By bumping up the deductible, the county will save about $404,000. If county officials had kept their deductible at $5,000 for property and $25,000 for liability, the savings would have been only $114,895. The total cost of risk, which includes the premium and estimated deductible payments, will be $825,953.
The county’s risk management consultant Adam Balls said the county over the past six years has paid $6.5 million in insurance premiums, but CORSA has only had to pay $1.375 million on 160 claims. He said the industry likes to see loss ratios in the 40-to-60 percent range, and the county is at 20.9 percent. He said CORSA was basically rewarding the county for its successful risk management with the lower premium, but they couldn’t take the reduction too far.
“They need to be a little bit careful from the fact that they have 67 other counties that they insure,” he said. “If they move the needle for one more than the other, you can send a message out across the state, so I think they try to protect that.”
Balls said for the first time ever CORSA agreed to a stop-loss cap of $500,000, which means if the county experiences an unusually high claim or volume of high claims, CORSA will pick up the cost over the cap amount. The highest incurred losses the county has experienced over six years were in 2001-2012 with a total of $218,782 paid out for law enforcement liability.
The stop-loss coverage sealed the deal for Commissioner T.C. Rogers.
“As long as we’re getting the stop loss,” he said. “I’m thinking we go to the $100,000 (deductible).”
The plan is to take the money saved on premiums and bank it so they can build up a reserve that will allow them to move closer to paying dollar-for-dollar for claims, rather than the lopsided premium-to-payout they have experienced in the past.
“We may not ever be completely self-insured, that’s a big step to go down, but potentially,” Administrator Charlie Young said. “You kind of move toward that by going to higher and higher deductibles. The higher your deductible the more you look like you’re self insured because only on extraordinary claim there ends up being a (insurance) pay out.”
Some of the non-general fund departments already help pay for insurance coverage, but the commissioners instructed staff to contact those that don’t, like the Alcohol and Drug Addiction Services board and the port authority, to let them know they are on the hook for any claims.
“I think we need to do the disclosure on every user we’ve got, whether they are in or out of the general fund,” Commissioner Don Dixon said. “That number needs to be pulled out and put in a separate line item so they know what it is. Just tell them they are going to be held to the $100,000.”
Several other insurance companies responded to the RFP but the commissioners decided CORSA overall had the best plan and they are happy with the services they have received.
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