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The Kentucky Association of Counties All Lines Fund held a Board of Directors' meeting, pursuant to proper notice given in accordance with KRS 61.823, at 12:50 p.m. on Wednesday, May 27, 2020 via teleconference in Frankfort, Kentucky.
The roll was called. The following Directors participated by phone: Chairman Robert Carpenter, Greenup Co. Judge/Executive; John Wilson, Garrard Co. Judge/Executive; Orbrey Gritton, Anderson Co. Judge/Executive; Charles Kenner, Boone Co. Commissioner; and Adam O'Nan, Union Co. Judge/Executive.
Others participating by phone included: Temple Juett, Director of Insurance; Jim Henderson, Executive Director/CEO; Tim Sturgill, General Counsel; Karen Basham, Chief Financial Officer; Michael Ray, Safety & Loss Control Manager; Bruce Lawson, Senior Accountant; Crystal Hellard, Litigated Claims Specialist; Kris Dunn, Underwriting Manager; Jeremy Head, Claims Manager; Andrea Morse, Associate Underwriter; Rich Ornstein, Staff Attorney; Phil Crumpton, Law Enforcement Specialist; Steve Bolton, Board Counsel; Rob Brown and Joe Greathouse, LGIA/KACo Marketing Agents; Clint Combs, Peel & Holland/Marketing Agent; Sue Porter, Kathy Marshall and Michelle Barrett, Roeding Insurance/Marketing Agents; Grant Satterly, Director of Financial Services; Jeremy Russell, Underwriters, Safety & Claims; Kristie Whistle and John Logan, Marsh, Inc.; Jon Sharp, IT Manager; and Sonya Chesser, Chief Administrative Officer/Executive Assistant to CEO.
Chair Carpenter called the meeting to order at 12:55 p.m.
Motion made by John Wilson, seconded by Orbrey Gritton, to approve the minutes of the April 22, 2020 meeting. Motion carried.
Ms. Basham presented and discussed the following reports: balance sheet as of April 30, 2020; FY 2019/20 budget detail for the ten months ending April 30, 2020; FY 2019/20 PAF budget for period July 1, 2019 through April 30, 2020; FY 2019/20 agent commissions as of April 30, 2020; FY 2019/20 additions and deletions for period April 1 - 30, 2020; FY 2019/20 premium receivables as of May 21, 2020 including a verbal update on payments received to date; and FY 2019/20 investment portfolio summary as of April 30, 2020. She provided an update on the Fund's investments.
Motion made by John Wilson, seconded by Orbrey Gritton, to acknowledge receipt of the financial reports as presented. Motion carried.
Mr. Head, providing the quarterly claims report, said he anticipates that the Fund will be over budget by at least 8% this fiscal year on claims payments. However, he said the number of claims and the cost per claim are down for this current year, which will result in a decrease of roughly $10,000,000 in incurred claims. He provided claims information by year, 2015 to 2019, including incurred, frequency, exposure and more. He also provided the total number of open and closed for 2019 and the new reported claims for April 2020.
Ms. Basham presented and discussed the FY 2020/21 proposed draft budget. The board will adopt the final budget in the fall once the actuarial study has been completed.
Ms. Whistle presented and discussed the reinsurance options for FY 2020/21. She said the current program includes property and liability on a five year policy with Munich Re effective July 1, 2018 and expiring July 1, 2023 with the option of a five year extension. At the Board's request, Marsh sought bids for the upcoming policy year with Munich Re and County Reinsurance Limited (CRL) submitting quotes. Ms. Whistle provided a comparison of coverages offered by each carrier and pricing. She recommended that the Board contract with CRL but recommended requiring CRL to secure claim payments in a separate fund, a 114 trust. Mr. Juett provided additional information regarding pricing and coverage with Munich Re and CRL with CRL offering better coverage options and price.
Motion made by John Wilson, seconded by Orbrey Gritton, to contract with County Reinsurance Limited (CRL) for policy year 2020/21 as recommended by Marsh and staff. Motion carried.
Mr. Juett requested approval of a memorandum of extension and amendment with Marsh commencing on July 1, 2020 and continuing through June 30, 2023. At the conclusion of this term, there will be an option for one additional extension of three years remaining.
Motion made by John Wilson, seconded by Orbrey Gritton, to approve the memorandum of extension and amendment as presented. Motion carried.
Mr. Juett presented changes to the FY 2020-21 policy. He recommended adding coverage for watercraft by extending the length from 26 feet to 50 feet and to add a pandemic exclusion.
Motion made by John Wilson, seconded by Orbrey Gritton, to approve coverage for watercraft by extending the length to 50 feet and to add a pandemic exclusion. Motion carried.
Mr. Juett provided the board with a copy of his monthly director's report.
Motion made by Orbrey Gritton, seconded by Charles Kenner, to move the next regularly scheduled meeting from June 16th at the Marriott Griffin Gate in Lexington to June 24th via teleconference at 12:50 p.m. (EDT). Motion carried.
Motion made by John Wilson, seconded by Adam O'Nan, to go into closed session at 1:42 p.m. to discuss proposed or pending litigation involving the board as authorized by KRS 61.810 (1)(c). Motion carried.
Motion made by John Wilson, seconded by Orbrey Gritton, to return to open session at 2:01 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 2:01 p.m. Motion carried.
