INSURANCE MATTERS
A Newsletter for Members of the CCAP Insurance Programs
Owned by Members, Governed by Members, Service to Members
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Specialty Lines |
Hello ,
It's budget time again, and here is my annual attempt to help you anticipate insurance costs for 2012.
My advice is to first take a look at what has changed in your county or entity. What exposures have changed? Look at payroll, property, vehicles, employees and operations. Do you have more or less of these exposures? These are the factors to which insurance rates are applied, and any significant changes in these categories can drive your costs up or down.
Second, how has your experience been? Find out what your workers' compensation experience modification will be for 2012, as changes in that multiplier will greatly impact your premium. If you have had a lot of claims - property losses, liability lawsuits - your insurance costs may be going up.
I am pleased to report that CCAP's insurance programs are in very good shape. The PComp rates for 2012 should remain flat (subject to approval by L&I) and while PCoRP does not renew until June 1, finances are very good and I don't expect any huge increases there. If you budget a 5% increase for PCoRP you should be safe (unless any of the notes above about exposures and claims apply to you). PELICAN is also in fine shape and I don't expect rates for nursing home liability insurance to change very much.
The UC Trust is hoping to finally have a fiscal year finish in the black at the end of 2011, but it has been a tough several years of high claims by the members. I expect the need to increase rates to continue, and would suggest at least a 15% budget increase to be safe.
The toughest prediction each year is health insurance. Our new CCAP Health Alliance is moving forward and will be enrolling counties in 2012. Nationally, medical costs are projected to increase eight to ten percent. In Pennsylvania the prognosis is more along the lines of nine to 11.5 percent. A major factor in your health insurance costs for the county will be the claims experience of your employees, which seems obvious but often escapes the planning process. Take a look at your 2011 usage and plan accordingly.
Make sure you call us when you need help with something,
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PLGIT Diversification - Using Variety to Manage Risk |
By Brian Sanker, PLGIT Senior Marketing Representative
What does diversification mean when developing an investment strategy? Diversifying can mean many things, including holding a basket of different investment securities and bank deposits (or investing in a vehicle that is already diversified), varying the duration and maturity of certain investments or seeking different investment options that react differently to changes in the markets.
Today, in the wake of bank failures, money market fund collapses and the evaporation of real estate values, the advantages of diversification have become more apparent.
For the individual investor, this may involve holding a variety of stocks, bonds and mutual funds in different categories: small- and large-cap, domestic and international, value and growth and so on. The precise mix depends on the situation, risk tolerance and goals of the particular investor.
Of course, municipal investors have their own set of challenges and limitations when it comes to achieving diversity. Even so, local governments have some options when it comes to creating a diversified portfolio and managing risk.
WAYS TO DIVERSIFY ASSETS
Diversification may be a challenge for municipalities with smaller budgets. Pennsylvania statutes and regulations limit the types of vehicles allowable for the investment of public funds; however, municipal investors have opportunities for diversification within these boundaries.
First, there are a variety of types of investments that are permissible for municipalities: certificates of deposit, certain money market-type funds, obligations backed by the full faith and credit of the U.S. Government and a handful of others. By holding a variety of these investments, municipal investors can achieve a form of diversification.
For example, PLGIT, the Pennsylvania Local Government Investment Trust, has created a diversified portfolio by including only those investments permitted by the codes governing local governments and schools in Pennsylvania, including:
- U.S. Treasury Bills/Notes
- Short-term debt of highly rated federal agencies such as the Federal Home Loan Bank
- Appropriately collateralized certificates of deposit and time deposits in banks
- Debt issued by the Commonwealth of Pennsylvania or a state-level agency
- Short-term repurchase agreements with highly-rated financial brokers backed by appropriate collateral held in custody in the name of the Trust
On a daily basis PLGIT's investment adviser, PFM Asset Management LLC, may adjust which of these investments are held in the portfolio, as well as the total percentage of each investment, based on market conditions and cash flows of Investors into and out of the Trust. Investing in a fund with this type of variety of permitted investments can enable local governments to take advantage of diversification.
In addition, local government investors can vary the terms of their investments. By holding fixed-rate investments for different time periods, municipalities can strike a balance between the more favorable rates of return that often (though not always) accompany longer-term investments and the need for liquidity at specific dates in the future.
Varying the terms of investment can also help manage what is called "interest rate risk" - the possibility that changes in rates over time will affect your potential earnings. For example, if you commit all your assets to a single investment with a fixed rate, you risk missing out on potential earnings if rates rise.
Finally, diversification may help local governments manage their cash better, by reducing what is called "liquidity risk." This type of risk refers to how easily an investment can be turned into cash when you need it.
If a municipal investor is forced to withdraw funds from certain investments, such as a certificate of deposit, prior to maturity, that investor may lose some or all of the interest that CD has earned because of fees or penalties charged for early withdrawal. However, money market accounts and U.S. Government and federal agency obligations are very liquid.
Therefore, a diversified portfolio of assets with varying terms can help local governments have liquid funds available when needed.
GETTING STARTED
In addition to the potential for reduced risk, seeking a diversified portfolio can provide local governments with an opportunity to review the "big picture" of their financial holdings.
Before you begin to diversify your assets, it is important to review your current portfolio: What types of investments do you already have, and in what proportions? What are the terms of any fixed-rate investments or investments with maturity dates - and perhaps, penalties for early withdrawal?
Next, it is important to include diversification in the language of your written investment policy. In addition to the key elements of the delegation of authority and responsibility and a statement of accounting and reporting requirements, your policy should include a statement of approved investments and institutions - and a commitment to minimizing risk through diversification.
Another key involves liquidity: the type and term of your investments may change based on capital expenditures you need to make in the future or on your month-to-month cash flow needs. How much of your municipality's holdings are readily available in checking or money-market-type accounts? Too little, and you may risk not having enough cash available for contingencies. Too much, and you may be missing an opportunity for a higher rate of return for some of those funds.
With uncertainty still one of the dominating forces in the U.S. economy, minimizing risk and pursuing safety has never been more important. Bear that in mind as you begin to review your investments and consider your level of diversification. Remember, by seeking diversification, you may reduce certain types of risk that can affect your portfolio.
Brian Sanker is a senior marketing representative with PFM Asset Management LLC, Investment Adviser/Administrator to PLGIT, the Pennsylvania Local Government Trust, working in PFM's Harrisburg office. He can be reached at sankerb@pfm.com.
This information does not represent an offer to sell or a solicitation of an offer to buy or sell any fund or other security. Investors should consider the investment objectives, risks, charges and expenses before investing in any of the Trust's portfolios. This and other information about the Trust's portfolios is available in each portfolio's current Information Statement, which should be read carefully before investing. Copies of these Information Statements may be obtained by calling (800) 572-1472 or are available on the Trust's website at www.plgit.com. While the PLGIT and PLGIT/ARM portfolios seek to maintain a stable net asset value of $1.00 per share and the PLGIT/TERM portfolio seeks to achieve a net asset value of $1.00 per share at its stated maturity, it is possible to lose money investing in the Trust. An investment in the Trust is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Shares of the Trust's portfolios are distributed by PFM Fund Distributors, Inc., member Financial Industry Regulatory Authority (FINRA) (www.finra.org) and Securities Investor Protection Corporation (SIPC) (www.sipc.org). PFM Fund Distributors, Inc. is a wholly owned subsidiary of PFM Asset Management LLC.
A description of the PLGIT CD Purchase Program is contained in the PLGIT Information Statement. The Information Statement contains important information and should be read carefully before investing. Investors may purchase Certificates of Deposit through the PLGIT CD Purchase Program only by executing an investment advisory agreement with the Program's Investment Adviser, PFM Asset Management LLC.
SMPLGIT, PLGIT-Class Shares, PLGIT/PLUS-Class Shares, PLGIT/I-Class Shares, PLGIT/TERM, PLGIT-CD, PLGIT/ARM, PLGIT/SAM, and PLGIT-CAPare service marks of the Pennsylvania Local Government Investment Trust.
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Fall Workshop Opportunities | By Linda Rosito, Insurance Training Director
The fall workshop season is well underway! But there are still several training opportunities left and they could be FREE to attend if your county related entity is a member of the sponsoring insurance program. And as always lunch is included!
As we do every season we take the ideas and suggestions we receive from our evaluations and offer trainings that YOU ask for. Below is a listing of workshops for the rest of the fall season!
- Tuesday, October 4 - Four Generations in the Workplace: A Survival Guide, Scranton Hilton, Scranton
- Wednesday, October 6 - Time Management in the New Economy, CCAP North Office, Harrisburg
- Wednesday, October 12 - Safety Workshop, The Penn Stater Conference Center Hotel, State College
- Thursday, October 13 - Time Management in the New Economy, Best Western/Country Cupboard, Lewisburg
- Tuesday, October 18 - KEYS: Four Generations in the Workplace A Survival Guide, Regional Learning Alliance, Cranberry Twp.
- Thursday, October 20 - Time Management in the New Economy, Scranton Hilton, Scranton
- Thursday, October 27 - KEYS: Four Generations in the Workplace; A Survival Guide, Best Western/Country Cupboard, Lewisburg
- Wednesday, November 2 - KEYS: Navigating Through the Act 195 Maze..., CCAP North Office, Harrisburg
- Thursday, November 3 - Annual Producers Meeting, CCAP North Office, Harrisburg
- Friday, November 4 - County Risk Managers Council, CCAP North Office, Harrisburg
- Monday, November 7 - PIMCC Correctional Care Seminar, CCAP North Office, Harrisburg
- Wednesday, November 9 - Prison Personnel Workshop, Penn Stater Conference Center Hotel, State College
- Wednesday, November 16 - County Risk Managers Council, Regional Learning Alliance, Cranberry Twp.
For more information on these workshops, 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.
We hope to see you this fall!
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Office Fire Safety |
By Gary Nicholson, CHSP, Loss Control Services Manager
National Fire Prevention Week, according to the National Fire Protection Association (NFPA), is October 9 through October 15. Fire Prevention Week was established to commemorate the Great Chicago Fire of 1871. During this annual commemoration, attention is focused on promoting fire safety and prevention; however fire safety should be practiced every day all year long.
There is no easy button to create a safe office workplace. The most common type of hazard in an office is a fire hazard which might cause personal injury to employees. The main reason for office fire hazards are combustible materials, poor maintenance of equipment, poor standards of housekeeping and poor maintenance of electric circuits. Office fire hazards could cause serious injuries to employees and could even lead to loss of life.
Workers play a major role in creating a safe office workplace. It is important that each employee does their part to control workplace hazards. Through a program of scheduled inspections, unsafe conditions can be recognized and corrected before they lead to a serious problem. Look around you! Take a few moments each day to walk through your work area.
To have a fire safe workplace here are some recommendations to follow.
- Portable heaters are discouraged but if used should be Underwriter Laboratory (UL) approved and have an automatic shut off if tipped over. They should only be used when the area is occupied, and the unit should be unplugged when not in use.
- Open flames such as candles and incense are not appropriate for the office under nearly all conditions. An open flame is not recommended.
- Electrical equipment should be inspected regularly for frayed or cracked cords. Sockets and plugs should also be inspected on a regualr basis. Do not run electrical cords under carpet or rugs. Only approved electrical appliances and power strips should be used.
- Appointing a specific person to turn off appliances at the end of the day is a good practice.
- Combustible materials include such things as paper products, food items, plastics, upholstered furniture and rugs. Combustible materials should be continually organized and to avoid accumulation periodic housecleaning should be performed.
- Emergency exits should remain free of office furniture and stored items to allow for easy access.
- Automatic sprinkler systems shall have a minimum clearance of two feet below ceilings or 18 inches below the sprinkler head.
- Jammed copy machines should be fixed promptly. Jammed paper may catch fire. Copier drums must be cooled before being cleaned with an approved solvent.
In case of fire, do not panic and follow these procedures:
- Call 911 as soon as you are safe. Don't ever assume that someone else has already called. Stay calm while talking to the dispatcher and tell them as much as you know about the situation - where the fire started, if anyone is trapped, etc. Every piece of information is vital to helping firefighters assess the situation and take action.
- Follow the building's emergency evacuation plan.
- Never use the elevator during a fire, but always use the stairs. If there is a power outage or if the fire department has to cut the power, the elevator may get stuck with you in it.
- If you have to open a door during your escape, feel the door handles with the back of your hand and then feel the door from top to bottom before you open it. If the door is too hot, don't open it; there could be smoke or flames behind it that could rush into the room as soon as it is open, creating an oxygen glut that could be fatal. If the door is cool, slowly open it and be prepared to quickly close it if smoke or heat rushes in.
- Evacuate as efficiently as possible making sure you close every door behind you to contain the fire and slow it down as much as possible.
- If smoke or fire blocks your path, find a different exit as fast as possible. If you get caught in smoke during your escape, drop as low as possible and move toward the exit. Heat and smoke rise so the cleanest air is going to be closest to the floor.
- Once outside, move away from the building and proceed to the designated meeting location.
- If coworkers are still inside, notify emergency personnel. Do not attempt to re-enter the building to rescue coworkers. Stay out of the building until officials say it is safe to return.
Remember the best time to think about fire safety is before a fire starts. Most office fires are preventable if proper fire safety procedures are followed and used each day.
For more information email Gary Nicholson, Loss Control Services Manager or call (800) 895-9039.
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Prison Inmate Medical Caps Process Starts October 10 |
By John Sallade, Managing Director
CCAP is pleased to report the implementation of changes which will provide counties with access to significant savings on inpatient inmate medical costs, in many cases 50% or greater, and possibly even more on outpatient costs! The payment process for these savings will begin October 10, 2011.
For several weeks CCAP has been working closely with the Governor's Office, the Department of Corrections and the Department of Public Welfare on the implementation of Act 22, Inmate Medical Provisions. As you are likely aware, Act 22 allows certain county jail and prison, as well as state prison inmates to qualify for Medical Assistance coverage for hospitalizations, and caps medical provider rates at Medicaid rates for inmates not qualified and Medicare rates for outpatient services provided to inmates. The Act was signed into law with an effective date of July 1, 2011, requiring significant work on the part of DPW and DOC since no systems were in place to process Medicaid claims for inmates. In late August, a procedure for billing Medicaid for inmates in State Correctional Facilities was finalized and implemented. Since then, the focus has shifted to establishing the structures for billing for county jail and prison inmates. The process will go live on October 10, as a result of decisions involving CCAP's Prison Inmate Medical Cost Containment (PIMCC) program serving in a special intermediary role to facilitate some provisions of the Act.
In preparation for implementation, we have surveyed all counties on inpatient admissions and taken steps to have counties register as COMPASS Partners. The COMPASS system will be utilized to qualify inmates after a hospitalization, leading to hospitals billing through the PROMISE system, Pennsylvania's system for Medicaid invoice processing. According to the Act, the county of residence of inmates in county jails and prisons will pay the State portion of the hospital bill, about half of the total bill, as a result of provisions in Act 22 that will draw down federal funds for the other half. In order to achieve timely reimbursement to DPW of the county portion of hospital bills, CCAP has agreed to serve as an intermediary between DOC and DPW to collect and remit the county share of the inmate medical costs. CCAP's PIMCC program is the State approved liaison between DPW and all 67 counties and will be the single entity for counties to reconcile their portion of hospital bills for qualified inmates.
PIMCC is a medical cost management and education program dedicated to assisting county prisons/jails with the containment of all costs relating to prison inmate medical expenses. Since 1995 PIMCC's overall goal has been to train, educate, and provide a quality managed care program which allows counties to develop a medical cost saving program that fits into each county's unique inmate health care situation.
For the 19 counties which are currently PIMCC members, procedures may change but the membership relationship will remain the same. PIMCC members will continue to receive the same benefits they have traditionally enjoyed along with the new Act 22 service at no additional cost. Cost Management Plus, the administrator of PIMCC, will continue to provide PIMCC member services, and will assist CCAP with the administration of the Act 22 service.
For counties not in the PIMCC program, membership is not required for the basic Act 22 service. There will be a small administrative fee to cover CCAP's costs of administering the Act 22 service. The fee will be part of the calculation of payments to the escrow fund being established to make counties' payments to DOC (see below).
CCAP will be establishing an Act 22 service escrow fund, into which each county will provide funding for their portion of inpatient costs. Each month DOC will be billing PIMCC for the counties' share of inmate inpatient costs, and the escrow fund will make one payment to DOC on behalf of all 67 counties. We will be in touch soon to establish payment procedures and amounts for the escrow fund so payments can be made to DOC in a timely manner.
With the start date for the inpatient billing process set for October 10, CCAP will be providing counties with detailed step by step instructions on what to do it an inmate is admitted to the hospital. It is important to note you will not be registering all your inmates, just those who have received inpatient services.
Inpatient costs include:
- All hospital inpatient admissions
- Lifeline flights
- Emergency room treatment which results in inpatient admission
Outpatient costs are capped under Act 22 at Medicare rates, and counties should ensure that providers of outpatient services are billing at Medicare rates. If you are interested in how the PIMCC program can assist you with this, please let us know.
In the weeks to come PIMCC will provide detailed procedures and announce training. To prepare, please be sure that while your prison is registered as a COMPASS Community Partner, you have also registered users (Delegated Administrators) who will be the staff submitting the actual MA applications on the COMPASS system.
CCAP would like to express its thanks for the assistance provided by the Department of Corrections, Department of Public Welfare and the Governor's Office for their work to implement the provisions of Act 22.
For questions on PIMCC or the inmate medical provisions, please contact Christie Ward at cward@pacounties.org or (800) 895-9039.
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Coverage Corner
Reminders and Pointers about Insurance Coverage and Risk Management |
By Karen Cohen, Property and Casualty Programs Manager
Rails to Trails
Managing your rails to trails system effectively includes adopting risk management strategies to minimize the potential for injuries on the trail. New trail managers are often concerned that managing a trail will expose them to liability for trail-user injuries. However, trail managers have a number of legal protections that limit their exposure to liability. As a result of these legal tools, when coupled with sound risk management practices, liability concerns should not normally be an impediment to the development or management of a trail.
Questions or comments? Contact Karen Cohen, CCAP's Property and Casualty Programs Manager, here.
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Quote of the Month |
"It's not the load that breaks you down,
it's the way you carry it."
- Lena Horne
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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's Insurance Programs for the use of members of CCAP's UC Trust, PCoRP, PComp, PIMCC, COMCARE, COMCARE PRO, PELICAN, Health Alliance 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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