Wednesday, February 27, 2019

The Kentucky Association of Counties All Lines Fund held a special Board of Directors' meeting, pursuant to proper notice given in accordance with KRS 61.823, at 1:00 p.m. on Wednesday, February 27, 2019 at 400 Englewood Drive in Frankfort, Kentucky.

The roll was called. The following Directors were present: Chairman Robert Carpenter, Greenup Co. Judge/Executive; John Wilson, Garrard Co. Judge/Executive; Orbrey Gritton, Anderson Co. Judge/Executive and Charles Kenner, Boone Co. Commissioner.  The following Director was absent: Adam O'Nan, Union Co. Judge/Executive.

Others present were: Temple Juett, Director of Insurance; Brian Roy, Executive Director/CEO; Jim Henderson, Deputy Director; Kris Dunn, Underwriting Manager; Michael Ray, Safety & Loss Control Manager; Jeremy Head, Claims Manager; Bruce Lawson, Senior Accountant; Tim Sturgill, General Counsel; Karen Basham, Chief Financial Officer; Crystal Hellard, Litigated Claims Specialist; Rich Ornstein, Staff Attorney; Macy Thompson and Kathy Basham, Customer Service Representatives; Clint Combs, Peel & Holland/KACo Marketing Agents; Sue Porter, Roeding Insurance/KACo Marketing Agents; Joe Greathouse, LGIA/KACo Marketing Agent; Andrea Morse, Underwriter Associate; Ed Meredith, Underwriters, Safety & Claims; Steve Bolton, Board Counsel; Kristie Whistle, Marsh,  Inc.; Greg Coker, Greg Coker Development; Jesse Penn, Computer Support Specialist; and Sonya Chesser, Executive Secretary.

Chairman Carpenter called the meeting to order at 1:05 p.m.

Motion made by John Wilson, seconded by Orbrey Gritton, to approve the minutes of the January 30, 2019 meeting. Motion carried.

Ms. Basham presented and discussed the following reports: FY 2018/19 budget detail for the seven months ending January 31, 2019; balance sheet as of January 31, 2019; FY 2018/19 PAF budget for period July 1, 2018 - January 31, 2019; FY 2018/19 addition and deletions for January 1 - 31, 2019; FY 2018/19 premium receivables as of February 22, 2019 including an oral update on members paid to date; FY 2018/19 agent commissions as of January 31, 2019; and FY 2018/19 investment portfolio summary as of January 31, 2019.

Mr. Bolton said he spoke with the chairman of Knox County Help, Inc. and, given that the program has no funds, the FY 2018/19 policy will be cancelled retroactive to July 1, 2018, which will protect KACo against any claims.  Mr. Bolton has drafted a release letter and contract for review by Mr. Juett and Mr. Sturgill. Once approved, it will be forwarded on to Judge Hopper, the board's chairman, for his signature.

Ms. Porter provided an update on Perry County Fiscal Court and Kentucky River Regional Jail Authority that have outstanding balances.

Motion made by John Wilson, seconded by Charles Kenner, to accept the financial reports as presented.  Motion carried.

Mr. Head presented and discussed the following claims activity reports: summary of losses valued as of January 31, 2019; graphs of opened and closed claims during FY 2018/19; total open claims for all years as of January 31, 2019; and a chart comparing the number of claims from the last three to five to ten years including the incurred monthly averages as of June 30, 2018. There were a total of 225 newly reported claims totaling an incurred value of $1,172,562.90 for the month of January 2019 as compared to 213 reported claims totaling an incurred value of $3,152,831.68 for the month of January 2018.

Motion made by Orbrey Gritton, seconded by John Wilson, to approve the report as presented.  Motion carried.

Mr. Ray, providing a loss control update, said for the month of February, staff has presented at six of its ten KACo insurance forums across the state. Staff is promoting its return to work policy and has created sample job descriptions and guidelines to assist members in crafting appropriate job descriptions. He said jail consultant, Tracey Reed, has partnered with KACo to provide a training on March 14th for jail personnel with instructors from the Department of Corrections and Crisis Negotiations team. He said KACo has developed two additional posters to be displayed in all member jails concerning fatal warnings from drug withdrawals and warning signs commonly associated for intoxication and withdrawals.

Mr. Juett said the board previously approved awarding Peel & Holland as regional agent for Territory A.  He asked approval to allow the chair to sign the agent agreement between KACo and Peel & Holland for period July 1, 2019 through June 30, 2022.  The engagement period may be extended by mutual agreement for up to two additional three year periods.

Motion made by John Wilson, seconded by Orbrey Gritton, to authorize Chairman Carpenter to sign the agreement between KACo and Peel & Holland.  Motion carried.

Mr. Juett requested approval authorization for the chairman to sign an agreement between the Fund and Legal and Liability Risk Management Institute (LLRMI).  The term of the agreement shall be for a period commencing upon the execution by both parties and terminating December 31, 2020 and shall automatically renew for an additional one (1) year term unless either party provides the other party at least thirty (30) days written notice.

Motion made by Orbrey Gritton, seconded by John Wilson, to authorize Chairman Carpenter to sign the agreement between the Fund and Legal and Liability Risk Management Institute (LLRMI).  Motion carried.

Mr. Juett presented and discussed the actuarial rate study as prepared by Oliver Wyman Actuarial Consulting, Inc. for period ending June 30, 2020. He said, historically, the board has adopted the expected level at a 2% discount, which this year would result in basically a flat renewal or a 0.6% decrease.  He said staff's recommendation is to adopt the expected level at a 2% discount for $40,431 million.

Motion made by John Wilson, seconded by Charles Kenner, to acknowledge receipt of Oliver Wyman's actuarial rate study dated February 20, 2018 and to adopt the necessary rates for FY 2019/20 at the expected level, discounted 2%, to generate projected gross premiums of $40,431 million across all lines of coverage.  Motion carried.

Mr. Juett said staff is exploring a separate rate study concerning the liability side going from a budget exposure to a payroll exposure. He said Oliver Wyman has submitted an engagement letter for the scope of work at a fee of $15,000. He will request approval at the next meeting for the board's consideration.

Mr. Juett recommended holding a board retreat on March 27th with the Workers Compensation Fund Board holding a special meeting at 10:00 a.m. and the KALF Board holding a special meeting at 11:00 a.m. followed by a joint retreat for both programs. The board concurred.

Mr. Juett discussed new car replacement coverage.  This additional coverage would allow the insured member to receive a new vehicle in place of their totaled vehicle if the totaled vehicle is less than two years old, has less than 40,000 miles and the value is less than $100,000.

Motion made by John Wilson, seconded by Orbrey Gritton, to approve the new car replacement coverage. Motion carried.

Mr. Juett said staff continues to review the HR Portal and will present a recommendation at a later date.

Mr. Juett provided the board with a list of members that will receive a dividend check from the KACo Workers Compensation Fund.  He said this initiative will be marketed across the state.

Mr. Roy introduced Mr. Coker who will be assisting KACo to develop a strategic plan for KACo and is currently visiting with stakeholders to assist in the process.

Motion made by John Wilson, seconded by Orbrey Gritton, to go into closed session at 1:46 p.m. to discuss proposed or pending litigation involving the board as authorized by KRS 61.810 (1)(c). Motion carried.

Motion made by Orbrey Gritton, seconded by Charles Kenner to return to open session at 2:20 p.m.  Motion carried. No action was taken in closed session.

Motion made by John Wilson, seconded by Orbrey Gritton, to adjourn the meeting at 2:21 p.m.  Motion carried.