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  Consent-General Government   # 7.       
County Administrator  
Meeting Date: 11/23/2021  
Brief Title:    YCPARMIA Rescission of Notice to Withdraw
From: Chad Rinde, Interim County Administrator, County Administrator's Office
Staff Contact: Chad Rinde, Interim County Administrator, County Administrator's Office, x8150

Subject
Authorize the County Administrator or designee to negotiate with YCPARMIA for improved exposure factor to reduce insurance rates and to rescind County notice of withdraw. (No general fund impact) (Rinde)
Recommended Action
  1. Authorize the County Administrator or designee to negotiate with YCPARMIA for improved exposure factor to reduce insurance rates; and
     
  2. Rescind County notice of withdraw from YCPARMIA.
Strategic Plan Goal(s)
In Support of All Goals (Internal Departments Only)
Reason for Recommended Action/Background
Background
The County of Yolo has participated in the Yolo County Public Agency Risk Management Insurance Agency (YCPARMIA) since its formation in 1979 and YCPARMIA now has approximately 30 agencies in Yolo County participating in its risk pooled programs. Yolo County is the largest member and makes up 48-52% of the payroll in each year. YCPARMIA self insures for a certain level of risk and manages insurance claims and contracts for excess coverage through other risk pools. The County has received significant rate increases in the past years along with other member agencies and determined the need to reevaluate its approach to meet its insurance needs. This led to submitting a letter notifying YCPARMIA (Attachment B) of the County's intent to withdraw from the joint powers agency. This was required in order to allow the County to explore alternative arrangements and the County retained the right to rescind the notice of withdraw by December 31, 2021. 

Analysis:
While there are numerous methods in which the County could procure and meet its insurance needs whether through Commercial Insurance, Risk Pooling, or  Self-Insurance, staff determined to analyze several alternatives. It was determined that commercial insurance would be unlikely to be successful so a number of self-insured and risk pooling options were explored. The results are detailed in Attachment A and summarized below for two major risk programs: General Liability and Workers Compensation. The information below was prepared comparing different rate structures for fiscal year 2021-22 given that information is not fully available for premiums in the subsequent year (FY 2022-23). Comparisons were made against the Public Risk Innovation Solutions and Management (PRISM) which was the former California State Association for Counties (CSAC) Excess Insurance Agency (EIA) and is used by many counties in their risk management. Some assumptions were made which are detailed in Attachment A. 

General Liability
 
Deductible/Self Insured Retention YCPARMIA PRISM Cost Savings (Increase)
$5,000/$10,000 $4,009,500 $4,703,605 $(694,105)
$100,000 $4,206,351 $4,183,319 $23,032
$250,000 $4,073,446 $3,763,646 $309,800

Worker's Compensation
Deductible/Self Insured Retention YCPARMIA PRISM Cost Savings (Increase)
$1,000/First Dollar $3,274,422 $2,975,176 $299,246
$125,000 $3,273,425 $3,320,238 $(46,813)
$250,000 $3,265,583 $2,986,001 $279,582

While under some of the scenarios above the County could achieve additional cost savings, there are some qualitative factors that should be considered included in Attachment A. The qualitative factors include lower insurance coverage, the need to rebuild reserves as reserves cannot be taken from YCPARMIA (per JPA agreement), staff effort involved in switching providers, and possible additional costs for managing tail claims (prior claims that stay with YCPARMIA). In addition, the County's departure would significantly impact rates of other public agencies and cause rates to increase significantly for other public agencies.

Recommendation:
As a result, staff believe it appropriate to attempt to negotiate with YCPARMIA to see if an exposure factor could be provided to the County that would recognize its lower risk and retain its participation in the pool but recognize the County is a lower risk member and thus should receive some rate benefit. Should that be able to be achieved, authority is requested to have the ability to rescind the notice of withdraw submitted to YCPARMIA in July 2021. The YCPARMIA Board would need to approve this type of policy action at its December 9th meeting, thus negotiations would occur and try to conclude prior to that date to ensure certainty prior to the notice being withdrawn.
Collaborations (including Board advisory groups and external partner agencies)
The County Administrator's Office has collaborated internally with the Department of Financial Services, Human Resources, and externally with the YCPARMIA and PRISM as well as actuaries and auditors on this recommendation. This recommended action was also reviewed by the Budget Ad-Hoc Committee on November 16, 2021.
Competitive Bid Process
Not applicable, the County of Yolo is a member agency of YCPARMIA.

Fiscal Impact
Potential fiscal impact (see notes in explanation section below)
Fiscal Impact (Expenditure)
Total cost of recommended action:    $   0
Amount budgeted for expenditure:    $   0
Additional expenditure authority needed:    $   0
One-time commitment     Yes
Source of Funds for this Expenditure
$0
Explanation (Expenditure and/or Revenue)
Further explanation as needed:
Risk management premiums are allocated across the organization based on their claims exposure and experience. The recommendation does not have an immediate fiscal impact but would impact rates for FY 2022-23 depending on the results of negotiation with YCPARMIA.
Attachments
Att. A. YCPARMIA Analysis
Att. B. Notice of Intent to Withdrawal

<
Form Review
Inbox Reviewed By Date
Chad Rinde (Originator) Chad Rinde 11/16/2021 09:37 AM
Financial Services Shelby Milliren 11/16/2021 09:48 AM
County Counsel Hope Welton 11/16/2021 09:54 AM
Joanne Vanhoosear Joanne Vanhoosear 11/16/2021 11:48 AM
Form Started By: Chad Rinde Started On: 11/12/2021 08:33 AM
Final Approval Date: 11/16/2021

    

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