, or any program thereof, upon a 2/3 vote of the entire
Board of Directors; provided that a reasonable time shall be afforded, in the discretion of the
Board of Directors, for the Member to seek coverage elsewhere.
(d) The Executive Committee shall have the right to terminate any Member
Agency's participation in the Authority, or any program thereof, upon a majority vote, in the
event of nonpayment of any of the Member Agency's obligations.
ARTICLE 13. DISPOSITION OF CIPA PROPERTY AND FUNDS
(a) A Member Agency may withdraw as a Member in accordance with this
Agreement and the Bylaws, provided that no withdrawing party shall be entitled to payment or
return of any earned premium, contribution, consideration, or property paid or donated by the
party to the Authority, or to any distribution of assets prior to final termination of this
017.141266.3
1.7
November 8, 2001
Agreement, except pursuant to subparagraph (b). The withdrawal or cancellation of any
Member Agency shall not terminate its responsibility to contribute its share of premium or
funds to any insurance program of CIPA or to cooperate with CIPA in the resolution of claims,
until all claims or other unpaid liabilities covering the period the Member Agency was a
participant have been finally resolved and a determination of the final amount of payments due
by the Member Agency or credits for such period has been made by the Authority.
(b) In the event of the dissolution of CIPA or the complete rescission or final
termination of the Joint Powers Agreement by all of the then parties thereto, any assets of
CIPA remaining after all claims and obligations have been paid, and after the payment of all
liabilities, costs, expenses and charges incurred pursuant to this Agreement, or provision made
for the payment of same through establishment of a liquidation fund, purchase of insurance or
reinsurance, or a combination thereof, shall be returned to the then current Members of CIPA
based on their total net contributions from inception, determined as of the date of dissolution,
rescission or final termination. For the purposes of this paragraph "net contributions" shall
mean the sum of actual contributions paid in, less losses and allocated claims expenses, but not
less than zero for any individual Member. Net contributions shall be reduced by any rate
credits given. Losses and allocated claims expenses shall include contributions used to pay for
reinsurance, but not any proceeds therefrom. Net contributions shall include any interest
actually earned thereon by the Authority. The Authority may adjust the interest earnings
attributable to the contributions of a Member whose net contribution is zero or less based on a
reasonable estimate of any periods during which no interest was earned.
ARTICLE 14. ENFORCEMENT
(a) CIPA shall have the authority to enforce this Agreement. Any dispute regarding
the interpretation of this Agreement or the Bylaws adopted hereunder, between or among CIPA
and any Member Agency or Agencies shall be submitted to final and binding arbitration in
accordance with the procedures established in the California Code of Civil Procedure and
referred to the Judicial Arbitration and Mediation Service or other arbiter as may be agreed by
the parties; except that the Authority or any affected Member may sue for the collection or
return of assessments, contributions or premiums for a given year of coverage; provided that
the affected member shall have first exhausted its administrative remedies and timely presented
a claim therefor to the Authority. As to such a claim for the collection or return of funds, the
prevailing party shall be entitled to reasonable attorney's fees.
ARTICLE 15. INVALIDITY
Should any portion, term, condition or provision of this Agreement be determined by a
court of competent jurisdiction to be illegal and in conflict with any law of the State of
California or be otherwise rendered unenforceable or ineffectual, the validity of the remaining
portions, terms, conditions and provisions shall not be affected thereby.
017.141266.3
1.8
November 8, 2001
ARTICLE 16. AMENDMENTS
No amendments to this Agreement shall be effective unless accomplished by written
agreement executed by the governing bodies of at least two-thirds of the parties to this
Agreement. Reasonable prior notice of any Board meeting in which amendments are to be
voted upon must be given to each director in writing. Such notice 'must include'mention of the
nature of the amendments to be voted upon.
ARTICLE 17. BYLAWS AND PLAN DOCUMENT'
(a) By a two-thirds vote of the entire Board, the Board shall develop and adopt
Bylaws and a Plan Document to govern the day-to-day operations of CIPA and may amend
such documents from time to time.
(b) Each Member Agency agrees to comply with and be bound by the provisions of
the Bylaws as the same may be amended from time to time. Notwithstanding any provision in.
the Bylaws or Plan Document adopted by the Board in the event of any conflict between this
Agreement and the Bylaws or Plan Document, this Agreement shall prevail; in the event of any
conflict between the Bylaws and the Plan Document, the Bylaws shall prevail.
ARTICLE 18. PROHIBITION AGAINST ASSIGNMENT
No Member Agency may assign any right, claim or interest it may have under this
Agreement, and no creditor, _assignee or third party beneficiary of any Member shall have any
right, claim or title to any part, share, interest, fund, premium or asset of the Authority.
ARTICLE 19. TORT LIABILITY
As to any debts or liabilities based upon Section 895.2 of the Government Code of the
State of California, except as otherwise provided by individual contract, pursuant to the
provisions of Section 895.4, of the Government Code of the State of California, this paragraph
allocates such liabilities. Each Member shall be liable for its pro rata share of both the debts
and liabilities of the Authority to the extent such debts and liabilities exceed the available assets
of the Authority, including any collectible coverage or insurance, and the Member's pro rata
share of all debts and liabilities for claims against all Members, arising out of facts: (i) in the
performance of this agreement, and (ii) occurring while a Member. A Member's pro rata
share of debts and liabilities shall be calculated by dividing each such Member's (or former
Member's) total contributions paid, by the total of all contributions paid by all such Members,
from the inception of the Authority. To the extent required to achieve such purpose, each
Member indenmifies the other Participants for any loss, cost or expense that may be imposed
upon such other Members. The rules therefor as set forth in Civil Code Section 2778 are
hereby made a part of this Agreement. For the purposes of this paragraph, "contributions"
shall include all funds paid to the Authority for participation in the programs of the Authority
(including group excess liability insurance programs), any liability protection programs
operated on a group self-insurance basis by the Authority, and for operation of the Authority.
017.141266.3
1.9
November 8, 2001
However, "contributions" shall not include payments made to the Authority which are used for
purchase of commercial insurance for other risks on a primary basis.
ARTICLE 20. AGREEMENT COMPLETE
The foregoing constitutes the full and complete Agreement of the parties. There are no
oral understandings or agreements not set forth in writing herein.
ARTICLE 21. DATE AGREEMENT EFFECTIVE
This Agreement shall become effective as of
accordance with its terms.
,2001 upon approval in
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their proper officers thereunto duly authorized.
Executed before me this
~ day of ,2001
CITY OF BREA
City Clerk By.
Executed before me this
~ day of ,2001
CITY OF CYPRESS
City Clerk By
Executed before me this
~ day of ,2001
CITY OF IRVINE
City Clerk By
Executed before me this
017.141266.3
1.10
November 8, 2001
day of ,2001 CITY OF LAGUNA BEACH
City Clerk
By,
Executed before me this
day of
,2001
CITY OF LA PALMA
City Clerk
By
Executed before me this
__ day of
,2001
CITY OF LOS ALAMITOS
City Clerk
By,
Executed before me this
__ day of
,2001
CITY OF ORANGE
City Clerk
By.
Executed before me this
~ day of
,2001
CITY OF SAN CLEMENTE
City Clerk
By.
Executed before me this
__ day of
,2001
CITY OF SEAL BEACH
017.141266.3
1.11
November 8, 2001
City Clerk
By
Executed before me this
'day of.
,2001
CITY OF STANTON
City Clerk
By
Executed before me this
~day of
,2001
CITY OF TUSTIN
City Clerk
By
Executed before me-this
~ day of
,2001
CITY OF WESTMINSTER
City Clerk
By.
Executed before me this
~day of
,2001
CITY OF YORBA LINDA
City Clerk
By
017,141266.3
1.12
November 8, 2001
EXHIBIT B
BY-LAWS
OF THE
CALIFORNIA INSURANCE POOL AUTHORITY
017.133654.3 1.13
TABLE OF CONTENTS
Page
SEC 1.1 PURPOSES ................................................................................... 1
SEC. 2.1 RISK MANAGEMENT BOARD ........................................................ 2
SEC. 2.110 MEETINGS OF THE BOARD ........................................................... 3
SEC. 2.120 BOARD AND RISK MANAGER ........................................................ 3
SEC. 3 1 EXECUTIVE COMMITTEE ............................................................. 3
SEC. 3 120 RESPONSIBILITIES; DELEGABILITY ............................................... 4
SEC. 3 130 RESPONSIBILITIES; ADVISORY ...................................................... 4
SEC. 3 140 MEETINGS OF THE COMMITTEE ................................................... 5
SEC. 3 150 REPORTS .................................................................................... 5
SEC. 3 160 APPEAL TO BOARD ...................................................................... 5
SEC. 3.2 OTHER COMMITTEES ................................................................... 5
SEC. 4.1
(a)
(b)
(c)
Underwriting Committee .......................................................... 6
Claims Review Committee ........................................................ 6
Investment Committee ............................................................. 6
OFFICERS ................................................................................... 6
SEC. 4.110 PRESIDENT ....................................................· ............................ 7
SEC. 4. I20 VICE PRESIDENT ......................................................................... 7
017.133654.3 1.14
SEC. 4.130 CLERK ........................................................................................ 7
SEC. 4.140 TREASURER ................................................................................ 8
SEC. 4.150 AUDITOR .................................................................................... 8
SEC. 5.1 RISK MANAGER ........................................................................... 9
SEC. 5.110 RESPONSIBILITIES ....................................................................... 9
SEC. 5.120 COMPENSATION, EMPLOYMENT ................................................ 10
SEC. 6.1 MEMBER AGENCIES ................................................................... 10
SEC. 6.110 DUTIES OF THE MEMBER AGENCIES ........................................... 11
SEC. 6.120 RIGHTS OF MEMBER AGENCIES .................................................. 11
--
SEC. 7.115 CLAIMS SETTLEMENT ...............................................................12
SEC.7.120 DEPOSIT AND INVESTMENT OF AUTHORITY FUNDS .................... 12
SEC. 7.130 AUDIT ...................................................................................... 12
SEC. 8.1 CLAIMS AGAINST THE AUTHORITY ............................................ 12
SEC. 9.1 DISPUTES OR CLAIMS BETWEEN MEMBERS ................................. 13
SEC. 10.1 MEMBER WITHDRAWAL; CIPA DISSOLUTION .............................. 13
SEC. 11.1 EXPULSION OF MEMBERS .......................................................... 14
SEC. 12.1 LEGAL REPRESENTATION .......................................................... 14
017.133654.3 l. 15
SEC. 13.1 AMENDMENT OF BYLAWS AND PLAN DOCUMENT ...................... 14
SEC. 14.1 NOTICES ................................................................................... 14
017.133654.3 1.16
BY-LAWS
OF THtE
CALIFORNIA INSURANCE POOL AUTHORITY
PREAMBLE
The CALIFORNIA INSURANCE POOL AUTHORITY (hereinafter referred to as
CIPA) is established for the purpose of operating and maintaining a cooperative program of
insurance, self-insurance and risk management and to provide a forum for the discussion,
study, development and implementation of procedures of mutual benefit in risk management
programs.
Sec 1.1 PURPOSES
(a) The purposes of CIPA are:
(1) To provide a self-insurance and risk management program and system
which will achieve the following objectives for the benefit of CIPA's member agencies in all
risk areas handled by CIPA:
(i) Reduced costs of insurance coverage through effective loss control practices,
pooling of risk, and combined purchasing power;
(ii) Reduced costs of claims administration services through central management,
volume and combined purchasing power;
(iii) Greater stability of insurance markets through size of combined membership,
longer duration of insurance agreements and effective loss control practices;
(iv) Reduced amount and frequency of losses of member agencies;
(v) Improved control of sources of risk through the application of risk management
- loss control techniques;
(vi) Improved recovery from responsible third parties;
and
(vii) Funding of adequate reserves by members to ease the impact of heavy losses;
(viii) Monitor local, state and federal legislative and agency risk management
activities with the intent of advocating CIPA's position through coordination with appropriate
representatives.
1.17
017.133654.3 November 8, 2001
(2) To provide a self-insurance and risk management program and system,
including any, all, or any combination of the following: payment of claims and benefits as
authorized by CIPA's member agencies; a~nistrati0n of one or more programs wherein
member agencies subscribe to a funding plan designed to relieve the impact of heavy losses;
administration of a self-insurance pool to be funded in any legal manner, including, but not
limited to, contributions, premiums, assessments or the issuance of certificates of participation;
joint purchase of insurance, reinsurance, or excess insurance, subject to any legal limitations;
formation of an owned or use of a non-owned onshore or offshore captive insurance company
to provide insurance and acquire reinsurance; joint purchase of administrative and other
services including risk management, consulting, brokering, claims administration, claims
adjusting, loss prevention, data processing, legal and related services.
(3) To acquire, hold and dispose of property, real and personal, necessary or
desirable for the purpose of providing the members of CIPA with a complete self-insurance
and risk management program, including but not limited to the acquisition of necessary
facilities and equipment, the employment of personnel, and the operation and maintenance of a
system of risk management.
Sec. 2.1 RISK MANAGEMENT BOARD
(a) The governing body of the Authority shall be the "Risk Management Board"
and may be referred to herein as the "Board."
(b) Voting members of the Board shall consist of one representative from each
participating member agency. Each member's representative shall be so designated by
appointment by the member agency's governing board, provided that the governing board of
the member agency may delegate its appointment authority to the city manager or chief
executive officer. Each member's governing board also may appoint one alternate who may
attend meetings and vote in the event of absence of the .representative. Each representative or
alternate must be a public agency staff member.
(c) The Risk Management Board shall meet at least quarterly to review all
operations of CIPA conducted pursuant to the CIPA Joint Exercise of Powers Agreement and
these By-Laws. The Board shall provide policy direction for the Executive Committee and the
Risk Manager. Other functions of the Board shall include, but not be limited to, final approval
of:
(1) All matters with respect to which it is mandatory that the Executive
Committee make recommendations the Board, and
(2) The following matters not covered by Paragraph (1) above:
(i) Selection and employment of a Risk Manager;
(ii) Admission of new Members;
017.133654.3 1.18
(iii) Expulsion of present Members;
(iv) An operating budget for CIPA~ to be approved in advance of the commencement
of each fiscal year;
(v) Arrangements, if any be made, with outside agencies for establishment of risk
management related lines of credit;
(vi) selection of claims administrators;
(vii) Selection of broker;
(viii) Selection of insurance policies after considering advice of the Risk manager; and
(ix) Determine, by majority vote, reductions in participation in services or costs of
claims administration or risk management due to special circumstances.
Sec. 2.110 MEETINGS OF THE BOARD
The Board shall establish a time and place to hold regular meetings not less often than
quarterly. Meetings shall be conducted pursuant to the most current edition of Roberts Rules
of Order or such other procedural rules as the Board shall adopt.
Sec. 2.120 BOARD AND RISK MANAGER
(a) The Board shall employ or contract for the services of a Risk Manager to
administer and operate CIPA's programs of risk management under the direction and
supervision of the Board and Executive Committee. The Risk Manager may, but need not be,
a consultant, a corporation, or an employee of a member of CIPA.
(b) Compensation, termination and other employment matters respecting the Risk
Manager shall be governed by the By-Laws to the extent covered therein. CIPA may, but is
not required to, enter into a written contract of employment with the Risk Manager.
Sec. 3.1 EXECUTIVE COMMITTEE
(a) An Executive Committee is hereby established for CIPA.
(b) The Executive Committee shall consist of the President, Vice-President,
Treasurer, Clerk, and Chairpersons of the Claims and Underwriting Committees. Each person
on the Executive Committee shall be entitled to one vote.
(c) The Executive Committee shall be responsible for the administration and
operation of the risk management programs of CIPA subject to the policy control and direction
of the Board.
017.133654.3 1.19
(d) The Executive Committee shall implement general policy and monitor
operations of the Treasurer, Auditor, and Risk Manager.
(e) The Executive Committee shall have such other powers and functions as may be
delegated to it, from time to time, by the Board.
(f) The President of the Authority, or the Vice President in the President's absence,
shall serve as the Chairperson of the Executive Committee.
Sec. 3.120 RESPONSIBILITIES; DELEGABILITY
(a) The following Executive Committee functions may not be delegated:
(1) Implementing policy and monitoring activities of the Treasurer, Auditor,
and Risk Manager.
(2) , Maintaining an awareness of major risk management field developments
which may affect CIPA handled California public entity risks.
(3) Adopting a set of procedural rules for Committee meetings.
(4) Performing those advisory responsibilities set forth in Section 3.130 of
these CIPA By-Laws.
(5)
Retaining overall supervisory responsibility respecting delegated
functions.
(b) The Executive Committee shall perform, delegate or contract to have performed
the following functions:
(1) Establish criteria for selection of a Risk Manager. Interview Candidates.
Make recommendations to the Board respecting employment.
(2) Establish criteria for selection of insurance brokers or companies,
underwriting and actuarial consultants, legal counsel and other consultants, as needed.
(3) Establish criteria for selection of claims administration and claims
adjusting services. Interview candidates. Make selection recommendations to the Board.
Selection criteria shall include a requirement that claims persons show knowledge and
understanding of the laws regarding claims against public entities.
Sec. 3.130 RESPONSIBILITIES; ADVISORY
(a) The Executive Committee shall make recommendations to the Board respecting
the following matters which must be approved by the Board before becoming effective:
017.133654.3 1.20
(1) Recommend to the Board risk management programs, claims
administration services, adjusting services, loss prevention services and other risk management
services which can help the Authority carry oiit its risk management objectives and its
obligations to member agencies.
(2)
Recommend to the Board each member agency's share of operating
costs.
(3) Recommend to the Board appropriate insurance broker(s);
(4) Recommend to the Board that the member agencies take steps to increase
reserves or raise revenues as may be needed to pay claims and expenses within the members'
self-insured retentions or in excess of CIPA risk management programs.
(5) Recommend authorizing payment of proper charges for costs of
administering this Agreement.
(6) Recommend whether to approve payment requests from member
agencies when the requests are in excess of the Auditor's authorization.
(7) Recommend a Conflict of Interest Code for adoption by the Board,
Committee, Officers, and Risk Manager.
Sec. 3.140 MEETINGS OF THE COMMITTEE
The Executive Committee may establish a time and place to hold regular meetings.
Meetings of the Executive Committee shall be called, as needed, by the President or by a
majority of its members. The meetings of the Committee shall be held, noticed and conducted
in the same manner as the meetings of the Risk Management Board.
Sec. 3.150 REPORTS
The Committee shall report to the Board not less than quarterly in order to advise the
Board of its decisions and activities concerning implementation and operation of the
Authority's cooperative program and system of self-insurance and risk management.
Sec. 3.160 APPEAL TO BOARD
Any decisions to the Executive Committee may be appealed to the Board by any
member agency subject to such restrictions as the Board may adopt.
Sec. 3.2 OTHER COMMITTEES
The Board shall establish such committees as it shall require to assist it in conducting
the business of CIPA. The following committees shall be appointed by the President and
approved by the Board:
1.21
017.133654.3
(a) Underwriting Committee. The Underwriting Committee shall consist of five (5)
members of the Board. The Underwriting Committee shall be responsible for review of
coverage areas to be offered under the pooled general liability and automobile programs of
CIPA. The Committee shall: review and recommend coverage changes; review and make
recommendations on new applications; review and recommend reinsurance levels; and other
duties prescribed by-the Plan Document. The Underwriting Committee may also, upon the
unanimous recommendation of the Risk Manager, Program Underwriter and Program Broker,
approve the addition of insureds and named insureds to a member's Contract of Pooled
Insurance. The comraittee shall report any such approvals to the Board at its next meeting.
The Underwriting Committee shall recommend assessments, if necessary, to the Board.
Imposition of an assessment may be approved by a simple majority of the Board, however, a
2/3 vote of a quorum of the Board shall be required to modify such a recommendation of the
Underwriting Committee.
(b) Claims Review Committee. The Claims Review Committee shall consist of five
(5)members of the Board. The Claims Review Committee shall be charged with the
responsibility for review of claims reported to CIPA pursuant to the pooled general liability
and automobile programs of CIPA. As to such claims, the Committee shall: review and
recommend reserve levels; review and recommend claims procedures; review and make
recommendations or determinations regarding coverage of claims; recommend, as necessary,
legal defense firms; assist the Risk Manager and Claims Administrator in planning and
implementing loss control activities and perform other duties as prescribed by the Plan
Document.
--
(c) Investment Committee. The Investment Committee shall consist of not less than
three (3) members of the Board appointed by the President from among the representatives
whose cities are participants in the pooled general liability program. The committee shall be
responsible for recommending investment policies to the Board and the Treasurer of CIPA.
Except as expressly provided in these Bylaws or the Plan Document, or when specific
authority is delegated to a committee by the Board, the Investment, Claims and Underwriting
Committees will be advisory committees only and they shall report their findings and
recommendations to the CIPA Board. The Claims Review Committee and Underwriting
Committee shall be assisted in their deliberations by the Risk Manager, CIPA brokers,
underwriter, claims administrator and other consultants, as appropriate.
Sec. 4.1 OFFICERS
(a) The officers of the Authority shall be:
(1) President
(2) Vice President
(3)
Clerk, who may also serve as Treasurer, and his or her duly appointed
deputies, if any
017.133654.3 : 1.22
(4) Treasurer and Auditor, and his or here duly appointed deputies, if any
(b) The Board shall elect the President and Vice President of the Authority for such
terms and in such manner as the Board shall provide.
(c) The Board shall designate the. Clerk, Treasurer and Auditor in the manner
provided for in these By-Laws.
(d) Each Officer shall hold his or her position until relieved of functions as an
Officer by either:
(1) Expiration of his or her elected or term, or appointed term, or
(2) Removal by a two-thirds vote of the Risk Management Board.
Sec. 4.110 PRESIDENT
(a) The President shall be elected by the Board from its membership.
(b) The duties of the President are to:
(1) Preside at and conduct meetings of the Board.
(2) Preside at and conduct meetings of the Executive Committee.
(3) Execute documents on behalf of the Authority.
(4) Exercise such spending authority as may be authorized by a resolution
approved by the Board.
Sec. 4.120 VICE PRESIDENT
(a) The Vice President shall be elected by the Board from its membership.
(b) The Vice President shall exercise the duties of the president in the absence of
the President.
Sec. 4.130 CLERK
(a) The Clerk shall be elected by the Board from its membership by majority vote
or by resolution.
(b) The duties of the Clerk are to:
(1) Attend the meetings of the Board and of the Executive Committee, and
make minutes thereof.
o17.133654.3 1.23
(2) Keep all official recOrds of the Authority not required to be kept by the
Treasurer.
(3) File such notices and statements as are required by Sections 6503.5 and
53051 of the Government Code.
(4)
Brown Act.
Cause notices of meetings to be given as required by the Ralph M.Brown Act
(c) In the absence of the Clerk, the President may appoint a Clerk pro tempore from
among the members of the Board to carry out the Clerk's duties at any meeting. In addition,
the Clerk shall recommend, and the Board may appoint such assistant or deputy clerks to act
on behalf of the Clerk, as the Clerk deems necessary or convenient.
Sec. 4.140 TREASURER
(a) The Treasurer shall be elected by the Board from its membership by majority
vote or resolution.
(b) The duties of the Treasurer are to:
(1) Perform the duties of the Treasurer prescribed in Section 6505.5 of the
Government Code.
(2) Attend meetings of the Executive Committee as a member thereof.
(3) To sign warrants or such other negotiable instruments as may be used for
proper disbursement of moneys from any CIPA fund.
(c) The Treasurer shall recommend, and the Board may appoint such
assistant or deputy treasurers to act on behalf of the Treasurer, as the Treasurer deems
necessary or convenient. In addition, the Board may set minimum qualifications which any
such assistant or deputy may be required to meet.
Sec. 4.150 AUDITOR
(a) The Treasurer shall serve as Auditor.
(b) The duties of the Auditor are to:
(1) Perform the duties of the Auditor prescribed in Section 6505 and 6505.5
of the Government Code.
(2) Issue warrants for the payment of claims of member agencies after
obtaining the member's authorization.
1.24
017.133654.3
(c)
Any assistant or deputy of the Treasurer is, ex officio, a deputy Auditor of the Authority.
Sec. 5.1 RISK MANAGER
(a) 'There shall be an CIPA Risk Manager.appointed by. the Board. The Risk
Manager shall be responsible for the day to day administration, management and operation of
CIPA's programs of risk management and he or she shall be subject to the direction and
control of the Board and Executive Committee. The RiSk Manager may, but need not be, a
consultant, a corporation or an employee of a member of CIPA.
Sec. 5.110 RESPONSIBILITIES
(a) The responsibilities of the Risk Manager shall include, but not be limited to:
(1) Monitoring status of: CIPA's programs and operations, member losses,
administrative and operational costs; service companies' performance, brokers' performance.
(2)
Providing appropriate risk management counseling and information to
Member Agencies.
(3) Writing quarterly reports to each member agency detailing loss
experience, desirable correction actions and other information pertinent to risk management
programs being handled by CIPA.
(4) Preparing an annual budget.
(5) Advising State Legislators on CIPA needs. Advising member cities on
legislative developments.
programs.
(6)
Advising member cities on the risk impact of proposed new or changed
(7) Assisting the Executive Committee and Risk Management Board in
selecting brokers, insurance companies, insurance policies, and claims administration services.
(8)
Performing or contracting for, actuarial studies to determine cost
allocations.
(9) Advising member cities on selection of claims attorneys.
(10) Developing criteria to assist cities in preparation of risk management
plans consistent with the Authority's master risk management plan.
(11) Conducting risk management audits to review the participation of each
member agency in one or more of the Authority's programs. The audit team shall include the
Risk Manager, the Board representative from the entity being audited and a Board
017.133654.3 1.25
representative from at least one other member agency. The Risk Manager will submit an audit
report to the governing body of the audited member agency,
(12) Developing effective risk management and loss control procedures and
advising member entities on how to implement them.
(13) Selecting and supervising CIPA employees as authorized by the Board or
Executive Committee.
The Risk Manager's responsibility to perform the above services with respect to any
member agency is limited to those risk areas or specific insurance programs in which the
member agency is a participating member.
Sec. 5.120 COMPENSATION, EMPLOYMENT
(a) The Risk Manager shall be compensated for his services to the CIPA in such
amounts and manner as may be fixed from time to time by the Board.
(b) Details respecting compensation, termination and other employment related
matters pertaining to the Risk Manager shall be governed by the By-Laws and such terms and
conditions as the Board shall set.
Sec. 6.1 MEMBER AGENCIES
(-a) Any party to the Agreement is a member agency. Any local public entity may
become a party to the CIPA Agreement by agreeing to be bound by the Agreement and these
By-Laws and by complying with ail of the following requirements:
(1) Submit application for membership and obtain Board approval.
(2) Execute the original of the CIPA Joint Exercise of Powers Agreement as
amended from time to time, and
(3) Become a participating member with respect to at least one risk area or
insurance program handled by CIPA, and
(4) Pay a fee to CIPA as determined by the Board for initial risk program
analysis and structuring consulting services.
(b) Non-city local public entities may be admitted as participating member agencies
upon terms and conditions, if any, approved by the Board.
(c) Additional requirements, as approved by the Board, may be imposed for
participation in specific insurance programs or risk areas.
Sec. 6.110 DUTIES OF THE MEMBER AGENCIES
017.133654.3 1.26
Each member agency shall:
(a) Appoint a member to the Risk Management Board and an alternate.
(b) Designate a representative (who may be the appointed Risk Management Board
member) to act as a liaison with the CIPA Risk Manager and to advise him or her of any
proposed or altered program which may have significant risk management ramifications..
(c) Maintain an active Safety Committee.
(d) Provide necessary data to assist in obtaining reinsurance, excess insurance,
claims administration services quotes, or as otherwise required for participation in specific
insurance programs.
(e) Establish and maintain a risk management program approved by the Executive
Committee, including maintenance of adequate claims reserves.
(f) Establish and maintain a prudent claims management.program for the member
agency's self-insured risks.
(g) Pay when due all premiums or assessments levied by the Board pursuant to the
CIPA Agreement, By-Laws, specific insurance plans, or Board policies adopted in furtherance
of the Agreement or By-Laws.
(h) Enter into and maintain contracts of insurance or reinsurance as required by the _
Board in risk areas or specific insurance programs in which the member agency is
participating.
(i) Pay from other funds or levy and collect taxes and assessments to pay judgments
pursuant to Chapter 2 (beginning with Section 970) of Part 5 of Division 3.6 of Title 1 of the
Government Code, if necessary.
(j) Comply with the letter and spirit of the CIPA Agreement and these By-Laws.
Sec. 6.120 RIGHTS OF MEMBER AGENCIES
The rights of member agencies are to:
(a) Have the Board designate appropriate required contracts of insurance with
excess insurers or reinsurers to provide coverage above the level of risks retained by the
member agency or the Authority.
(b) Receive assistance from the Executive Committee and Risk Manager in
establishing and maintaining a risk management program compatible with the policies and
programs of the Authority.
(c) Appeal decisions of the Executive Committee to the Board, subject to such
restriction as the Board may adopt by resolution or By-Laws.
017.133654.3 1.27
(d) Withdraw from membership as provided herein.
(e) Amend the Joint Powers Agreement or dissolve the Authority by a two-thirds
vote of all the Member Agencies, and amend these Bylaws by 2/3 majority vote of a quorum of
the Board.
Sec. 7.115 CLAIMS SETTLEMENT
Unless otherwise provided in an approved plan of insurance or risk-pooling
administered by the Authority, the determination of whether a claim for general liability,
automobile liability., worker's compensation, or accident and health is to be allowed,
compromised, settled, or rejected shall be that of the party against whom the claim is fried;
provided that no party shall have the power to commit the funds of the Authority to pay any
claim without the consent of the Authority.
Sec.7.120 DEPOSIT AND INVESTMENT OF AUTHORITY FUNDS
The Treasurer may deposit and invest Authority funds subject to the same requirements
and restrictions that apply to deposit and investment of the funds of a general law city.
Sec. 7.130 AUDIT
An annual audit of the financial affairs of CIPA shall be made by a certified public
accountant at the end of each fiscal year in accordance with generally accepted auditing
principles. A copy of the annual report shall be delivered to each member. The cost of the
annual audit constitutes an administrative expense of CIPA and shall be paid for in the same
manner as other administrative expenses are paid.
Sec. 8.1 CLAIMS AGAINST THE AUTHORITY
(a) Defense of Claims. As to any claim or action against the Authority which is
based on or arises out of an occurrence involving an officer or employee of the Authority and
arises out of activities within the course and scope of his or her duties as such, who is also an
officer or employee of a member agency, such claim or action against the Authority will be
defended by the Authority, except as to those claims arising while such officer or employee is
traveling to or from a meeting of the Authority, it being the intent of the Authority that the
risks of such travel be borne by the member agency in accordance with Article 19 of the CIPA
Joint Powers Agreement. The Authority may secure workers compensation, liability, or other
appropriate policies for its own activities.
(b) Payment of Claims. Claims and judgments against the Authority as to which the
Authority has a duty to defend pursuant to Paragraph (a) shall be paid from, or charged to, the
appropriate coverages or self-insured funds the Authority has establishes against such claims,
judgments, or losses. Such amounts shall be paid from the Authority's own coverage or self-
insured funds.
017.133654.3 1.28
(c) Costs of Defense. All costs of defense incurred pursuant to Paragraph (a) shall
be paid from such funds of the Authority as the Board shall designate, but shall not be charged
disproportionately to the account of the member agency of the officer or employee.
Sec. 9.1 DISPUTES OR CLAIMS BETWEEN MEMBERS
(a) Arbitration. Any differences, claims or matters in dispute arising between or
among members shall, if such differences arise out of these By-Laws, be submitted by such
members to arbitration in accordance with the provisions of the Joint Powers Agreement. The
decision of the arbitrator(s) may be entered as a judgment in any court of the State of
California or elsewhere.
(b) Authority Representation Conflicts. Any differences, claims or matters in
dispute arising between or among members shall, if such differences do not arise out of the
CIPA Agreement or By-Laws, be handled as follows:
(1) After being notified in writing that one member agency has filed a formal
claim against another in accordance with provisions of the California Government Code, the
Authority can no longer act on behalf of either member insofar as the case giving rise to the
claim is concerned if the claim involves a risk area or areas in which each of the involved
members is a participating member.
(2) Conversely, the Authority may continue to act on behalf of a
participating member, even after receipt of written notice of a formal claim filed by one
member agency against another, provided the claim only involves a risk area or areas in which
only one of the involved member agencies is participating.
(c) In any case falling within the ambit of (1) or (2) above, the Authority
may, in its discretion, act on behalf of one or all involved members, provided that the
Authority first obtains the written consent of all such members.
Sec. 10.1 MEMBER WITHDRAWAL; CIPA DISSOLUTION
(a) A member agency of the Authority may withdraw as a member upon complying
with the Joint Powers Agreement and these By-Laws.
(b) In the event of the dissolution of CIPA or the complete rescission or final
termination of the Joint Powers Agreement by all of the then parties thereto, any property of
CIPA remaining after all claims and obligations have been paid, or provision made for the
payment of the same, shall be returned to the then current members of CIPA in accordance
with the provisions of the Joint Powers Agreement..
(c) In the event a member agency withdraws from the Authority in accordance with
the Joint Powers Agreement, the Board may consider offering "tail" or extended discovery
period coverage as respects the claims made form of Contract of Pooled Self Insurance;
however, CIPA is not obliged to offer any such additional coverage. The Board may establish
0'17.'133654.3 1.29
such other terms and conditions of withdraWal as may be fair and equitable and not inconsistent
with the Joint Powers Agreement.
Sec. 11.1 EXPULSION OF MEMBERS
(a) A party to this Agreement may be excluded from membership when its actions:
(1) Cause the member to not substantially comply with the terms of the Joint
poWers Agreement, or
(2) Cause the member to fail in substantially complying with a written and
acknowledged term or condition imposed on the member by a simple majority vote of the
Board;
(3) Cause an adverse effect on CIPA's relations with the insurance market
and the member fails to remedy the adverse effect within a reasonable time after receiving
written notice from the Board as to appropriate corrective action.
(b) The Board may, by a two-thirds (2/3) vote, terminate and exclude the offering
member from any and all benefits of membership in CIPA.
Sec. 12. I LEGAL REPRESENTATION
Legal counsel to advise on matters relating to the operation of CIPA may b_e
recommended by the Executive Committee or Risk Manager and approved by the Board.
CIPA shall have the right to pay such legal counsel a reasonable compensation for said services
under a contract.
Sec. 13.1 AMENDMENT OF BYLAWS AND PLAN DOCUMENT
By a two-thirds vote of the entire Board, the Board shall develop and adopt By-Laws
and a Plan Document to govern the day-to-day operations of CIPA and may amend such
documents from time to time.
Sec. 14.1 NOTICES
(a) Notice to the Authority shall be given by delivery of such notices to the Clerk of
the Authority.
(b) Notice to member agencies shall be given by delivery of such notice to the clerk
of each member agency.
Sec. 15.1 EFFECTIVE DATE
These By-Laws shall be effective immediately upon their adoption by the Board.
017.133654.3 1.30
EXHIBIT C
GENERAL LIABILITY SELF-INSURANCE AND PROPERTY PROGRAM
· PLAN DOCUMENT
FOR
CALIFORNIA INSURANCE POOL AUTHORITY
017.4312.12
1.31. 5/2o/o2
TABLE OF CONTENTS
GENERAL LIABILITY SELF-INSURANCE AND PROPERTY PROGRAM
PLAN DOCUMENT
FOR
CALIFORNIA INSURANCE POOL AUTHORITY
Page
I. PURPOSE OF PLAN DOCUMENT .......................................................... · . 1
II. MODIFICATION OF THIS DOCUMENT ................................................... 1
III. EXECUTIVE COMMITTEE ................................................................. · . . . 2
IV. UNDERWRITING COMMITTEE .............................................................. 2
V. CLAIMS COMMITTEE .......................................................................... 2
VIi
DEFINITIONS ....................................................................................... 3
VII. GENERAL PROGRAM OPERATIONS ...................................................... 4
VIII. ELIGIBILITY GUIDELINES ....................................................................5
IX. GENERAL LIABILITY PROGRAM UNDERWRITING CRITERIA ................. 5
X. ACCEPTANCE OF NEW MEMBERS .............................................. , ......... 6
XI. ASSESSMENT PROVISIONS ................................................................... 7
XII. CLAIMS HANDLING PROCEDURES ........................................................ 8
XlII. GENERAL MANAGER ROLE IN CLAIMS HANDLING ............................. 12
o17.4312.12 1.32 5/20/02
XIV. EXHAUSTION OF ANNUAL AGGREGATE LIMITS .................................. 12
XV WITHDRAWAL (TAIL) COVERAGE . 13
XVI OVER.FUNDING- RETURN OF PREMIUMS 13
XVII CLAIMS AUDITS ............................... ee ii 13
· eleell $ eellle · · · · · ~e ®l · eel eellllll®lleee4teee ftll eel
XVIII.ACTUARIAL STUDIES.. ........................................................ . .. . . . ......... 14
XIX DISPUTES ......................................... 14
XX. POLICY FORMS, ENDORSEMENTS, COVERAGE QUESTIONS.. ....... ... .... 14
XXI. LIMITS OF LIABILITY ................... ............................................... ...... 16
XXH. HANDLING/INV~TMENT OF RESERVE FUNDS .................................... 17
--
XXIH.PARTICIPATING MEMBER RESERVE FUND LEVELS ............................ 17
017.4312.12. 1.3 3 5/20/02
GENERAL LIABILITY SELF-INSURANCE AND PROPERTY PROGRAM
PLAN DOCUMENT
FOR
CALIFORNIA INSURANCE POOL AUTHORITY
I. PURPOSE OF PLAN DOCUMENT
This document is intended to guide the day-to-day operations of the general liability
self-insurance program, as well as the reinsured property program of CIPA. This Plan
Document shall not:
1,
agreed.
Limit the authority of the board of directors of CIPA except as specifically
2. Infringe on rights and aUthorities of individual member agencies except as
specifically agreed.
3. Modify in any way, the terms and conditions of the agreement establishing
CIPA, or the Bylaws.
On September 1, 1986, the California Insurance Pool Authority (CIPA) established a
new group Self Insuran,e Program, covering municipal liability, for its members.
Subsequently, CIPA established a property coverage program for which reinsurance is
maintained. The purpose of this document is to formally summarize general understanding and
guidelines as respects the administration of the self-insurance programs of CIPA.
It is the recognized interest of all participants in this program that a method of group
pooled self-insurance for liability is a desirable alternative to the "standard" insurance markets
(coverage from same being unavailable or unacceptable) and that this program represents such
desirable alternative. By entering into this program, participants recognize that the only ~ource
for payment of claims against the program may be the pooled assets of member agencies. It is
also recognized that this entails an exposure to members above and beyond contributions and
premium payments.
II. MODIFICATION OF THIS DOCUMENT
Modification of this document once adopted may be made with 2/3 majority vote of a
quorum of the members of the Board of Directors of CIPA. All member agencies shall receive
copies of the revised Plan Document within 30 days of the amendment.
017.4312.12 1.34 5/2o/o2
III. EXECUTIVE COMMITTEE
It is intended that the Executive Committee of CIPA shall be made up solely of
representatives of participating members of the group General Liability Self-Insurance
Program. Duties shall include review and assessment of all matters relative to the Self-
InSurance and Property prOgrams as may be appropriate.
IV.
UNDERWRITING COMMITTEE
The purpose of this committee will be to make recommendations, considering the
recommendations from the Program Underwriter or Actuary, where appropriate, as respects:
.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Acceptance of new members, additional insureds and named insureds.
Rejection of new members, additional insureds and named insureds.
General Liability Contract of Pooled Self Insurance form changes.
Notification of premium calculations.
Establishment of self insured retention levels.
Levels of assessments.
Allocation of Assessments.
Recommend purchase or rejection of all excess and reinsurance.
Property coverage form changes
And any other matters as may from time to time be necessary.
The Underwriting Committee shall submit actions to the Executive Committee or Board
of Directors of CIPA, as appropriate, for review or approval as necessary. The CIPA General
Manager, Program Underwriter or Actuary and Program Broker serve as advisors to the
Underwriting Committee.
V. CLAIMS COMMITTEE
The purpose of the committee shall be to review all open claims submitted in
accordance with the reporting requirements contained herein and to:
I,
2.
3.
4.
Set and review reserve levels as respects potential Self-Insurance
Program exposure, in consultation with the Litigation Manager and
General Manager.
Review claims with the General Manager and Litigation Manager as
necessary.
Review the specific "handling" of all potential liability program losses
and develop and recommend litigation management guidelines and
policies for approval by the Executive Committee or Board.
Make recommendations to individual members for settlement or defense
and/or tendering of liability program losses to the Self Insurance
Program.
017.4312.12 1.3 5 5/20/02
5
6
7
8..
Rule on questions of coverage on specific excess claims or incidents and
recommend action to the Executive Committee or Board, as appropriate.
Accept or reject claims.
Set reserve levels on all excess claims, in consultation with the Litigation
Manager and General Manager.
Adopt set of procedures under which claims will be reported, reviewed,
and handled, to be distributed to all members for reference.
The General Manager, Program Underwriter or Actuary, Program Broker, and
Litigation Manager will serve as advisors to the Claims Committee.
VI. DEFINITIONS
The following terms are used in this Plan Document:
1. Excess Claim is a claim which may exceed the general liability program Self-
Insured Retention of a city and which meets the guidelines contained herein and has been
labeled an excess claim by the Claims Committee and referred to the General Manager and
Litigation Manager for handling.
2. General Manger shall be the General Manager of CIPA and shall perform the
duties prescribed in Article XIII.
--
3. Litigation Manager shall be an individual or legal entity under contract or
employed with CIPA for the express purposes of representing the General Liability Self-
Insurance Program as respects claims which may be expected to be paid within Self-Insurance
(excess insurance) Program, managing liability claims as to which CIPA is providing a
defense, and assisting in the management of property claims.
4. Tendered Claim is a claim which is tendered to the General Liability Self-
Insurance Program for handling by the General Manager and Litigation Manager by an
individual city and accepted by CIPA. That city thereby agrees to pay the full self insured
retention liability accruing from any judgement or settlement arising from such claim, and
cooperate pursuant to the terms of the Contract of Pooled Group Self-Insurance and the
policies and procedures of CIPA.
5. Premium is the amount payable annually by participating public entities to
qualify as members of the "pool" and "insureds" or covered parties under the Contract of
Group Pooled Self-Insurance, or property coverage issued by the Authority. As used in this
Plan Document, "premium" includes the amount of any contribution to the group self-
insurance pool fund administered by CIPA. Such premium amounts will be established by
CIPA in consultation with the Program Underwriter or Actuary, in order to fund the pool as a
whole on an actuarially sound basis.
017.4312.12 1.36 5/20/02
6. Program Underwriter or Actuary is an individual or legal entity either on
contract with or employed by CIPA for agreed purposes to provide analyses of the exposures,
projected or estimated costs, rates, contributions and the self-insurance, reinsurance and
insurance programs which are or may be undertaken by CIPA.
7. Assessments are additional funds required to be paid from time to time as are
necessary through the assessment procedure to ensure the "solvency" or ability to meet
financial obligations of the liability program.
8. Risk Management is the process through which risk or loss is transferred,
shared, reduced, eliminated, or knowingly assumed to minimize the overall exposure to a
member agency.
9. Non-subject premiums are the total premiums paid exclusive of prograin
administrative fees for coverage under the liability program of CIPA.
10. The terms "the Board", "the Board of Directors", and ."the Board of
Directors of CIPA" are defined to mean those members of the governing body of CIPA who
are currently participants in the General Liability Self-Insurance Program and are entitled to
vote on matters relative to the General Liability Self-Insurance Program as provided in the
CIPA bylaws.
VII. GENERAL PROGRAM OPERATIONS
All program participants shall pay "premiums,' as determined through accepted
underwriting or actuarial methods, into a "pool" of funds to be held as reserves against future
losses of all participants, or paid for reinsurance. Risk of Loss is shared and transferred under
the general liability program among participants. Assessments may be required in event
"pooled" premiums are inadequate to pay projected losses. Projected assessment amounts are
limited by both per-occurrence and aggregate limits of coverage under the general liability
program.
Administration of the general liability program shall be consistent with sound
professional insurance industry standards, and public agency group self-insurance practices and
includes:
1. Adherence to underwriting and actuarial principles in an effort to accurately
predict proper funding levels.
2. Establishment of sound claims and litigation management procedures to protect
"pooled" premiums.
3. Use of professional consultants to counsel in all matters relating to insurance
practices and legal issues.
4. Control of the program by participating agencies.
017.4312.12 1.37 5/2o/02
5. "Pooled" premiums maintained by CIPA in a fund for the purposes of the
liability program and operations of the joint powers authority in compliance with investment
and safekeeping laws and regulations applicable to cities for public funds.
Participants have agreed to. pay premiums, assessments (if any) share risk of loss, and
cooperate on claim management under the CIPA agreement and theContract of Pooled Self-
Insurance for general liability offered through the Authority.
VIII. ELIGIBILITY GUIDELINES
The following represent general guidelines of risk acceptability for participation in the
general liability program:
1. Members shall be of general size, geographical location and quality of risk as to
be comparable to existing membership. It is the intent to limit eligibility of cities to a
maximum population'of 250,000.
2. This program does not allow for the inclusion of any agencies with "unusual"
risk exposure.
3. As long term commitment is essential to any program of this nature, all
members shall be required to remain in the program for a minimum period of 2 years. Early
withdrawal may be authorized by written appeal to the underwriting committee demonstrating
just cause, on such terms and conditions as the committee may prescribe. Cancellation of
individual members will be in accordance with standard insurance policy language, as provided
in the Contract of Pooled Self Insurance and will require a two-thirds vote of the full Board,
except for cancellation for nonpayment, which may be approved by the Executive Committee.
' 4. Financial condition of prospective members must be such as to ensure ability to
pay premiums and assessments.
5. Risk management and litigation management attitudes of each member will be
consistent with other members as well as generally accepted guidelines and the policies of
CIPA. Such attitudes shall be reviewed by the Underwriting and Claims Committee, as
appropriate.
IX. GENERAL LIABILITY PROGRAM UNDERWRITING CRITERIA
Overall premium levels as well as individual (member) premium allocation shall be the
responsibility of the Board, with due consideration for the recommendations of the Program
Underwriter or Actuary. All such sums, as recommended by the Program Underwriter or
Actuary, shall be reviewed and approved by the Underwriting Committee and may, with
justifications, be modified, rejected, or accepted by same, and forwarded to the Board for final
approval.
017.4312.12 1.3 8 5120102
Once approved, such premium levels and allocations shall be deemed "fixed" and shall
be an obligation of individual members (and CIPA collectively) in order to retain or be
admitted to membership in the program. Premiums are due and payable within 30 days of
effective date of coverage, except as otherwise specifically provided in the Contract of Group
Pooled Self Insurance.
Such premium levels shall be reasonably calculated in accordance with general
insurance practices by a qualified underwriter or actuary retained by CIPA, and may consider
the overall funding level of the pool. The underwriter or actuary shall consider the following
in arriving at recommended overall premium levels (such consideration shall not be limited to
these factors alone):
1. Past loss experience of the group.
2. Projected loss exposure potential based on overall group exposures.
3. A "safety factor"' in order to build or maintain pool reserves at an acceptable
level. It is the intent of CIPA that this funding basis be conservative to establish reliability in
the solvency of the program.
Such individual premium allocations shall be reasonably calculated in accordance with
general underwriting or actuarial practices by a qualified underwriter or actuary retained by
CIPA. The underwriter or actuary shall consider the following in arriving at individual
premium allocations (such considerations shall not-be limited to these factors alone):
1. Past loss experience (most recent past five years).
2. Size of self insured retention.
3. Underwriting factors relating to:
a. Population.
b. Miles of streets.
c. Police exposure.
d. Automobile exposure.
e. Unusual exposures (beaches, utilities, risk management attitude, etc.).
f. Fire department exposures.
g. New construction in City/Member.
h. Entity Budget.
X. ACCEPTANCE OF NEW MEMBERS
It is generally accepted that general liability program growth through the acquisition of
new members of "like kind and quality" is good for program stability.
Prospective new members shall make application on a form provided by the General
Manager, and shall work with the General Manager and Program Broker in accurately and
017.4312.12 1.3 9 5/20/02
completely completing same. Such application shall contain any and all information deemed
necessary by the Program Underwriter or Actuary and Underwriting Committee and shall
furnish, as a minimum, the information described under "Underwriting Guidelines" as well as
complete financial information as to establish the financial capabilities to meet potential
program obligations.
It is the intent that all program members be members of CIPA and shall make
concurrent application for same, fulfilling any financial obligations of membership. There is an
application fee of $500.00 (subject to change at the discretion of the Executive Committee).
Such program application shall be reviewed by the General Manager, Program Broker
and presented to the Program Underwriter or Actuary. The Program Underwriter or Actuary
shall perform the underwriting task in a fashion consistent with "Underwriting Guidelines" and
with methods used on all existing members. Rates and/or premiums shall not be
discriminatory in any way.
The Program Underwriter or Actuary shall make written submission to the
Underwriting Committee as to establish recommended premiums, self-insured retention,
specific exclusions and other considerations. The Underwriting Committee shall have
available any underwriting data used in the evaluation.
The Underwriting Committee shall accept, reject or modify the Underwriter's
recommendations and report same to the Board of Directors of CIPA. The Board of Directors
of CIPA shall have final right of acceptance or rejection of prospective members.
XI. ASSESSMENT PROVISIONS
It is acknowledged that the Contract of Group Pooled Self Insurance for general
liability is fully assessable. Such assessability is necessary to provide for complete solvency of
the program. It is the intent of all members to adhere to these provisions.
It is the desire of all parties concerned that future claims and claims expense costs be
funded through annual premiums determined as described herein. Premium levels should be
"conservative" so as to provide reasonable confidence that all future claims obligations be met
through this source alone. Assessments are agreed to be undesirable by program members.
However, in the event of imminent short-fall of funds so that it may be reasonably concluded
additional monies will be needed to assure solvency and maintain reasonable reserves,
assessment provisions will be enforced as follows:
The Program Underwriter or Actuary shall have primary responsibility in projecting
future short-falls. To assist in this matter, a study may be done (with approval of the
Underwriting Committee or Executive Committee) by an outside consulting firm to
recommend short-fall amounts and methods of allocating assessments. Such recommendations
may be modified' in the judgement of the Underwriter or Actuary. The Underwriter or
Actuary shall make recommendation of assessment level, and allocation thereof, to the
017.4312.12 1.40 5/20/02
Underwriting Committee for review and action. The Committee may amend the amount
recommended, reject the recommendation or accept same.
The assessment level shall be determined taking into consideration all incurred losses
and associated expenses, projected reserves and anticipated payment dates as well as current
reserve levels and using an acceptable "Incurred But Not Reported" (IBNR) factor.
The assessment level shall be allocated based upon the recommendations of the
Program Underwriter or Actuary, and may consider the following factors:
1. All claims reasonably concluded to have directly led to the short-fall.
2. The level of funding available for policy year in which the short-fall occurs.
3. The loss experience of the members and their risk management policies and
practices.
4. The method used to determine the premiums for the year in which the short-fall
occurs.
Once determined and accepted by the Underwriting Committee, the Board of Directors
of CIPA shall review and take prompt action on the recommendation of the Committee. A
majority vote shall be sufficient to approve the recommendation. Rejection of the
Underwriting Committee recommendation shall require a 2/3 majority vote of a quorum of -
Board of Directors. However, in the event of such rejection, an alternate funding mechanism
must be implemented by the Board of Directors to assure solvency of the program, and the
Board MUST ACT to implement an allocation of the agreed assessment amount in an alternate
plan within fourteen (14) days.
All assessments are due and payable within 30 days of date of mailing of notice by the
Board of Directors. Any agency not fulfilling this or any other financial obligation shall b.e
deemed to be delinquent in payment.
Delinquent payments shall be subject to a penalty to cover liquidated damages, covering
administration and other costs of collection, which cannot be accurately estimated in advance,
which shall accrue at a rate equal to two percent (2 %) over the prevailing prime interest rate,
beginning on the date when the assessment is due and payable.
XlI. CLAIMS HANDLING PROCEDURES
It is the general intent that all general liability Group Self-Insurance Program claims be
handled in a fashion consistent with professional insurance company claims handling
procedures, to the extent applicable to public self-insurers. Certain intentions as respects
incurred claims are as follows:
017.4312.12 1.4 1 5/20/02
1. It is the intent of CIPA to establish and maintain a data base of all liability
claims reserved or paid at an amount of $50,000 or higher. A data base management system
will be established to maintain records in all such cases.
2. All liability claims falling within the self-insured retentions of the individual
members shall be administered by such member in acCordanCe with CIPA's litigation
management policies until determined to be an "excess claim" and even then shall be handled
in conjunction with the CIPA and its General Manager and Litigation Manager.
3. It is not the intent of the program to assume control of or usurp any authority as
respects an individual claim from the member agency involved unless such excess claim is
voluntarily "tendered" to the Self-Insurance Program and accepted by the Authority.
4. It is the intent of ail member agencies that there be full cooperation between
member claims handling personnel and program risk management personnel in the method and
direction of claims management of "excess claims" And property claims.
5. Closed session consideration of claims.
a. Committee and Board consideration of individual claims shall take place
in closed session. Any representative of a member, regardless of appointment on the Claims
Committee, may attend a committee meeting to present their'position on the initial review of
their claim or matter that is under consideration by that committee. In order to promote free
and creative exchange of ideas and alter-natives for action regarding claims or related issues,
and in light of the potential for the subject matter of the session to be the focus of arbitration or
legal proceedings between or among the member agency, Authority and other persons, the
member agency and Authority shall agree prior to the start of the closed session that the
proceedings and all aspects thereof are privileged, and that no part of the proceedings shall be
used, admitted or presented for admission into evidence for any purpose in any subsequent
arbitration or legal or equitable proceeding of any nature. No transcript or recording shall be
made of the closed session.
b. In no case shall a member agency participate in any vote or action
pertaining to a specific claim where that member agency is a party or potential party to that
claim. At the discretion of the Committee, the representative may be present during
consideration of the claim. If the president or claims chairperson has a conflict on a specific
claim or matter, the Vice President or Vice Chairperson will assume the duties of the president
or chair.
c. Upon request of the committee chairman, CIPA consultants may be
present in an advisory capacity.
d. The committee chairman will instruct the committee members on the
confidentiality of the information discussed and will distribute coverage opinion letters and any
other confidential material needed to assist members in the decision process. The chairman
will conclude the discussion and ask the committee to vote its position on the initial review of
017.4312.12 1.42 5/20/02
the claim or matter. Prior to the conclusion of the closed session, the committee chairman will
collect all confidential information from committee members and consultants.
e. The chairman will announce the committee's decision on the initial
review of the claim or issue to the city's representative.
f. If the member does not agree with the decision rendered by the Claims
Committee on their claim or matter, the member city can appeal the decision to the Executive
Committee, or may instead request to be heard by the full Board of Directors. The appeal
process will follow the same procedures as were followed by the Committee in its initial
determination of the disposition of the claim or matter as outlined in steps a - e, wherein the
Committee will be replaced by the Executive Committee or the full Board of Directors, as the
decision making body.
g. If the member does not agree with the final decision rendered by the
Executive Committee or the full Board of Directors, the member can pursue binding
arbitration.
h. If the Board of Directors is the first to render a decision on the claim or
matter, the Board may refer the matter to the Claims Committee or Executive Committee for a
recommendation.
i. Reservations of Rights letters will be issued by the Claims Conunittee, or
its designee. The Committee's decision on other issues will be communicated to the involved
member in writing by the respective committee chairman.
j. Upon receipt of a request from a member for a decision on a coverage
issue, a claim issue or any other issue, the committee should endeavor to render their decision
within a reasonable time.
6. If the Claims Committee is unable to convene the Claims Committee, the
Chairman or the President may authorize the hiring of an Excess Claims Attorney or Coverage
Counsel to review the claim on behalf of or represent CIPA in an amount not to exceed
$25,000. In addition, the Executive Committee may approve hiring of an Excess Claims
Attorney or Coverage Counsel for the review of a claim or representation of CIPA regarding a
claim. Any such actions should be reported at the next Claims Committee meeting.
At the recommendation of the General Manager, the Claims Committee Chairman and
the CIPA President may authorize the payment of a general liability claim up to the limit of
$500,000 in excess of the member's Self Insured Retention (SIR) amount.
At the recommendation of the General Manager and Claims Committee Chairman, the
Executive Committee may authorize the payment of a general liability claim up to the limit of
$1,000,000 in excess of the member's Self Insured Retention (SIR) amount.
017.4312.12 1.43 5/2o/02
If the General Manager recommends payment of a general liability claim in an amount
greater than $1,000,000 excess of a member's Self Insured Retention (SIR) amount, the Board
of Directors approval is needed.
Property claims shall be handled in accordance with the terms and conditions of any
agreement between the Authority and its reinsurer, and in accordance with the policies and
procedures which may be established from time to time by the Executive or Claims
Committees.
7. All documents and reports prepared by or on behalf of CIPA, or provided to
CIPA by a member agency, which pertain to a specific claim shall be considered provided in
confidence, and CIPA shall be considered an agent of the member to the same extent as an
ordinary insurer. Such information shall not be distributed beyond CIPA representatives.
Every effort shall be made to further protect such documents under the attorney-client privilege
and work-product doctrine.
All claims with reserves or potential payments, including defense costs, of $50,000 or
more, or involving any of the following, shall be reported in writing to the General Manager
of CIPA:
1,
2.
3.
4.
5.
6.
7.
8.
Deaths.
Any paralysis.
Multiple claimants.
Any amputation.
Burn cases.
Loss of sight/hearing.
Any serious head injury cases.
Any multiple fractures.
A claim is one that has been made in writing by or on behalf of any injured party to the
member agency. Failure to timely report a claim shall result in a denial of coverage by the
Authority for any otherwise reimbursable defense costs incurred prior to the report of the
claim, and may result in a denial of reimbursement for damages paid.
The report to the General Manager shall be in writing and contain all particulars as
determined by CIPA Claims Committee, including any summons or complaint. The member
agency shall also submit any additional reports required under CIPA's litigation management
policies to the General Manager or Litigation Manager, as required. Additional facts requested
shall not be withheld.
Such reports and additional facts shall be considered confidential by the.program and
disclosed only as necessary to further the purposes of the program.
No less frequently than quarterly, the Claims Committee shall meet to review all open
reported claims. The General Manager and Litigation Manager shall make recommendations
as to which claims shall be deemed "excess claims." The Claims Committee shall make such
017.4312.12 1.44 5/20/02
determination based on claims potential to penetrate into General Liability Self Insurance
Program Contract of Pooled Self Insurance. All claims labeled "excess claims" shall be
assigned to the General Manager and Litigation Manager for handling in accordance with the
litigation management policies of the Authority.
Handling by the Litigation Manager shall involve the assessment of claims potential,'
recommended reserve level, regular reports to the General Manager, quarterly report to the
Claims Committee and working directly with member agency claims handling personnel to
assess the claims handling procedures, ensure compliance with litigation management policies
and making appropriate recommendations regarding same.
Questions of coverage shall be considered by the Claims Committee The Claims
Committee shall formally accept, reject or reserve rights regarding claims submitted. Member
agencies shall be advised immediately of actions of the Claims Committee.
XlII. GENERAL MANAGER ROLE IN CLAIMS HANDLING
As respects the handling claims, it is agreed that the CIPA General shall have
responsibilities and authority as granted by the Executive Committee or Board of Directors and
appropriate committees. These duties shall include, but not be limited to:
1. Review claims for the existence of possible coverage questions and report same
to the Claims Committee.
2. Recommend and, with authorization, retain outside counsel to represent CIPA
interests.
3. Act (with approved authority) to pay claims to the benefit of CIPA.
4. Coordinate obtaining coverage interpretations from the coverage attorney and
ensure that the Litigation Manager and other third party adjusters under contract to CIPA
provide and obtain prompt and complete information.
5. Notify members when their claim has been placed on the "Watch List".
6. Notify members when the Claims Committee has hired the services of an excess
attorney to represent the interests of CIPA on a claim.
7. Manage and direct activities of the Litigation Manager and third party adjusters
under contract to CIPA.
XIV. EXHAUSTION OF ANNUAL AGGREGATE LIMITS
It is agreed by all member agencies that in the event of short-fall of annual aggregate
limits in the general liability program, all affected members shall share the short-fall
017.4312.12 1.45 5/20/02
proportionally based on the ratio of total claims that would have been paid by the Contract of
Group Pooled Self Insurance had no short-fall occurred as bears to the total amount collectible.
If return funds are due from certain member agencies to others, these funds will be due and
payable within 30 days of determination of short-fall claim.
XV. WITHDRAWAL (TAIL) COVERAGE
In event of withdrawal of one or more member agencies, it is the intent of the program
to offer a 2 year "tail" or extended discovery period coverage as respects the claims made
form of coverage, if applicable. The premium charged for same shall be derived, reviewed
and approved in the same manner as for other program premiums, provided that in no case
should the "tail coverage" premium exceed 200% of the prior year's premium.
In no way does the offer or purchase of "tail" coverage waive any other provision of
the Contract of Pooled Self Insurance or of this plan document.
XVI. FUNDING - CHANGES IN PROGRAM
It is the intent of the general liability program to adjust for over or under funding
levels through the decrease or increase in annual premiums, retroactive premium adjustments,
dividends to current participants, changes in the scope of coverage offered, or other changes in
the operation of the program. Such changes shall be made only after giving due consideration
to the recommendations of the Program Underwriter or Actuary and the Underwriting
Committee..Such changes will be approved or disapproved by the Board of Directors or the
Executive Committee, in accordance with the joint powers agreement and bylaws of CIPA.
It is noted that various changes in the liability program may reduce funding levels,
including such changes as reduced premiums and expanded coverage, and that former member
agencies will not benefit from same. However, this is offset by the possibility of increased
premiums or restrictions in coverage to make up for funding reductions, and such former
member agencies will not be subject to this method of improving the solvency of the program.
XVII. CLAIMS AUDITS
A claims audit will be required of an on-going member of this program. Such audit will
be made at least once in two years and shall be performed by a qualified outside firm (selected
by the Claims Committee and approved by the Board of Directors). The cost of such audit
shall be the responsibility of the Self-Insurance Program. Such audit shall be considered a
condition of membership in the program.
A claims audit (such as described above) may be required of a prospective member or
an existing member (under special circumstances) other than on a two year periodic basis. Such
requirement may be requested by either the Underwriter or Claims Committee. Final authority
for making such audit mandatory shall be with the Board of Directors.
01 ?.4312.12 1.4 6 5/20/02
XVIII. ACTUARIAL STUDIES
Actuarial studies shall be obtained annually to assist the Authority in establishing the
amounts which member agencies should pay for coverage under the general liability program.
Such studies shall be performed by a qualified outside firm selected by the Executive
Committee.. The cost of. such studies shall be the responsibility of the general liability.
XIX. DISPUTES
It is agreed by all program member agencies and ali wlthdrawn member agencies that
ali disputes arising from enforcement of the terms of the Contract of Group Pooled Self
Insurance for the general liability program as well as agreements contained herein shall be
addressed and settled to conclusion as follows (in order):
1. Appeal to the appropriate program committee or committees.
2. Appeal to the Board of Directors or Executive Committee of CIPA.
Following such appeals decisions by the above shall be made and affected parties
notified of such decisions in writing within seven (7) days of the hearing of such appeal.
If the matter remains unresolved, affected agencies shall participate in the process of
binding arbitration. Any differences, claims or matters in dispute arising between or among
members shall be submitted by such members to arbitration in accordance with the Joint
Powers Agreement. The decision of the arbitrator(s) may be entered as a judgment in any
court of the State of California or elsewhere. Cost of such arbitration proceedings shall be
allocated by the arbitrators.
No Court proceedings shall be initiated by CIPA or affected member or withdrawn
member agency other than for the collection of premiums and/or assessments or retro-return of
premiums payable as outlined in this document, or enforcement of an arbitration award.
To the extent consistent with the agreements between the Authority and its reinsurer,
these procedures shall also apply to disputes arising under CIPA's property program:
XX. POLICY FORMS, ENDORSEMENTS, COVERAGE QUESTIONS
It is the intent of CIPA that all matters dealing with coverages to be provided under the
general liability Self-Insurance Program or property program be the responsibility of the
Underwriting Committee. The Underwriting Committee shall receive advice in all such
matters from the Program Underwriter or Actuary.
When specific coverage questions arise concerning pending claims, the Claims
Committee shall take such action as it may deem appropriate after due consideration of the
matter, considering any report from coverage counsel and any relevant records of the
1.47 5/20/02
017.4312.12
Authority, such as the proceedings of the Underwriting Committee concerning development of
the coverage documents. Disputes on coverage questions shall be resolved by majority vote of
the Executive Committee or, if specifically requested, the full Board of Directors. It is
recognized that time may be of the essence, and that special meetings may be required.
Time Limits on Coverage Determinations; Appeals. The time frames in this '
Section XX shall be effective as to any claim reported to the Authority on or after May 20,
2002. As to any claim reported prior to May 20, 2002, the time within which any action must
be taken under this section shall be extended for 60 calendar days (i.e., through July 19,
2002). Following reporting of a claim to the Authority, the Authority may provide .an initial
indication of whether the claim appears to be within the scope of coverage, in whole or in part.
A Participant must make a written request for a coverage determination by the
Claims Committee on a claim reported to the Authority to the General Manager as soon as
practicable, but in no event later than 60 days after determination of the facts by verdict or
. judgment.
A Participant may submit a written demand for an appeal of a coverage
determination to the Executive Committee or Board, or to arbitration, as applicable, but only
within:
(1) 60 calendar days from issuance of a written determination by the Claims
Committee of a coverage question;
(2) 60 calendar days from issuance of a written determination by the. Executive
Committee or Board of Directors of a coverage question;
Waivers; Abandonment. In the event a Participant fails to timely submit a
request for a coverage determination, the Participant shall be deemed to have accepted as final
any prior indication by the Authority regarding the scope of coverage, or if no indication has
been given, to have waived any claim to coverage. In the event a Participant fails to timely
seek appeal, the Participant shall be deemed to have abandoned appeal and waived any further
right of appeal or arbitration.
Once a demand is made, the Authority shall schedule a hearing within 90 days.
If the Participant fails to attend the hearing, the Participant shall be deemed to have abandoned
the appeal, accepted the prior determination and waived further rights of appeal and
arbitration.
If arbitration is demanded, in accordance with this Plan Document and the
Contract of Pooled Self Insurance, the Participant shall cooperate with the Authority to select
an arbitrator within 60 days of demanding arbitration. If the Participant fails to do so, the
Participant shall be deemed to have abandoned the arbitration and accepted the prior award.
Time Extensions. For good cause shown, based on a written request from the
Participant received prior to the expiration any of the time periods in this section, the
017.43'12. '12 1.48 5/20/02
PreSident, Executive Committee or Board of Directors may extend the time period within
which the Participant is required to act; provided that neither the Executive Committee, nor the
Board of Directors may extend any time period after the time to act has expired. Extensions
granted shall be for a specified period and shall be in writing.
XXI. LIMITS OF LIABILITY
At the inception of the general liability program, it was the intent of member agencies
of the Group Self-Insurance Program that the limits of liability be established using the
following general guidelines:
1. Per occurrence limit was to approximate two times the annual.premiums
collection under the program.
2. Annual aggregate limits was to approximate four times the annual premium
collected under the program. The purpose of such limitations is to assure member agencies
that potential assessments shall be limited to a maximum relative to the annual aggregate
exposure.
Limits of liability for the general liability program have been increased beyond these
general guidelines based on:
1. Availability of excess or reinsurance.
2. Accumulation of adequate reserves.
3. Actuarial studies.
It is the intent of the member agencies to maintain a conservative posture with regard to
annual aggregate liability exposures of the members.
For general liability, the limits of liability shall be established annually (at each
anniversary) and shall not be amended with the mid-term addition or deletion of participating
member agencies.
For general liability, the limits of liability shall be recommended by the Program
Underwriter or Actuary to the Underwriting Committee. The Underwriting Committee shall
approve, disapprove or modify such recommendation with just cause. However, final limits
shall be established by the Underwriting Committee sufficiently in advance of policy
anniversary so as to allow for consideration as part of the Executive Committee's budget
recommendations to the Board of Directors. The Board of Directors of CIPA shall have final
authority in the establishment of the limits of liability.
017.4312.12 1.49 5/20102
XXII. HANDLING/INVESTMENT OF RESERVE FUNDS
All Group Self-Insurance Program general liability reserve funds shall be held in a
custodial (or comparable) account in an appropriate financial institution or institutions. Funds
in such institutions shall be removed only for the following causes:
1 ,
2.
3.
4.
Payment of claims and related claims expenses.
Payment of administrative or other program costs.
Retro-return of premiums as described herein.
Liquidation of the Self-Insurance Program (returns established as if
retro-return premiums).
Other than the above, the integrity of the reserve funds shall be inviolate.
XXIII.PARTICIPATING MEMBER RESERVE FUND LEVELS
It is the intention of program members to establish and maintain individual liability
reserve fund levels. As to the Authority itself, the Executive Committee shall establish a
method of funding reserves for the Authority, at such levels as the Executive Committee shall
deem appropriate. The level of such reserves shall be reviewed from'time to time by the
Underwriting Committee who shall make recommendations for adjustments as necessary.
In general the following guidelines should be followed as to other members:
1. Maintenance of a reserve fund for the individual member Self Insured Retention
losses is mandatory to comply with, within the frrst policy year. The fund level should
approximate three times the individual member Self Insured Retention at any given time.
2. Maintenance of a reserve fund to provide for possible assessment provisions
contained herein. This fund level should approximate three times the highest annual premium
paid to the Self-Insurance Program within the past five years.
Full control of such liability reserve funds shall remain with the individual member.
public agency.
It must be noted that the above fund levels are recommendations only. However, lack
of appropriate funding may be a cause for cancellation of general liability coverage provided
by the Self-Insurance Program. Such review, recommendations for adjustment of funding
levels, and recommendation for cancellation shall be the responsibility of the Underwriting
Committee. Final action in all such cases shall be the responsibility of the Board of Directors
of CIPA.
017.4312.12 1.50 5/20/02
EXHIBIT D
AGREEMENT
AMONG CALIFORNIA INSURANCE POOL AUTHORITY
WORKERS' COMPENSATION POOL MEMBERS AND
CALIFORNIA INSURANCE POOL AUTHORITY
ESTABLISHING CIPA WORKERS' COMPENSATION POOL PROGRAM
This Agreement is entered into by and between the California Insurance Pool
Authority, a California joint powers authority ("CIPA"), and the members of the CIPA Workers'
Compensation Pool Program listed on the signature pages to this Agreement ("Members").
1. The Program shall be liable for the payment of workers' compensation liabilities
of Members in the manner set forth below:
a. Each Member shall self-insure and retain liability for payment of at least
the first $300,000 of each workers' compensation occurrence ("Self-Insured Retention").
b. The CIPA Workers' Compensation Pool Program ("Program") shall cover
each workers' compensation occurrence over $300,000, up to $1,000,000 to the same
extent as provided under the excess insurance policy described below, provided that
discrimination claims made under California Labor Code Section 132(a) shall be covered
regardless of the coverage provided by any excess insurance policy.
c. No Member will, except at the Member's own cost, voluntarily make a
payment, assume any obligation, nor incur any expense, for which the Program is
obligated to reimburse the Member, without the Program's consent. The Program shall
not reimburse a Member for, nor count towards exhaustion of the Member's Self-Insured
Retention, any defense costs or other expenses that were incurred by a Member for a
covered workers' compensation occurrence: (1) prior to the Program's receipt of' written
notice of the occurrence; and (2) without compliance with any litigation management
policies adopted by the Program, regardless of whether the interests of the Program are
prejudiced.
d. CIPA shall procure and maintain in full force a specific excess workers'
compensation insurance policy to cover each workers' compensation occurrence over
$1,000,000 for the Members of the Program.
2. Each Member shall be responsible for administration of workers' compensation
claims, or for contracting separately through C1PA for such services.
3. Contributions and assessments paid to CIPA under this Workers' Compensation
Self-Insurance Program shall not be considered contributions to, or assessments for, CIPA's
General Liability Self-Insurance Program. To the extent that any portion or all of the
contributions or assessments for CIPA' s Workers' Compensation Self-insurance Program are
used to secure excess insurance or reinsurance to cover pooled Workers' Compensation risks,
such contributions or assessments, or portions thereof, shall not be considered assets of CIPA for
purposes of Article 13(b) of the Joint Powers Agreement.
4. Members agree to pay their respective premiums and any other contributions to
the Program as recommended in the Actuarial Review prepared by Bickmore Risk Services
dated May 2 I, 2002, and approved by the Executive Committee of the Board of Directors of
CIPA.
5. This Agreement shall be effective for a term of one (1) year, beginning on July 1,
2002, and ending on June 30, 2003. This Agreement shall be automatically effective in
successive years on the same terms, unless the part/es agree to terminate or amend this
Agreement.
6. This Agreement may be executed in any number of counterparts and all so
executed shall constitute one Agreement,.binding on all of the parties hereto, notwithstanding
that all of the parties are not signatory to the original or the same counterpart. Tiffs Agreement
may be executed by facsimile.
7. The parties agree that the Executive Committee of the Board of Directors of
CIPA, and its designees, are authorized to execute, verify, and file any and all such. documents,
enter into any agreements, and to take any and all such actions on behalf of the Program, as may
be proper and necessary to effectuate the purposes of this Agreement and the Program.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their proper officers thereunto duly authorized.
CALIFORNIA INSURANCE POOL AUTHORITY
c/o Kiser & Company
240 Newport Center Drive, Suite 210
Newport Beach, California 92660
Executed before me this
~ day of ., 2003
By.
Its
Executed before me this
__ day of ., 2003
CITY OF TUSTIN
City Clerk
By
Executed before me this
~day of
,2002
City Clerk
Executed before me this
~day of
,2002
City Clerk
Executed before me this
~ day of
,2002
City Clerk
Executed before me this
~day of
,2002-
City Clerk
Executed before me this
~day of
,2002
City Clerk
Executed before me this
.... day of
,2002
City Clerk
CITY OF CYPRESS
By
CITY OF IRVINE
By
CITY OF LAGUNA BEACH
By.
CITY OF LOS ALAMITOS
By.
CITY OF ORANGE
By,
CITY OF STANTON
By
Executed before me this
~ day of
,2002
CITY OF TUSTIN
City Clerk
By.
Executed before me this
~ day of
,2002
CITY OF WESTMINSTER
City Clerk
By.
Executed before me this
.... dayof
,2002
CITY OF YORBA LINDA
City Clerk
By