Skip to Main Content
 

 Trust Matters, August 2014 

Members continue to see value of RMS programs

Health Benefits Trust positive performance

Affordable Care Act update

Cyber liability management tool available

Register for free cyber liability training in your area

From the board room

Did you know?

--

Members continue to see value of RMS programs

February through June is a very busy time for your Risk Management Services staff. We are talking to you, our members, about the rates that will be in place on July 1, your risk management and benefits needs, and preparing quotes for potential new business. During this time we made contact with 131 current and potential members striving to be the premier risk management solution in North Carolina for municipalities and affiliated entities.

Our Health Benefits Trust increased medical rates again this year by a greater margin than we would have liked, because of an inordinately high number of large claims in 2012 and 2013. We expected several members would terminate coverage, and they did. However, the good news is that we were able to bring in new members. The Board of Trustees reduced the rates within our Property/Liability Insurance Trust, which led to four new members. The Trustees also increased the incentive credit to $2.5 million to be dispersed to members who renew in the program. Workers’ Compensation rates and incentive credits remained unchanged, and we picked up three new members.

We welcome the following new members:

 Health Benefits Trust Property/Liability Workers' Compensation
Polk County  Town of Erwin  Town of Farmville
Town of Wadesboro Town of Lillington  Town of Mebane 
Alamance ABC Town of Montreat  Mid-East Commission 
Town of Sandyfield
Carrboro Tourism Development Authority

We also had kind words from the membership. The Town of Wadesboro terminated medical last year, but returned when the renewal rates were presented this year. Town Manager Alex Sewell said, “The Town chose to return to the League’s Health Insurance for several reasons including rate stability combined with generous benefits. Town Staff who provided me with feedback largely supported the switch. All and all, the Town is glad to have more stability in a changing environment.”

Richard Douglas, Town Manager in Erwin, said upon their return to the property/liability trust, “The Town of Erwin has been a long-time participant in NCLM’s workers’ compensation pool and recently switched to their property and liability insurance pool. Why switch from a private carrier to NCLM?-- customer service, responsiveness, and peace of mind that an organization that is focused on municipal-related issues is working on your behalf. I have personally worked with NCLM staff over the past ten years in each of their three insurance pools and have found these individuals to be true professionals focused on municipal issues ranging from ordinary to unique. I highly recommend NCLM to any municipality considering a change in insurance providers.”

Health Benefits Trust positive performance

We are seeing some encouraging claims trends for the first half of 2014 (as compared to this same period last year):

  • The per member per year trend has decreased by 6.2% (driven by decreases in facility and professional claims cost)
  • The number of high cost claimants is down from 87 to 58
  • Total high cost claims dollars have decreased by 7%
  • Our per member per year trend is 10% below the Medcost commercial benchmark (note however that our utilization is 16% above the benchmark)

We continue to see high utilization of the emergency room: 76 emergency room encounters were avoidable representing $66,000 and 73 members incurred more than 3 visits each.

We also continue to see preventive screenings compliance at a low level; e.g. 52% of females over 40 years old have not had a mammogram, 80% of males over 50 have not had a colonoscopy; and 74% of the population has not had their annual physical. We strongly believe these screenings will help us identify conditions early to save money down the road-thus our program to incentivize employees to receive their screenings per the American Cancer Society Guidelines and get their annual physical exam.

Affordable Care Act update

In July, Reuters reported U.S. health insurers will send out about $330 million in rebates to employers and individuals per the U.S. Department of Health and Human Services pursuant to the Patient Protection and Affordable Care Act.

Health insurers are required to rebate customers if their medical loss ratio is below 85 percent for group plans and 80 percent for individual plans. One purpose of this provision is to limit spending on administrative costs, salaries and bonuses by health insurers. Some have asked if the League’s Health Benefits Trust is required to provide such rebates. The answer is “no” since we are a self funded risk pool not a health insurer. Practically speaking however, we have always “rebated” our members in the form of renewal rates. We budget to break even, which translates to a 90 percent loss ratio. We are able to do this because our administrative costs are 10 percent whereas 15 is the benchmark for health insurers. If we outperform our budget by way of a lower loss ratio, renewals will appropriately reflect this good experience, thus benefitting you, the membership.

In another newsworthy development, two federal appeals courts (4th Circuit and D.C.) came to opposite conclusions as to whether residents of states with a federally run public exchange are eligible for premium subsidies since the Affordable Care Act states that only those individuals purchasing coverage in a state run exchange are eligible. The IRS has ruled that the intent is regardless of who runs the exchange, individuals below 400 percent of the poverty level will receive the subsidy/tax credit. This will continue to be the policy until a final, definitive ruling is made, or until the legislation is amended.

Cyber liability management tool available

The Property/Liability Board of Trustees approved a subscription to eRisk Hub for all members of the property/liability trust. This site provides everything you need to establish your cyber security risk management program and assistance should you suffer a breach. Included is an incident roadmap, news center, learning center, expert/vendor contacts and risk manager tools. The site will allow you to:

  • Complete a data breach self-assessment
  • Develop policies on such things as IT security, an incident response plan, personal device use, etc.
  • Determine the potential cost of a data breach for your organization
  • Locate third party resources
  • Plan your response to a data breach incident
  • Contact a breach coach for 1 hour of free consultation (this is for those pool participants who have not purchased cyber liability coverage through the Beazley Insurance)
  • Review best practices for public entities
  • Download employee training programs
  • Locate resources and vendors that can assist in conducting assessments, business continuity, compliance readiness, IT security management, etc.

We encourage you to take full advantage of this value added service. You can access the site through your League website member login credentials here.

Register for free cyber liability training in your area

Have you considered the purchase of cyber security insurance but not sure what it covers and how this meshes with your current liability policies? Did you know that a cyber event not only results in third party liability, but expenses related to fines, penalties, notification and credit monitoring for victims? Attend one of these free RMS trainings to learn how cyber security insurance responds to these and other costs following a breach:

  • Sept. 17 in Asheville
  • Sept. 18 in Hickory
  • Sept. 24 in Raleigh
  • Sept. 30 in Greenville
  • Oct. 8 in Wilmington

Click here to register for one of the above trainings.

From the board room

Your Board of Trustees met on Aug. 21 and took action to approve program budgets for the three insurance trusts administered by the League. The Trustees approve these budgets following the renewal July 1 to have accurate revenue data and a more refined estimate of losses. Each program benefits significantly from the investment portfolio that has been built over the years. Combined, this income (not including changes in the value of the investments) totals $5.7 million and offsets a significant portion of our operating expenses, allowing us to maintain stability and underwrite to a higher loss ratio.

Additionally, the Trustees received updates on a number of initiatives currently underway:

  • Website upgrades,
  • Cyber security initiatives,
  • Loss control initiatives like our new mobile application, which will streamline the claims process internally,
  • Fit Responder and Arc Angel training,
  • Development of land use training modules in partnership with the UNC School of Government,
  • and health program underwriting review-including predictive modeling.

 If you’d like to learn more about any of these please contact Kristy Barefoot.

Did you know?

Did you know six modules of land use training are now available through Safety Catch, your online training resource. These modules have been developed by the UNC School of Government experts in land use law and regulation in North Carolina. They are excellent programs to train your elected and appointed officials that have land use planning and decision making responsibilities. Please contact Brenda Rich for more information.