To jump in the pool or not to jump in the pool, the PIRMA insurance pool that is, was the question on Mahoning Township supervisors minds as they listened to presentations by long time township insurance carrier Jeffrey Kyle of DGK Insurance and Tim Lutz of HA Thomson Insurance. PIRMA is an acronym for the Pennsylvania Intergovernmental Risk Management Association and is composed of a group of municipalities throughout the commonwealth who pool together to deal with property and liability claims.
Kyle, who was first to speak under new business, appeared to be caught off-guard and told supervisors he felt that he was at a disadvantage. "I have no idea what the other presenter will be offering from his agency but I'm sure he had used your existing policies to form his package." He asked Secretary-Treasurer if Lutz had seen the existing policies and she told him he reviewed some of them.
Chairman John Wieczorek said he didn't want either presenter to feel disadvantaged and felt it didn't matter who went first. "I will give you a chance to rebut anything in his (Lutz's) presentation and likewise in the sense of fairness, (Lutz) will have the same opportunity."
Kyle told supervisors his firm has serviced the township for 20-plus years and offers insurance for property, liability and worker's compensation. His insurance is through traditional carriers and he said, "In the 20 years, we have dealt with many competitors but I'm proud to say this township has not incurred a loss that was not covered by our insurance. That's the last 20-plus years."
Kyle pointed out that the board should review both packages carefully ensuring the deductibles are the same, the coverages match up and the worker's compensation is covered. "In addition, I ask you to review the financial stability of the carriers they use. Our carrier Employers Mutual Company has an A- rating."
One item Kyle pointed out was the Workers Compensation premium noting it was up 17 percent from last year. He told supervisors this was due to claims in the last three years that comprised the experience modifier. The last claim was in 2008.
Supervisor Travis Steigerwalt asked if the number of employees affects the premium for Workers Compensation. Kyle told him the premiums are audited at the end of the year and compared with the actual workforce with the final amount being adjusted accordingly.
Supervisor Franklin Ruch asked if the insurance also extends to firefighters and ambulance personnel while supervisor George Stawnyczyj also included fire police. Kyle said all three groups are also covered in the premium.
In Lutz's presentation, he told supervisors his firm HA Thomson Agency has been in existence since 1934 and has touched more than 1,000 municipalities and agencies throughout the state. He mentioned that their speciality is municipal insurance.
He mentioned they also use Employers Mutual Company as well, but the program he was presenting tonight was better than the insurance offered by EMC.
"I'm proposing the same areas of insurance, property, liability and workers compensation, but our property and liability insurance will be through the PIRMA pool," Lutz said.
According to Lutz, PIRMA offers up to a $10 million dollar payout per claim as opposed to the $4 million DGK insurance currently provides the township. He cited a case in Westfall Township in Pike County where the township declared bankruptcy after losing a lawsuit brought by a developer. "We want to make sure you are covered. Hopefully you won't need that much, but it's better to have more than less."
He also pointed out there were no deductibles on PIRMA liability insurance for police, supervisor liability insurance and employee practices.
PIRMA is an intergovernmental pool of municipalities that provide insurance to the members. They cover $350,000 and then they have a reinsurance company cover the rest. He told supervisors reinsurance was common in such pools. Although it is not traditional insurance he pointed out that as far as pool programs go, the PIRMA pool has a AAA rating. "Ninety percent of our clients are in the program," Lutz commented.
He also mentioned there is more complete coverages including pollution liability coverage and firefighting chemicals as well as damage caused by salt application and storage.
To enter the program, the municipality would need to approve an intergovernmental agreement and pass an ordinance. Once in the pool they must stay for the year before opting to leave. Lutz pointed out though that if there is an open claim, the pool governance requests the member municipality remain in the pool until the claim is settled or the claim must leave the pool coverage with the township.
Lutz said the premiums paid to the pool are divided between the budgetary fund and a capital reserve fund used to cover any shortfalls that might occur.
He added that once enrolled a loss control and risk management specialist would visit the township and make recommendations for ways to reduce risks in the community. He assured supervisors the recommendations would not be capital expenditures but simple things that could be done to make the municipality and the employees' practices safer.
Ruch asked if the premiums would fluctuate with other municipalities' claims. Lutz said the pool is PA specific and is known for little fluctuation. He added that he would review the policy several months before the effective date to give supervisors an indication of how the premiums would look for budgetary purposes.
Wieczorek asked how the pool was left and Lutz said after one year the township can leave, but any open claims would need to leave with the township. He also pointed out that the township would be wise in that case to look for prior claims coverage as anything brought against the township after they left the pool would not be covered for the time they were in the pool if they were no longer members.
With regard to the recommendations by the loss control specialist, Wieczorek asked what would happen if the township refused to follow the recommendations. Lutz said if there were claims filed because a recommendation was not followed the township coverage could be terminated. He was quick to add that in 22 years no one has been terminated and a few municipalities that left had returned to the program. "It's not just insurance, but an entire program we offer to you."
Lutz also said the workers compensation was covered by Amerihealth, a division of Blue Cross.
in rebuttal, Kyle pointed out that this is not standard insurance being offered by Thomson and the way he mentioned of leaving the pool has only existed for the past two or three years. He pointed out that if they leave the pool and don't have coverage for prior claims, then they could be sued after the fact and not have insurance for the time they were covered by the pool.
He also asked supervisors to question and explore why Amerihealth uses an unrated carrier and to make sure the company is as stable as the rated carriers Kyle offers. He said he didn't understand why a carrier would not want to be rated as it tends to be an asset and not a liability.
Lutz countered by telling supervisors he wants them to understand the pool program and doesn't want them to do anything they aren't totally comfortable with doing. He urged them to follow up on the references and contacts he provided to get their opinions of the program.
Steigerwalt asked if Kyle could provide prices for similar claims coverage citing the $10 million dollar coverage Lutz offered. Kyle said he would.
Wieczorek thanked both for their presentations and said they would be reviewed and a decision would be reached in the near future.