COG Comprehensive Annual Financial Report

All operating funds of the City participate in the risk management program and make payments to the Employee Risk Retention Fund and the General Risk Retention Fund based on the funds’ historical claims experience. Payments are for prior and current year claims and to establish a reserve for catastrophic losses. Claims liabilities are reported when it is probable that a loss has occurred and the amount of the loss can be reasonably estimated. Liabilities include an amount for claims that have been incurred but are not reported (IBNR’s), based on actuarial computations. Settled claims have not exceeded self–retained or purchased insurance coverage in any of the past three fiscal years. 1. Employee Risk Retention The City provides for health, dental, life and workers’ compensation benefits in its Employee Risk Retention Fund. The City’s health plan currently offers two plan options through a self-funded program, and a dental plan and vision plan is administered for employees and their covered dependents, supplemented by employee contributions. Term life insurance for employees is provided by the City for the term of employment, at no cost to the employee. The amount of coverage is based on salary. For those dependents covered by the health plan, the City also provides a reduced coverage term life insurance policy at no cost to the employee. For the life plan, the City pays its contribution directly to the insurer. The City is self-funded for workers’ compensation for claims up to $1,250,000 per occurrence. Claims in excess of the retention are covered through a combination of purchased insurance and self-funding participation. The City’s contributions toward employee costs are accounted for as expenditures when the funds are contributed to the The City’s General Risk Retention Fund includes five separate funds in the Local Government Excess Liability Fund, Inc. (ELF) to self-fund certain types of liability claims. Up until December 31, 1999, the ELF was structured to provide varying tiers of funding, with pre-determined contribution rates, limits of coverage, repayment schedules and certain levels of transfer of risk from the five local governments and school members represented by the ELF. Annual contributions by members are periodically reviewed by the Board of Directors and the Executive Director of the ELF. Effective January 1, 2000, the ELF was reorganized and the resulting structure provides for no transfer of risk from any of the member units to the ELF. Fund balances are segregated by member and in the event of loss, those amounts are available for claims payment by the respective member, on either a loan or withdrawal basis. The new structure of the ELF is considered to be similar to a claims-servicing arrangement. The ELF Revolving Fund – Primary Liability Coverage pays amounts in excess of $100,000 up to $5,000,000 per occurrence, with an aggregated available for the City of $8,931,535 as of June 30, 2018. Additional amounts of $115,685 are recorded in the ELF for payment of City claims. In addition, a new tier of coverage was established in the ELF in April 2007, to replace purchased Excess Liability coverage and to support General Liability claims. The balance on deposit as of June 30, 2018 is $4,603,878. Accordingly, including these balances, a total of $13,651,098 is included in the City’s General Risk Retention Fund as insurance deposits. The City is also a member of the Local Government Property Insurance Deductible Fund, Inc. The City purchases Replacement Cost property insurance with a $100,000 deductible for most losses. Property losses up to $100,000 per occurrence are paid by the Fund after application of a $10,000 deductible requirement. Property insurance coverage above the annual retention provides for up to 100% replacement cost, limited to $500,000,000 per occurrence. In Fiscal Year 2018, the City contributed $50,000 to the Property Deductible Fund. At June 30, 2018 following distribution of net earnings to individual accounts for respective members, the fund held deposits of $916,618 payable to the City of Greensboro for payment of future claims. The City has the right to withdraw its contributions in the Revolving Fund – Primary Liability Coverage, the Self-Retention Fund, the Excess Liability Fund and the Revolving Fund – Employers, Liability/Workers’ Compensation of the Local Government Excess Liability Fund, Inc. and the Local Government Property Insurance Deductible Fund, Inc. when all claims against the Funds have been settled and all legal obligations have been paid for each claims year. 38ii Employee Risk Retention Fund. 2. General Risk Retention