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INSURANCE MATTERS
 
A Newsletter for Members of the CCAP Insurance Programs
Owned by Members, Governed by Members, Service to Members
 
April 2010 Volume 14, Issue 4
Specialty Lines
 
Hello ,
 
We have this cotoneaster bush in the back yard that has taken over our sloped garden, and I have promised my wife I will dig the thing out this spring before it grows any larger. Trust me, this is one agreement which I wish I had not made, but will of course need to honor (if I know what is good for me).
 
I bet there are agreements your county has entered into which did not turn out the way you hoped. We have seen this on the insurance end, when something goes wrong and a claim arises, and then the county is surprised to find the contract they signed limits what they can do about the party responsible for the claim.
 
Parties contracting with the county have become a lot more protective of their rights - I think overly protective -  and before you sign any contract it is essential it be reviewed for some of these one sided clauses.
 
We are seeing more proposed contracts where the person or company you are employing asks you to waive subrogation. This means if they make a mistake that results in a claim, the county cannot try to make them pay some or all of the costs of the claim. And Pennsylvania courts have said if the county cannot subrogate, than neither can its insurance company.
 
We are also seeing proposed contract wording which seeks to have the county totally indemnify the contractor. This is just not fair. If the person or company you hire makes a mistake, they should be responsible for it. Similarly, if the county makes a mistake, the responsibility should be yours. Asking you to indemnify the contractor could also result in the loss of your governmental immunity, exposing the county to potentially higher liability. And some insurance policies have clauses invalidating coverage if the public entity waives its governmental immunity.
 
Have your solicitor and local insurance producer review contracts before you sign them. This includes renewing existing contracts. PCoRP members can also send us your proposed contracts and we will check these clauses (send them to John Sallade or Karen Cohen).
 
I know we cover this issue frequently in our presentations and publications, but it really can make a big difference if a claim happens. And keep in mind that just because you sign a contract does not mean your county's insurance automatically will cover what goes wrong related to that contract. The only way to know for sure is to check with your insurer before you sign the contract!
 
Make sure you call us when you need help with something,
 
                              John Sallade
 
In This Issue
Specialty Lines
PComp board vacancy
Banks in transition
Newsletter Awards of Excellence
U.S. Communities
PELICAN subscriber's meeting
April workshops!
New cost saving step
Investing for retirement
Quote Of The Month

Quick Links 

 
 
 
 

 
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PComp board vacancy
By John Sallade, Managing Director, Insurance Programs
 
There is currently a vacancy on the PComp Board of Directors, due to the resignation of Peggy Aharrah who has resigned as chief clerk of Elk County. PComp is CCAP's workers' compensation insurance pool.
 
The PComp Board of Directors is seeking nominations from the membership to fill this vacancy. The Board will select a replacement from the nominations received from the members. Please respond by April 9.
 
The person nominated should be an elected official or staff member of your county, and should have experience or familiarity with workers' compensation issues. The PComp bylaws specify no more than one representative from any member county, so nominations cannot be received for anyone from one of the following counties, as they already have someone on the PComp Board: Bedford, Bradford, Clarion, Columbia, Erie, Juniata, Lawrence, Mercer, Monroe, Tioga, Union, Wayne.
 
You may nominate someone from your county or from another county. Please check with them first to ensure they are interested in serving. The PComp Board meets three times each year, and expenses to attend the meetings are reimbursed by PComp.
 
Please e-mail the name(s) you would like to nominate to John Sallade at CCAP.
 
An e-mail announcing the vacancy was also sent in mid-March to the chief clerks and county executives of all PComp member counties. If you nominated someone as a response to that e-mail, you do not need to respond again. 

 
Banks in transition: The emerging challenge to banks and what it will likely mean to depositors (Part 1 of 2)
By Brian Sanker, Consultant, Pennsylvania Local Government Investment Trust
 
This article, the first of a two-part series, will take a brief look at how the banking industry continues to navigate and adapt itself to the current economic environment. The second part will look more closely at what bank changes will mean for account holders.
 
The origins of America's current financial challenges are complex, intertwined, and widely debated. Even so, many economists agree that the rapid collapse of the sub-prime mortgage market was at the forefront of the problems that befell financial institutions and markets across the country.
 
As the mortgage dominoes began to fall, several sectors began to feel the pain of the crisis more acutely, most notably institutions with a large investment in mortgage holdings. As fears of a depression took hold, the federal government stepped in and enacted programs and policies to help rescue financial institutions, thereby helping to restore some degree of confidence to the marketplace.
 
Now, with the worst of the economic crisis seemingly behind us, a series of significant decisions will result in a dramatic increase in expenses for banks - expenses that they will likely have to recoup in increased fees and other costs to depositors.
 
BANK FAILURES AND TARP
 
One of the most visible effects of the collapse of the subprime mortgage sector was the marked increase in bank failures: 25 in 2008 and 140 in 2009. As the number of bank failures began to increase, the federal government enacted the Troubled Asset Relief Program (TARP) to purchase assets and equity from financial institutions and strengthen its financial sector.
 
A Congressional Budget Office (CBO) report details that through December 31, 2008, transactions under the TARP totaled $247 billion. According to the CBO's report, the Treasury purchased $178 billion in shares of preferred stock and warrants from 214 U.S. financial institutions through its Capital Purchase Program (CPP). This included the purchase of stock in insurance giant AIG, Citigroup, Bank of America and others. The Treasury, along with the FDIC and the Federal Reserve, also agreed to guarantee a $306 billion portfolio of assets owned by Citigroup.
 
TARP helped to slow the failure of financial institutions, but it did not stop the failures completely. As banks continued to close through 2009, the Federal Deposit Insurance Corporation (FDIC) continued to provide the funds it is required by law to guarantee - up to $100,000 per account per depositor and $250,000 per Individual Retirement Account at insured banks.
 
These payments soon began to deplete the Deposit Insurance Fund, putting the FDIC itself at risk of being unable to meet its guarantees, and putting the account holders of future failed banks at an even greater risk. TARP came under fire for placing the financial security of the American taxpayer at risk in order to prop up financial institutions. The FDIC began to develop a plan that would begin to restore its coffers.

REPAYING TARP

At a meeting on September 28, 2009, the FDIC Board proposed to take a big leap toward recapitalizing itself by proposing that all institutions prepay their estimated risk-based assessments for the fourth quarter of 2009 and for all of 2010, 2011, and 2012. The prepayment would be mandatory for all banks except for a few exemptions.
 
"The subjects of those fees will try to pass along the costs to their customers," Jeff Miron, an economics professor at Harvard University, said in a January 2010 issue of SmartMoney.com. "It's not a substantial cause of concern, but it's certainly a cause of concern."
 
In addition to the prepayment, the agency proposed a fee increase for 2011. Currently, banks pay the FDIC 12 to 16 cents for every $100 they have on deposit. With the increase, that fee would rise to 15 to 19 cents per $100. The government is expecting to raise $90 billion over 10 years and will continue charging the fee until all TARP dollars are repaid.
 
Many banks responded unfavorably. In a press release, American Bankers Association executive vice president Wayne Abernathy remarked, "Every excess dollar pulled from bank capital into FDIC coffers means $10 of lending and related banking services that will not be available to support economic recovery. The decision could mean that as much as $20 billion or more of bank services will now not be available to invest in new jobs and new businesses this year, precisely when new jobs and new business investments are most needed."
 
All of this means that, for the time being, banks will have to learn to operate with a much smaller profit margin. At the same time, industry observers say that banks will be looking for ways to recoup their own costs through increased fees to account holders, reduced lending, continued lower yields on deposits and other means. For many banks, that recouping has already started.
 
Next issue: Banks in Transition (Part II) What the new FDIC proposal may mean to account holders in Pennsylvania.
 
Brian Sanker is a Consultant working for PFM Asset Management LLC, investment advisor and administrator to PLGIT, in its Harrisburg office. 

 
The County Newsletter Awards of Excellence
By Debra S. Tingley, APR, Director of Publications
 
The County Commissioners Association of Pennsylvania is pleased to announce a new award: The County Newsletter Awards of Excellence. The new award is designed to honor counties for outstanding communication, internal and external, through the use of printed and electronic newsletters. The awards will recognize outstanding communication and publication tactics.

Entry guidelines are:

Ongoing and regular newsletters produced in print or electronically between January 1, 2009, and December 31, 2009, are eligible.

Entrants must select a single county level of entry. A county can enter both categories, electronic and printed, if they produce two separate publications: one for print, one for electronic distribution. These must be two separate and distinct newsletters.

All entries must have been produced by the county with outside assistance strictly limited to support functions (typesetting, printing, technical and production services). Projects contracted to outside individuals, studios, ad agencies and public relations firms are not eligible.

Judging is performed across the state by teams of public relations and county communication officers and others with expertise in publications and communications. Only one award is given in each of the county classification levels for print and one for electronic communications. Only publications meeting the Awards of Excellence criteria are selected. No awards will be given in categories where judges determine that the entries do not merit them. Judges' decisions are final and may not be contested.

The winners and runners-up (if selected) will be announced on August 11 as part of the CCAP Annual Conference being held at the Penn Stater Conference Center Hotel - winning entries are displayed during the Conference. In addition, winners will be honored in the September issue of Pennsylvania County News.

For more information on the awards, go to www.pacounties.org and click to obtain a brochure and official entry form.

Questions can be directed to: Debra S. Tingley, APR, Director of Publications, CCAP, PO Box 60769, Harrisburg, PA 17106.
 
 
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U.S. Communities: seven-point gold standard for cooperative purchasing
Article provided by U.S. Communities, an endorsed program of NACo and CCAP

What differentiates U.S. Communities from other regional and national cooperative purchasing programs? There are a lot of purchasing cooperatives out there, but the National Association of Counties (NACo) and the County Commissioners Association of Pennsylvania (CCAP) sponsor only one - U.S. Communities. There are seven reasons:
 
1. THE LEAD PUBLIC AGENCY MODEL
 
U.S. Communities initiated the use of a lead public agency as its model from its first contract offering in 1998. Each contract offered by the program has been publicly solicited by a large lead public agency on behalf of all other local and state agencies in the United States. Each lead public agency takes responsibility for structuring the bid documents, assembling a national team of experts to review responses, documenting the bid tallies and awarding the contract to one or more qualified firms. A master interlocal government agreement provides access to each of these contracts by public agencies across the country.
 
2. MODELED ON PUBLIC AGENCY OVERSIGHT
 
U.S. Communities provides program oversight and compliance with professional procurement standards through its advisory board. The board consists of 22 public procurement professionals representing cities, counties, schools, higher education and state government. Each member serves a three-year term. Each appointed member must have the authorization of its public jurisdiction to serve.
 
3. LOWEST-COST-TO-GOVERNMENT COMMITMENT
 
Prior to the award of a contract to a supplier, the supplier must agree to specific terms and conditions. A key commitment is that the offering is the lowest price offering the supplier provides to the government sector.
 
4. PROGRAM AUDITS
 
U.S. Communities provides internal and third-party audits of the contracts on the program. Each year seven or eight contracts are audited by a third-party independent auditing firm for compliance with contract pricing, terms and conditions. In 2009 seven firms were audited, resulting in no exceptions for four firms, an immaterial exception for one firm, and corrective action for two firms.  In 2010 eight additional contracts will be audited by a third-party firm.
 
5. CONTRACT BENCHMARKING
 
U.S. Communities uses benchmarking to validate its best pricing guarantee. Benchmarking is done against another large contract held by a U.S. Communities supplier, against a contract held by a competitor of a U.S. Communities supplier, against results of a bid process, and against retail pricing in the marketplace. In 2009 19 of 21 contracts had benchmarks performed, showing overall savings from 7.5% to 18.5% for program contracts.
 
6. SIGNIFICANT SAVINGS AT NO COST TO PUBLIC AGENCIES
 
All U.S. Communities contracts are offered without fees or costs to participating public agencies and non-profit organizations. Registration is free and public agencies are not required to commit to minimum amounts of purchasing. Agencies can use the program as frequently or as little as they desire. Since 2001, the program has documented public agency savings of more than $1.3 billion. As of January 2010, more than 39,000 public agencies have registered for the program, more than 24,000 agencies use at least once contract every quarter and more than 35% of using agencies use two or more contracts every quarter.
 
7. PROFESSIONAL ASSOCIATION SPONSORSHIP
 
U.S. Communities was co-founded as a public benefit cooperative by the National Association of Counties, the U.S. Conference of Mayors, the National Institute of Governmental Purchasing, the National League of Cities and the Association of School Business Officials in order to assist public agencies in procuring goods and services on a cooperative basis. More than 70 state associations of counties, cities, schools and purchasing groups endorse or sponsor the program at the state level. The overwhelming sponsorship by professional government associations strengthens the value of the program and assures significant oversight for program participants.
 
CONCLUSION
 
NACo is a proud sponsor and founder of U.S. Communities. More than 70% of counties in the United States are registered to use the program. For 14 years U.S. Communities has provided significant hard dollar savings on commodities and services, as well as soft dollar savings on avoided administrative costs, to public agencies nationwide.
 
For more information, e-mail Nancy Parrish or go to www.uscommunities.org to begin saving money for your county.
 
 
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PELICAN to hold Seventh Annual Subscriber's Meeting

By Christie Ward, Captive Programs Manager
 
The seventh annual PELICAN subscriber's meeting will be held on Wednesday, April 21, 2010, at the Nittany Lion Inn, State College, PA. The meeting will begin at noon with a buffet luncheon followed by a short business meeting. The agenda will include an election to fill three positions of PELICAN Subscriber Advisory Committee (SAC) members whose terms expire in 2010.
 
PELICAN Insurance subscribers and their producers are invited to attend. There is no charge to attend but pre-registration is required. Look for the meeting notice emailed in late February or contact Eric Mallon.
 
For more information on PELICAN Insurance RRG, please contact Christie Ward at

cward@pacounties.org or (800) 895-9039.

 

 

April workshops!
By Linda Rosito, Insurance Training Director

April is our busiest month of the spring season. Here is a list of our workshops:

For additional information on the rest of the workshop season, please refer to Glimpse Online. As always, if you have any questions, please feel free to contact Linda Rosito or Jenn James at (800) 895-9039.
 
Please keep in mind that most of our training sessions are free (if sponsored by an insurance program in which your employer is a member) AND for PCoRP, PComp and UC Trust members you can SAVE MONEY off your insurance costs by attending training sessions.
 
Thank you for your continued support of the CCAP Insurance Programs trainings. We hope to see you in April!


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New cost saving step added for PCoRP members
By Tessa Kelley, PCoRP Claims Representative

At the end of January, a new procedure was implemented by the PCoRP claims staff for auto physical damage claims. We began utilizing the services of National Insurers Audit Bureau (NIAB) which audits repair shop estimates and obtains an agreed upon price with the shop. These audits ensure the application of accepted industry standards and up-to-date pricing. Professional, former field adjusters with a minimum of 25 years experience are used, which guarantees clients the most qualified personnel to handle the claims. This program delivers an average 11.5 percent reduction of the amount of repairs, while reducing expense dollars spent on field appraisals by 50 percent. Thus saving PCoRP and our members' dollars and helping reduce insurance costs.

Here is how the audits work. Once the preliminary estimate is obtained PCoRP will forward the estimate to NIAB where a seasoned appraiser will review it to make sure it is in line before repairs begin. If discrepancies are found, the NIAB representative will contact the body shop to discuss these discrepancies, such as part-price differences, labor rate inflammations, etc. NIAB will then get an agreed figure with the body shop and forward a revised estimate back within 24 hours. Once the revised estimate is obtained, payment will be based off of the revised figure and a copy of the report will be forwarded via e-mail to our members for their records.

With this new procedure, we ask that our members hold off on authorizing any repairs until they obtain a PCoRP claim representative's approval, as body shops won't adjust charges if the repairs are completed or underway.

This service can also be utilized by the members when damages are under their deductible. All the member has to do is submit the claim to PCoRP through the STARS WEB process as normal and express to the assigned adjuster their desire to take advantage of this new process. The cost of the review is $37.00 and would be billed to the member.

If NIAB cannot obtain an agreed upon revised figure or the difference is less than their charge of $37.00, there is no charge for the service.

We hope this new service will assist in saving members money on unnecessary charges involving parts and labor. If anyone has any questions about this new procedure, please do not hesitate to contact a PCoRP claims representative at (800) 895-9039.
 

 

Investing for retirement costs less than you may think
Article provided by Nationwide Retirement Solutions, administrator of the NACo Deferred Compensation Program
Investing for retirement costs less than you may think
You may be able to afford to invest a little more for retirement each payday by just trading away a daily cup of coffee or a weekly movie or magazine. Now, let's see how you can exchange the cost of a cup of coffee for an investment that's more than that cost.

If you pay around 25% in income taxes, about $75 from your take-home pay will put $100 in your 457 Deferred Compensation account. Because taxes aren't taken out of your contributions, your money has the potential to earn on what would've been paid in taxes. Of course, eventually you will pay taxes on your contributions and earnings, if any, but not until and as you withdraw your money - usually at retirement. Your withdrawals are taxed as ordinary income.

SO, WHAT CAN YOU AFFORD?
 
Use the Paycheck Impact Calculator available online at www.nationwidefinancial.com. You'll likely find that increasing your 457 Deferred Compensation contribution is "less costly" than you may have thought. Then, settle on an amount you can comfortably afford and consider increasing your contribution.

The NACo 457 Deferred Compensation program is administered by Nationwide Retirement Solutions and sponsored by the County Commissioners Association of Pennsylvania (CCAP).
For more information e-mail Julia Jackson, CCAP Employee Benefit Programs Manager, or call (800) 895-9039.
 
Electrical Safety
Article provided by National Safety Council

NSC logoElectricity is nature's most versatile form of energy. Electrical power lights our homes, streets, offices and factories. The power of electricity can be dangerous if it is not used correctly. Electrical energy can damage property and ignite fires. It can also hurt and even kill.
 
Sound safety practices can help minimize electrical hazards and cut down the risk of accidents. The hazard of electricity cannot be eliminated, but it can be controlled through education and engineering. The more you understand about electrical energy, the safer you will be at work and home.
 
What causes electric shock?
 
You can get an electric shock if you touch a grounded surface and hazardous electrical equipment at the same time. The shock happens when the flow of electric current (amperage) from the electrical equipment goes through your body to the ground. How serious the injury depends on what part of your body receives the current. It also depends on how long the electric current flows. Just a small amount of amperage can hurt or be fatal.
Protecting yourself at work 
  • Are you aware only trained, qualified and authorized employees are permitted to work on electrical equipment?
  • Has an electrician inspected the equipment, tools, machines and lights to make sure they operate according to electrical code requirements?
  • Are extension cords and appliance cords in good repair and are properly rated for the way they are intended to be used?
  • Are you using 3-prong receptacles for 3-prong plugs?
  • Are you protecting yourself with Ground Fault Circuit Interrupters (GFCI) in wet/damp areas like kitchens, bathrooms and outdoors?
  • Are you protecting your equipment and home with circuit breakers?
  • Are you closing electrical control panels and covering receptacle boxes?
  • Do you avoid touching water, damp surfaces, ungrounded metal and bare wire if you are not protected?
  • Do you avoid working in and around wet or damp conditions, equipment and electrical current that are not grounded, and wires that are not insulated?
  • Do you use equipment and tools the way they are designed to be used?
  • Do you report immediately any damage or defective equipment, power hand tools or machinery?
  • Are you looking for posted signs that identify electrical hazards? Are you following lockout/tag out procedures?

Wearing the right protection

  • Don't wear metal jewelry that might make contact with electric current
  • Wear eye protection where required
  • Wear rubber-soled shoes or boots on damp or wet surfaces
  • Wear safety-approved rubber and leather gloves when you work with electricity
Hazard observation checklist 
  • Check the surrounding area for spills, dampness or water
  • Check connections and ground wires to be tight and free from breaks
  • Check circuits and wiring are in good repair and not overloaded
  • Check insulation for worn spots or breaks that could cause a shock
  • Check the condition of cords and extension cords
  • Check and maintain equipment to make sure it is working right and free of defects or damage
  • Check equipment belts and gears to detect excess tension or binding that can cause a power overload
  • Check that personal protective hand and food protectors are kept in good repair and readily available
  • Immediately report any hazards, damage and defective equipment, tools and machinery to a supervisor or manager 
Electrical emergencies
 
Outdoor (high voltage) electricity 
  • Contact the police and emergency medical services
  • Notify your supervisor or follow the emergency instructions spelled out in your company policy
  • Do NOT touch the person
  • Do NOT try to use a tool to free the person 
Indoor (low voltage/100 volts) electricity 
  • Contact emergency medical services
  • Do not touch anyone who has become grounded
  • Switch off power at the fuse of circuit-breaker box, or pull the plug
  • Call the electric company if you cannot get the power shut off
Information and recommendations are compiled from sources believed to be reliable. The National Safety Council makes no guarantee as to and assumes no responsibility for the correctness, sufficiency or completeness of such information or recommendations. Other or additional safety measures may be required under particular circumstances. Last Revised: 04/09
 
For more information email Bruce Mitchell, Loss Control Services Manager, or call (800) 895-9039.

 
Quote Of The Month
 
 
"The smallest good deed is better
 than the grandest intention." 
 
- Barbara Walters
  
 

CCAP Insurance Programs
PO Box 60769, Harrisburg, PA 17106-0769
Phone (800) 895-9039 - FAX (717) 526-1020
Claims Fax (888) 692-2368
Click here to go the Insurance Section of the CCAP Website.

email:jsallade@pacounties.org

Insurance Matters is published monthly by CCAP Insurance Programs for the use of members of CCAP's UC Trust, PCoRP, PComp, PIMCC, COMCARE, COMCARE PRO, BEST Flex, PELICAN and other insurance programs, and insurance producers of these members.

Advice contained in this publication is not legal advice and members are encouraged to seek the opinion of their solicitor.

The information provided in this publication is not intended to take the place of professional advice. Readers are encouraged to consult with competent legal, financial, or other appropriate professionals. Statements of facts and opinions expressed in this publication, by authors other than Association staff and officers, are the sole responsibility of the authors and do not necessarily represent an opinion or philosophy of the officers, members and staff of the County Commissioners Association of Pennsylvania (CCAP). No endorsement of advertised products or services is implied by CCAP unless those products or services are expressly endorsed, or are owned or managed by the Association programs, or our affiliates. This publication may not be reproduced, modified, distributed, or displayed in part or in whole, by any means, without advance written permission of CCAP. Please direct your requests to John Sallade, Managing Director, CCAP Insurance Programs, jsallade@pacounties.org.

Note: As part of its copyright agreement the CCAP grants the author the right to place the final version of his/her manuscript on the author's homepage, subject to CCAP's standards, or in a public digital repository, provided there is a link to the CCAP website.

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