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The Board of Directors of the KACo All Lines Fund and the Board of Trustees of the KACo Workers' Compensation Fund held a special joint meeting, pursuant to proper notice given in accordance with KRS 61.823, at 11:00 a.m. on Tuesday, June 25, 2019 at 400 Englewood Drive in Frankfort, Kentucky.
The roll was called. The following KACo Workers Compensation Trustees were present: Chairman Greg Terry, Carlisle Co. Judge/Executive; Vice-Chair Dan Mosley, Harlan Co. Judge/Executive; Michael Logsdon, Oldham Co. Magistrate; Casey Ellis, Owen Co. Judge/ Executive; and Elbert Bennett, Caldwell Co. Magistrate.
The roll was called. The following KACo All Lines Fund Directors were present: Orbrey Gritton, Anderson Co. Judge/Executive; Charles Kenner, Boone Co. Commissioner (via phone); and Adam O'Nan, Union Co. Judge/Executive.
Others present were: Temple Juett, Director of Insurance; Jim Henderson, Executive Director/CEO; Kris Dunn, Underwriting Manager; Michael Ray, Safety & Loss Control Manager; Jeremy Head, Claims Manager; Bruce Lawson, Senior Accountant; Karen Basham, Chief Financial Officer; Tim Sturgill, General Counsel; Crystal Hellard, Litigated Claims Specialist; Rich Ornstein, Staff Attorney; Sue Porter, Roeding Insurance/KACo Marketing Agent; Rob Brown and Joe Greathouse, LGIA/KACo Marketing Agents; Jerry Pace and Clint Combs, Peel & Holland/KACo Marketing Agents; Andrea Morse, Associate Underwriter; Marie Skinner, Accountant; Kathy Basham, Customer Service Representative; Grant Satterly, Director of Financial Services; John Logan and Kristie Whistle, Marsh, Inc.; Steve Bolton, KALF Board Counsel (via phone); Jesse Penn, Computer Support Specialist; and Sonya Chesser, Executive Secretary/Events Manager.
Chairman Terry called the Worker Comp board meeting to order at 11:04 a.m.
Judge Gritton called the KALF board meeting to order at 11:04 a.m.
Motion made by Michael Logsdon, seconded by Casey Ellis, to approve the minutes of the May 22, 2019 Workers Comp meeting as presented. Motion carried.
Motion made by Adam O'Nan, seconded by Charles Kenner, to approve the minutes of the May 29, 2019 KALF meeting as presented. Motion carried.
Ms. Basham presented and discussed the following reports for the Workers Compensation Fund: balance sheet as of May 31, 2019; FY 2018/19 budget detail for the eleven months ending May 31, 2019; check history report for May 1 - 31, 2019; FY 2018/19 PAF budget for period July 1, 2018 - May 31, 2019; FY 2018/19 premium receivables as of June 20, 2019 and oral update on outstanding premiums in Ms. Porter's territory; FY 2018/19 agent commissions as of May 31, 2019; FY 2017/18 payroll audit premium receivables as of June 20, 2019; and FY 2018/19 investment portfolio summary as of May 31, 2019. She noted that the Fund is in compliance with its investment ratios as statutorily required by the Kentucky Department of Insurance.
Motion made by Michael Logsdon, seconded by Casey Ellis, to approve the financial report as presented. Motion carried.
Ms. Basham presented and discussed the following reports for the All Lines Fund: balance sheet as of May 31, 2019; FY 2018/19 budget detail for the eleven months ending May 31, 2019; FY 2018/19 PAF budget for period July 1, 2018 - May 31, 2019; additions and deletions to premium for May 1 - 31, 2019; FY 2018/19 premium receivables as of June 20, 2019; FY 2018/19 agent commissions as of May 31, 2019; and FY 2018/19 investment portfolio summary as of May 31, 2019. She noted that the Fund is in compliance with its investment ratios as statutorily required by the Kentucky Department of Insurance.
Motion made by Adam O'Nan, seconded by Orbrey Gritton, to approve the financial report as presented. Motion carried.
Mr. Head presented and discussed the following claims activity reports for the Workers Compensation Fund: summary of losses valued as of May 31, 2019; graph of opened and closed claims during fiscal year 2018/19; graph of open claims for all years as of May 31, 2019; and a chart comparing the claim count from the last three, five and ten years including the monthly incurred averages as of June 30, 2018. There were a total of 140 newly reported claims totaling an incurred value of $588,698.94 for the month of May 2019 as compared to 127 reported claims totaling an incurred value of $223,485.24 for the month of May 2018.
Mr. Head presented and discussed the following claims activity reports for the All Lines Fund: summary of losses valued as of May 31, 2019; graph of opened and closed claims during fiscal year 2018/19; graph of open claims for all years as of May 31, 2019; and a chart comparing the claim count from the last three, five and ten years including the monthly incurred averages as of June 30, 2018. There were a total of 171 newly reported claims totaling an incurred value of $763,659.69 for the month of May 2019 as compared to 213 reported claims totaling an incurred value of $1,203,488.84 for the month of May 2018.
Mr. Juett presented and discussed a proposal for a safety and loss control grant program to be funded jointly by the KACo All Lines Fund and the KACo Workers Compensation Fund. This program would allow members to apply for financial assistance to purchase safety equipment, training or consulting services to help reduce losses to the insurance programs. Each year, a written notice would be sent to the members of both insurance programs notifying them of the opportunity to apply for a grant. The maximum amount of any grant awarded would be $10,000 subject to a 20% match from the member. The funding amount would be determined annually by the program boards and, for FY 2019/20, Mr. Juett requested appropriating $150,000 split evenly between the two programs. He staff will annually identify areas of loss prevention measures for which priority will be given in awarding grants. Applications will be made available in the first quarter of each fiscal year and members will be given 60 days to submit their proposals. A committee comprised of a combination of staff, board members and program members will review the proposals and select from those that offer the greatest potential benefit for the programs. Selections will continue until funding has been depleted or until staff determines that all qualifying proposals have been funded appropriately. Finally, KACo will recognize the recipients awarded grants.
Motion made by Dan Mosley, seconded by Casey Ellis, to approve the grant program and funding as presented. Motion carried.
Motion made by Adam O'Nan, seconded by Charles Kenner, to approve the grant program and funding as presented. Motion carried.
Mr. Juett presented and discussed the FY 2019/20 program administration agreement between KACo and the KACo Workers Compensation Fund for term commencing on July 1, 2019 and ending June 30, 2020.
Motion made by Casey Ellis, seconded by Elbert Bennet, to approve the FY 2019/20 program administration agreements between KACo and KACo Workers Compensation Fund. Motion carried.
Mr. Juett presented and discussed the FY 2019/20 program administration agreements between KACo and the KACo All Lines Fund for term commencing on July 1, 2019 and ending June 30, 2020.
Motion made by Adam O'Nan, seconded by Charles Kenner to approve the FY 2019/20 program administration agreements between KACo and KACo All Lines Fund. Motion carried.
Ms. Whistle presented and discussed the reinsurance renewal for the KACo Workers Compensation Fund for policy year July 1, 2019. The Fund is in a five year policy with County Reinsurance Limited (CRL) effective July 1, 2017 through July 1, 2022. This year there was a 10% premium decrease based on reduced loss activity experienced by CRL and the Fund. Staff's recommendation is to remain at a retention of $850,000 based on historical losses, which will result in a 10.7% decrease in premium totaling $1,264,465.
Motion made by Casey Ellis, seconded by Dan Mosley, to approve the staff's recommendation to renew with CRL and remain at a retention of $850,000 for policy year July 1, 2019. Motion carried.
Mr. Juett said KACo sent out a request for qualifications for board counsel for the KACo Workers Compensation Fund. A response was received from Stoll, Keenon, Ogden, PLLC.
Motion made by Casey Ellis, seconded by Dan Mosley, to table the issue. Motion carried.
Mr. Juett presented and discussed the Defense Panel Policies & Procedures for the KACo Workers Comp board's consideration. To qualify and remain on the WCF's defense panel:
1. Attorneys must have a minimum of five years defense experience in handling Workers Compensation cases in KY.
2. Firms shall accept WCF rates and shall adhere to the WCF Litigation Protocol attached hereto.
3. No attorney within any firm shall have any pending claim(s) against any county or county related entity at the time of application. After selection for the panel, neither the attorney nor the firm shall file a claim(s) against any county or county related entity.
4. Staff shall periodically evaluate attorney performance, outcomes, costs and adherence to WCF Litigation Protocol to determine continued panel eligibility.
Vacancies shall be filled in accordance with the following:
1. KACo Insurance staff will evaluate the need within a region to determine if a vacancy exists on the panel.
2. RFQ process will ensue in accordance with KACo guidelines.
3. KACo Insurance staff will review bids, make a selection and inform the WCF Board.
4. WCF Board has veto power regarding the staff selection.
Motion made by Casey Ellis, seconded by Dan Mosley, to approve the Defense Panel Policies & Procedures as presented. Motion carried.
Mr. Juett requested approval of a non-monetary claim defense coverage to be added to the KALF policy to cover legal expenses for any lawsuit filed against the insured except for unemployment or workers' compensation claims. He also requested to add $50,000 coverage limit to cover legal defense claims costs for policy year 2019/20.
Motion made by Charles Kenner, seconded by Adam O'Nan, to approve adding non-monetary claim defense coverage and $50,000 coverage limit to cover legal defense claims. Motion carried.
Mr. Juett also requested approval for KALF to extend additional cyber coverage offered by CRL two years ago to cover penalties assessed against an insured for failure to maintain certain required security measures when processing credit card transactions. There is no additional cost to KALF to enhance this coverage.
Motion made by Adam O'Nan, seconded by Charles Kenner, to approve additional cyber coverage as a benefit to the members for policy year 2019/20. Motion carried.
Mr. Juett presented an engagement letter from Oliver Wyman to perform an actuarial reserve study for the KACo Workers Compensation Fund as of June 30, 2019. He said the proposed fee represents a 3% increase over last year.
Motion made by Dan Mosley, seconded by Casey Ellis to approve the engagement letter as presented. Motion carried.
Mr. Juett presented an engagement letter from Oliver Wyman to perform an actuarial reserve study for the KACo All Lines Fund as of June 30, 2019. He said the proposed fee represents a 3% increase over last year.
Motion made by Charles Kenner, seconded by Adam O'Nan to approve the engagement letter as presented. Motion carried.
Mr. Juett said Knott County Fiscal Court has requested the board's consideration to waive penalties owed for both KALF totaling $5,272.55 and WCF totaling $1,501.47. Mr. Bolton recommended both program boards establish a policy as it relates to requests for waiver of penalties and interests for all members.
Motion made by Adam O'Nan, seconded by Charles Kenner, to table the issue until next month and coverage will continue until the issue is resolved. Motion carried.
Motion made by Dan Mosley, seconded by Michael Logsdon, to waive the penalties of $1,501.47 for Knott County Fiscal Court. Motion carried.
The next scheduled KACo Workers Compensation Fund board meeting will be held July 24th at 11:00 a.m.
The next scheduled KACo All Lines Fund board meeting will be held July 24th at 1:00 p.m.
Motion made by Adam O'Nan, seconded by Charles Kenner, to adjourn the meeting at 12:11 p.m.
Motion made by Michael Logsdon, seconded by Dan Mosley, to adjourn the meeting at 12:11 p.m.
