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The Kentucky Association of Counties Workers' Compensation Fund held a special Board of Trustees' meeting, pursuant to proper notice given in accordance with KRS 61.823, at 10:00 a.m. on Monday, November 23, 2020 via teleconference.
The roll was called. The following Trustees were present: Chairman Greg Terry, Carlisle Co. Judge/Executive; Vice-Chair Dan Mosley, Harlan Co. Judge/Executive; Michael Logsdon, Oldham Co. Magistrate; Elbert Bennett, Caldwell Co. Magistrate; and Casey Ellis, Owen Co. Judge/Executive.
Others participating included: Temple Juett, Director of Insurance; Jim Henderson, Executive Director/CEO; Karen Basham, Chief Financial Officer; Michael Ray, Safety & Loss Control Manager; Jeremy Head, Claims Manager; Andrea Morse, Associate Underwriter; Kris Dunn, Underwriting Manager; Marie Skinner, Accountant; Crystal Hellard, Litigated Claims Specialist; Rich Ornstein, Staff Attorney; Rob Brown and Joe Greathouse, LGIA/KACo Marketing Agents; Paul Harnice, Board Counsel, Stoll, Keenon, Ogden, PLLC; Bruce Lawson, Senior Accountant; Phil Crumpton, Law Enforcement Specialist; Clint Combs, Peel & Holland/Marketing Agent; Sue Porter and Kathy Marshall, Roeding Insurance/Marketing Agents; Greg Sisson, Underwriters, Safety & Claims; John Logan, Marsh, Inc.; Jennifer Burnett, Chief Innovation Officer; Sonya Chesser, Chief Administrative Officer/Executive Assistant to CEO.
Chairman Terry called the meeting to order at 10:40 a.m.
Motion made by Elbert Bennett, seconded by Casey Ellis, to approve the minutes of the October 21, 2020 meeting as presented. Motion carried.
Ms. Basham presented and discussed the following reports: balance sheet, income statement, and claims expense report as of October 31, 2020; FY 2020/21 PAF budget for period July 1, 2020 - October 31, 2020; check history report for October 1 - 31, 2020; additions and deletions for the premium for October 1 - 31, 2020; FY 2020/21 agent commissions earned to date as of October 31, 2020; FY 2020/21 premium receivable as of November 13, 2020; and FY 2020/21 investment portfolio summary as of October 31, 2020.
Motion made by Dan Mosley, seconded by Elbert Bennett, to acknowledge receipt of the financial reports as presented. Motion carried.
Ms. Basham presented and discussed the Fund's dividend policy and financial analysis for board's consideration in determining whether to declare a dividend payable in the July 1, 2021 policy term. She said the dividend would be based on policy year 2007-08. Mr. Juett recommended that the board declare a $2 million dividend to be paid after July 1, 2021, subject to the approval of the Department of Insurance. At a later date, the Fund can consider whether to use surplus to reduce overall premium needed once the rates are determined in January. Only those who were members in 2007-08 and remain members after July 1, 2021 will be eligible to receive a dividend.
Mr. Juett answered questions from the board concerning how the recommended amount was determined, whether market conditions had been considered and the Fund's financial position.
Mr. Harnice noted that the board had done its due diligence in ensuring that declaring a dividend would be in the Fund's best interest in accordance with Kentucky's business judgement rule.
Motion made by Casey Ellis, seconded by Michael Logsdon, to follow staff's recommendation and declare a dividend on policy year 2007-08, subject to the approval of the Department of Insurance, in the amount of $2 million to be paid after July 1, 2021. Motion carried.
Mr. Head presented and discussed the claims for the quarterly period of July 1, 2020 through October 31, 2020.
Mr. Juett presented and discussed an agreement with The Underwriters Group and Succeed Risk Management jointly with the KACo Workers Compensation Fund and KACo All Lines Fund for software services for loss control videos. He said The Underwriters Group is moving these services from the current vendor, Succeed Risk Management, to Zywave. The term is effective January 1, 2021 through December 31, 2021 at annual cost of $5,000 to be split between the KACo Workers Compensation Fund and KACo All Lines Fund.
Motion made by Michael Logsdon, seconded by Elbert Bennett, to approve the contract between the Fund and The Underwriters Group for safety videos commencing on January 1, 2021 and concluding on December 31, 2021 in the amount of $5,000, as presented. Motion carried.
Mr. Juett presented the Fund's investment policy, as adopted October 24, 2018, for the board's annual review of the policy. He said that investment options for the Fund are limited by statute and the Fund's investment managers recommended no changes to the Fund's investment strategy. Therefore, staff recommends no changes to the policy.
Mr. Juett presented and discussed an engagement letter for Oliver Wyman to perform an actuarial rate study on policy year 2021-2022 at a cost of $9,750.
Motion made by Dan Mosley, seconded by Michael Logsdon, to approve the engagement letter with Oliver Wyman to perform the actuarial rate study for policy year 2021-2022 in the amount of $9,750 as presented. Motion carried.
Mr. Juett, giving the executive director's report, provided a list of the safety grants awarded for 2020. He said staff approved a little over the $200,000 limit because he believes a few entities may not take advantage of the program, which will result in the Fund not exceeding the $200,000 limit.
The board agreed to move the time of the December 21st meeting from 10:30 a.m. to 10:40 a.m.
Motion made by Elbert Bennett, seconded by Michael Logsdon, to go into closed session at 11:15 a.m. to discuss proposed or pending litigation involving the board as authorized by KRS 61.810 (1)(c). Motion carried.
Motion made by Dan Mosley, seconded by Elbert Bennett, to return to open session at 11:30 a.m. Motion carried. No action was taken in closed session.
Motion made by Michael Logsdon, seconded by Dan Mosley, to adjourn the meeting at 11:30 a.m. Motion carried.
