HomeMy WebLinkAboutNB 2 JT PWRS AG 08-18-86 --.--- NEW BUSINESS
q~"/mm ~2~ - 8-18-86
DATE AUGUST 13, 1986 Co1'~
TO:
FROM:
SUBJECT:
WILLIAM A. HUSTON, CITY PIANAGER
FINANCE DEPARTtlENT
AMENOMENTS TO JOINT POWERS AGREEMENT AND BYLAWS OF THE ORANGE
COUNTY CITIES RISK MANAGEMENT AUTHORITY
RECOMMENDATION
Adopt amendments to the Orange County Cities Risk Management Authority
(OCCRMA) Joint Powers Agreement and Bylaws, allowing the creation of a risk
sharing pool and dissolvement of the buffer fund.
BACKGROUND
As you are aware the liability insurance market place has become extremely
volatile and fraught with uncertainity. At the present time, as a member
of OCCRMA, the City of Tustin is self-insured with a retention of $250,000
and excess coverage of $5 million. While this is a significant decrease in
coverage from previous years at least we have some protection beyond our
self-insured retention.
Our most recent contact with our excess carrier indicates that they may be
willing to offer coverage for the year beginning December 13, 1986 but only
to a limit of $1 million, at no significant drop in our current premium,
minimum of $320,000, with a possibility of an increase in premium. At
these cost for coverage levels it is no longer a benefit to the City to pay
for excess insurance protection.
Staff of the OCCRMA member agencies have been working together with our
Risk Manager, Attorneys and Insurance Consultants on realistic alternatives
to cost prohibitive premiums or going "bare".
The Board of Directors of OCCRMA, with concurance of City staff, are
recommending to amend the Joint Powers Agreement and the Bylaws to expand
the scope of OCCRMA's self-insurance program to include a risk sharing
pool. The attached amendments are drafted to be as general as possible
with the intent that specific provisions would be set forth in any plan
documents developed for the program. The amendments do not obligate the
City in any way to joining a risk sharing pool, it on~ allows OCCRMA to
offer an option to the present program.
Regarding the buffer fund, the OCCRMA Board is recommending that the buffer
fund requirement be deleted and that the current balances be returned to
the member agencies. During the formation of OCCRMA the buffer fund was
created as mandatory reserve fund for the use of all members as a borrowing
pool for the payment of shock claims. As we've become more proficient as
Risk Managers it is the present feeling that the buffer fund deposits are
William A. Huston
August 13, 1986
Page 2
no longer necessary and can be better used by the contributing members.
The~i)ty shall receive some $93,000 from this liquidation. This money will
bemired into the self-insurance fund as a reserve for future claims.
Ro~ld A. Nault
Finance Director
RAN:skr
Attachment
AMENDMENT TO ~OI#T EXERCISE OF POWERS AGREEMENT
OF
ORANGE COUNTY CITIES RISK ~NAGEHE#T AUTHORITY
(occP, )
THTS AGREEJqENT ts entered into by the City of Tusttn whtch is a member
of the Orange County Ctttes Risk Hanagment Authority ("OCCRIqA"). This
Agreement amends the Joint Exerctse of Po~ers Agreement to Provide Risk
Hanagement for Ctttes in the County of Orange, California, approved and
adopted on June 13, 1978 (the "Joint Po~ers Agreement").
WHEREAS, due to the changing insurance market and the Inability of
many local entities to acquire liability insurance, it my be necessary, in
order to accommodate the needs of the Individual members, for OCCPJ~A to
offer a variety of insurance and self-Insurance programs; and
WHEREAS, It Is the desire and intent of the members of OCCPJqA to
modtfy the extstttng Jotnt Po~ers Agreement to provide for the concurrent
administration of Insurance and self-Insurance programs.
#0#, THEREFORE, the undersigned member of OCCRIqA hereby agrees as
follows:
1. The stxth paragraph of Sectton 1.100, Joint Exercise of Po~ers
is hereby deleted and replaced with the following:
"ktlEREAS, each of the parties to the Agreement desires to join
together wtth the other parttes for the purpose of Mnlmtzing risk through
any, all or' any combination of the following: poollng of rtsk, ion funding
of insurance or risk reserves In any legal manner, formation or rental of a
capttve insurer, establishing certatn self-insured reserves agaunst losses
and jointly purchasing insurance, excess Insurance, reinsurance and
administrative services in connection with a cooperative program of risk
management; ·
2. The first paragraph of Subdivision (f) of Article 1.
Definitions, is hereby deleted and replaced with the following:
"(f) "Participation" or "Participating" shall mean a member agency's
actton or state of taking part in the programs of the Authority by doing
all, any, or any combination of the following through the Authority with
respect to one ur more risk areas."
3. Subdivision (f) of Arttcle 1. Definitions is hereby amended by
adding paragraph (vi) as follows:
"(vi) participate by the payment of premiums and entorlng into
requisite agreements in any poollng of losses, capttve insurance programs
or other self-insurance program established and admtnistored by the
Authority. ·
4. Subdivision (g) of Article 1. Definitions, is hereby deleted
and replaced with the following:
"(g) "P~ting Structure" shall mean the means by which premiums,
assessments, contributions to a fund. or allocated expenses are established
for a rtsk area or Insurance program on the basis of conditions which
affect the probability of loss."
5. Subdivision (a) of Article 4. OCGPJ4A Powers, is hereby deleted
and replaced with the following:
"(a) OCCPJ4A shall have the power and the duty to establish and
operate a program of risk management and provide for its execution either
directly by OCCPJ4A or by contract.'
6. Subdivision (b) of Arttcle 4. OCCRMA Powers. is hereby deleted
and replaced with the following:
'(b) OCCRMA is authorized to rake 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
l tries of credit, and to sue and be sued in its own name. The foregoing
powers tnclude, but are not limited to, those relative to contracting for
excess insurance or reinsurance, risk pooltng formation of an owned ur use
of non-owned captive insurance co~q~ny, funding of self-Insurance in any
legal manner, clatms administration services and consulsting services.'
7. The first sentence of Subdivision (a) of Article 8. 14e~ership
Term: Withdrawal. hereby deleted and replaced with the following:
'(a) A party to this Agreement shall remain a me,er agency for a
minimum of two years; thereafter the me,er agency may withdraw by:
(1) Giving written notice to th 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, and
(2) Fully performing its obligations as a me,er agency."
8. All remaining provisions of the Joint Powers Agreement shall
remain unchanged.
9. Thts amendment to the Joint Powers Agreement shall be effective
on that date which t~o-thtrds (2/3) of the existing OCCP~ meudaership have
approved this amendment.
IN #ITNESS MtEREOF, the undersigned have executed this Asend~ent as of
the date first above ~ritten.
CITY OF TOSTIN
ORANGE COUNTY CITIES RISK
MANAGEMENT AUllIORITY
BY:
Mayor of the City of Tustin
Presid&nt
BY:
City Clerk of the City of Tustln
APPROVED AS TO FORM:
BY:
City Attorney, City of Tustln
AMENDMENT TO BYLAWS
OF
OeA~G£ COUNTY CITIES RISK ~ANAGEME~T AUTHORITY
(OCCm~A)
Tills AGREEMENT ts entered into by the City of Tustin which is a member
of the Orange County Ctties Rtsk Management Authority ("OCCRMA"). This
Agreement amends the Bylaws of OCCRI~A originally adopted in conjunction
with the approval and adoption of the Joint Exercise of Powers Agreement to
Provide Risk ~tanagement for Cities tn the County of Orange, California, on
June 13, 1978, and amended on November 27, 1979 and on ~lay 27, 1986.
gNEREAS, due to the changing Insurance mrket and the Inability of
tony local entities to acqutre 1lability Insurance, tt my be necessary, tn
order to accomdate the varying needs of individual members, for OCCRlqA to
offer a vartety of insurance and self-insurance programs; and
MIEREAS, tt is the desire and intent of the members of OCCPJ4A to
modify the ex,siting Bylaws to provide for the concurrent administration of
insurance and self-insurance programs; and
WNEREAS, the members of OCCRI~A have determined that the mtntenance of
a buffer fund ts no longer destreable or necessary, and by ~otton approved
June 26, 1986, authorized the Board to determine a procedure for
liquidation of the buffer fund and distribution of funds to participating
ct ti es.
#OW, TtlEREFORE, the undersigned member of OCCRI~A hereby agrees as
fo11 ows:
1. Subparagraph (t) of Paragraph (1) of Subdivision (a) of Section
1.100, Purposes, is hereby deleted and replaced with the following:
"(i) Reduced costs of insurance coverage through effective loss
control practices, pooling of risk, and combined purchasing power;"
2. Paragraph (2) of Subdivision (a) of Section 1.100, Purposes, is
hereby deleted and replaced with the following:
"(2) To provide a self-insurance and risk management program and
system including any, a11, or any combination of the following:
payment of claims and benefits as authorized by OCCRMA's member
agencies; administration of one or mere 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 ltmited to, 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 tnsruance and acquire
reinsurance; joint purchase of administrative and other services
includtng risk management, con sul ting, brokering, clai ms
administration, claims adjusting, loss prevention, data processing,
legal and related services.'
3. Subdivision (a) of Section Z.130, Quorum; Vottng, ts hereby
deleted and replaced with the following:
'(a) A quorum for the transaction of business by the Board shall
constst of a mjortty of the representatives, or thetr alternates, of
· e~bers of OCCRI4A e119161e to vote on the business at hand."
4. Subdivision {c) of Section Z.130, Quorum; ¥oting, is hereby
deleted and replaced wtth the following:
'(c) Each representative on the Board my vote on each rotter brought
before the Board for decisions. Except, tf the Board by mejorlty vote
designates a particular rotter as one whtch pertains only to a given risk
area (e.g., mrkors' co,pensatton) or a specific insurance program (e.g.,
self-insured pool), then only the representatives of those members who are
parttcipeting members vtth respect to the given risk ur spectftc insurance
program .By VOte upon the rotter. This limitation respecting who my vote
on certatn rotters is not tntended to prohtbtt any member from expressing
1ts opinion as to how those qualified to vote should vote.'
5. Paragraph (11) of Subdivision (a) of Sectton 5.110,
Respenstbilities of Risk Manager, is hereby deleted and replaced with the
fo11 owi n g:
'(11) Conduct risk mnagement audits to review the participation of
each member agency in one or mere of the Authortty's programs. The audit
team shell include the Risk IMnager, the Board representative from the
entity being audited and a Board representative from at least one other
~ber agency. The Risk tMnagor will submit an audit report to the
governing body of the audited m~ber agency.'
6. Paragraph 14 of Subdivision (a) of Section 5.110,
Responsibilities of Risk l~nager Is hereby deleted and replaced with the
fo11 ow1 ng:
"(14) The Rtsk ganager's responsibility to perfor, the above services
wtth respect to any amber agency ts 11mited to those risk areas or
spectftc insurance programs tn which the member agency Is a participating
member. '
7. Section 6.100, Member Agencies, ts hereby deleted and replaed
with the following:
"Sec. 6.100 MEMBER AGENCIES
(a) Any party to the Agreement is a member agency. Any local
public entity in the County of Orange or in a county contiguous
to the County of Orange my become a party to the OCCRFIA
Agreement by agreeing to be bound by the Agreement and these
Bylaws and by co~plying with all of the following requirements:
(1) Submit application for membership and obtain Board
approval.
(Z) Execute the original of the OCCRI~A Joint Exercise of
Powers Agreement as amended from time to time, and
(3) Become a participating msmber with respect to at least one
risk area or insurance program handled by OCCRtqA, and
(4) Pay a fee to OCCRHA as determined by the Board for tnitlal
rtsk program analysis and structuring consulting services.
(b) gonctty loeal public entities my be admitted as participating
·ember agencies upon terms and conditions, if any, approved by the
Board.
(c) Additional requirements, as approved by the Board, my be
i~posed for participation in specific insorance programs or risk
areas. '
8. Subdivision (d) of Sectton 6.110, Duties of the Hember Agencies,
ts hereby deleted and replaced with the followng:
#(d) Provtde necessary data to asstst tn obtaining reinsurance,
excess insurance, claims administration service quotes or as otherwise
requtred for participation tn spectftc Insurance programs."
9. Subdivision (g) of Sectton 6.110, Duties of the Hember Agencies,
ts hereby deleted and re~aced with the following:
"(g) Pay when due all premium of assessments levted by the Board
pursuant to the OCCRYlA Agreement, Bylaws, specific Insurance plans, or
Board poltc~es adopted in furtherance of the Agreement or By]aws."
10. Subdivision (h) of Sectton 6.110, Duties of the Re,bet Agencies,
is hereby deleted and replaced with the following:
'(h) Enter Into and mintatn contracts of insurance or reinsurance as
requtred by the Board in rtsk areas or spectfic insurance programs tn
uhtch the member agency is participating.'
11. Subdivision (f) of Section 6.120, Rights of Hember Agencies, ts
hereby deleted and replaced with the following:
"(f) Recetve a refund of any credit balance of the member agency's
account or accounts tn Authority funds or any reserve account upon
withdrawal of membership or dissolution of the Authority. The ttming
and nature of receipt of such refunds or credit balances shall be
governed by the Agreement, Bylaws, and any requirements established by
the Board ur in any contract or plan document entered into or approved
by the Authority or participating mmbers relating to the specific
insurance programs which the member is a participant in. Return of
any funds shall be subject to offset by any outstanding assessments
due to Authority or any insurer by the withdrawing member."
12. Paragraph (1) of Subdivision (a) of Section 7.100, Funding, is
hereby deleted and re~aced with the following:
'(1) individual Ctty Self-Znsurance Fund
Each participant shall establish for each area of risk participation
or spectftc insurance program a fund for the predicted and expected
self-insured retention and/or deductible. This fund will be
maintained by each agency for its own use in the amount and manner
required by the OCCRMA Board or the specific insurance program of the
participant.'
13. Paragraph (2) of Subdivision (a) of Section 7.100, Funding,
relating to Buffer Funds, is hereby deleted.
14. Paragraph (3) of Subdivision (a) of Section 7.100, Funding,
relattng to Excess insurance Premiums ts hereby renmaberd as Paragraph (2).
15. Paragraph (4) of Subdivision (a) of Section 7.100, Funding
relating to Rtsk Fbnagemont Services, is hereby deleted and rep]aced with
the fo]lowing paragraph {3):
'(3) The cost of risk management services will be a11ocatod in
accordance with a formola to he approved by the Board on an annual basis.
Such formula shall take Into account the number of risk areas or speciftc
insurance programs each member participates tn.'
16. Paragraph (5) of Subdivision (a) of Section 7.100, Funding,
relating to Claims and Administration Services is hereby renmbered
paragraph (4) and a new paragraph {5) Is hereby inserted as follows:
'(5) Trust Accounts
Trust Accounts shall be established by the Board for funding of pooled
losses as requtred by the approved terms of a risk-pooling program
administered by the Authority.'
17. Section 7.115, Clatms Settlemsnt, is hereby deleted and replaced
wtth the following:
'Sec. 7.115 CLAIMS SETTLEHENT
Unless otherwise provided in an approved plan of insurance or
risk-pooling admlnlsterd 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 filed.'
18. Section (1) of Subdivision (c) of Section 11.100 Flemper
Withdrawal; OCCRIqA Dissolution, is hereby deleted and re~aced with the
following:
'(1) A sum shall be arrived at by calc~ating the cumulative paid in
full contributions ~us any investment income of the withdrawing
member and prorata share of any assets of OCCRHA less the cumulative
losses and expenses of the withdrawing member and a prorata share of
operating costs of the Authority. Any such distribution is subject to
adjustment in the amount or time of the distribution to accomedate the
approved requirements of any insurance or pooled risk program in which
the withdrawing member is a participant.'
19. All remaining provisions of the Bylaws shall remain unchanged.
20. Thts amendment to the Bylaws shall be effective on that date
which t~o-thtrds (2/3) of the extsttng OCCRMA membership have approved thts
amendment.
IN tIITNESS ~IEREOF, the undersigned have executed this Amendment as of
the date ftrst above ~rltten.
CZTY OF TUSTIN
ORANGE COUNTY CITIES RISK
JUNAGDIENT AUTHORITY
BY:
Hayor of the Ctty of Tusttn
President
BY:
City Clerk of the City of Tustin
APPROVED AS TO FORM:
BY:
Ct tyAttorney, City of Tusttn