HomeMy WebLinkAboutCC 10 RISK MGMNT BY-LWS 6-16-86 GENDA
DATE:
'~ ~ CONSENT CALENDAR
~ NO, 10
_ _
JUNE 11, 1986
TO:
FROM:
SUBJECT:
WILLIAM A. HUSTON, CITY MANAGER
FINANCE DEPARTMENT
ORANGE COUNI"f CITIES RISK MANAGEMENT AUTHORITY BYLAWS AMENDMENT
RECOMMENDATION
Authorize the Mayor ~o sign the attached amendment ~o By-laws of Orange
County Risk Management Authority (OCCRMA) .allowing for an alternative
method of allocating the cost of excess insurance, when warranted.
DISCUSSION
In the current volatile insurance market place OCCRMA has experienced a
sudden sharp increase in premiums. The current "standard formula" for
allocating these premiums to its members does not provide for an
alternative to the 50/50 formula, 50% ISO published manual rates and 50%
average annual incurred losses over a five year period. The attached
By-laws amendment allows for the OCCRMA Board of Directors to propse an
· alternative allocation formula if it appears ~o be warranted.
Finance Director
RAN:skr
Attac hmen t
AMENDMENT TO BY-LAWS
OF
ORANGE COUNTY CITIES RISK MANAGEMENT AUTHORITY
(OCCm A)
THIS AGREEMENT is entered into as of this day
of , 1986, by the undersigned local
public entities which are members of the Orange County
Cities Risk Management Authority ("OCCRMA"). This Agree-
ment amends the By-Laws of OCCRMA adopted in conjunction
with the approval and adoption of the Joint Exercise of
Powers Agreement to Provide Risk Management for'Cities in
the County of Orange, California, approved and adopted
on , 19 .
WHEREAS, pursuant to the By-Laws excess insurance
premiums for liability and worker's compensation coverage
are allocated in large part on the basis of average annual
incurred losses; and
WHEREAS, under certain market conditions, the existing
allocation system is not reflective of the actual cost of
excess insurance coverage as evidenced by underwriter's
quotes; and
WHEREAS, it is the desire and intent of the members of
OCCRMA to modify the existing allocation system for excess
insurance premiums for liability and worker's compensation
coverage to provide an alternate allocation system which
considers the actual allocation of the cost of such insur-
ance by the underwriter.
NOW, THEREFORE, the undersigned members of OCCRMA
hereby agree as follows:
1. Subparagraph (3)(ii) of Subdivision (a) of Sec-
tion 7.100 (Funding) is hereby deleted and replaced with
the following:
"(ii) Liability.
Fifty percent (50%) of the liability premium will
be allocated on the basis of ISO published manual
liability rates. The remaining fifty percent
(50%) will be allocated to participating members
based on average annual incurred losses over a
five year period. This manner of allocation
shall be referred to as the 'Standard Formula'
In the event that, upon receipt of underwriter's
quotes for any given premium period, the alloca-
tion for any individual member pursuant to the
Standard Formula is more than ten percent (10%)
higher or lower than the underwriter's quote for
that member, calculation of the allocation of all
liability premiums shall be based upon an alter-
nate allocation formula (the 'Alternate Formula')
should the majority of the Board determine that
an alternate formula is appropriate.
The Alternate Formula shall meet the following
criteria:
(a) It shall be approved by the Board;
(b) It shall take into account the actual under-
writer's quote;
(c)
To the extent feasible, the Alternate
Formula shall be designed to minimize the
variance between any participating member's
allocation and the underwriter's quote
attributable to that member.
(d)
The Alternate Formula shall be designed to
distribute the premium allocation equitably
among the participating members."
2. Subparagraph (3)(iii) of Subdivision (a) of
Section 7.100 (Funding) is hereby deleted and replaced with
the following:
"(iii) Worker's Compensation. -
Fifty percent (50%) of the worker's compensation
premium will be allocated on the basis of manual
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worker's compensation premiums. The remaining
fifty percent (50%) will be allocated to partici-
pating members based upon average annual incurred
losses over a five year period. This manner of
allocation shall be referred to as the 'Standard
Formula'.
In the event that, upon receipt of underwriter's
quotes for any given premium period, the alloca-
tion for any individual member pursuant to the
Standard Formula is more than ten percent (10%)
higher or lower than the underwrlter's quote for
that member, calculation of the allocation of all
worker's compensation premiums shall be based
upon an alternate allocation formula (the
'Alternate Formula') should the majority of the
Board determine that an alternate formula is
appropriate.
The Alternate Formula shall meet the following
criteria:
(a) It shall be approved by the Board;
(b) It shall take into account the actual under-
writer's quote;
(c)
To the extent feasible, the Alternate
Formula shall be designed to minimize the
variance between any participating member's
allocation and the underwriter's quote
attributable to that member.
The Alternate Formula shall be designed to
distribute the premium allocation equitably
among the participating members."
3. Ail remaining provisions of the By-Laws shall
remain unchanged.
IN WITNESS WHEREOF, the undersigned have executed this
Amendment as of the date first above written.
MAYOR
CITY CLERK
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