2019 TRICO JIF Planning RetreatMEL & RCF Update

FINANCIALSMEL, RCF, EJIF

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Financials - MELValued as of 12/31/18 – MEL System Statewide Audited Surplus

$223.7 million ($27.8m MEL share) Statewide Cash Balance

$476.5 million ($54.7m MEL Share) Statewide Assessments

$219.3 million ($44.1m MEL Share)*Includes RCF JIF and E-JIF.

*Surplus requirement if we were an:

-Insurance Co.–$78.2m;

-Captive-$41.2m.

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FINANCIALS – SURPLUS (MELJIF System)Valued as of 12/31/18

MEL

2007 16,417,964

2008 13,910,036

2009 9,834,392

2010 8,511,422

2011 12,070,178

2012 12,977,044

2013 15,738,596

2014 17,158,280

2015 14,254,705

2016 21,091,737

2017 21,870,835

2018 23,953,130 -

5,000,000

10,000,000

15,000,000

20,000,000

25,000,000

30,000,000

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

MEL Surplus

Excludes MEL share of RCF Surplus

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FINANCIALS Valued as of 12/31/18.

MEL SYSTEM SAVINGS (in millions):Lower Premiums $872Dividends $366Retained Surplus $224Reduced Accidents $1,600

MEL Total $3,062

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FINANCIALSLOSS TIME ACCIDENT FREQUENCY

MEL Employee Accident Rate

Lost Time Accidents per 100 Employees

1991: 5.73 2017: 1.61

Valued as of 12/31/18.

TRICO LTAF: 1.77 as of May 18, 2019

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FINANCIALSLOSS TIME ACCIDENT FREQUENCY

NJ Employee Accident Rates Lost Time Accidents by industry per 100 employees

Industry LT Cases

Finance & Insurance 0.3

Wholesale, Retail Trade 2.3

Manufacturing 2.6

Mining 2.8

Construction 3.1

Transportation 4.0

State Government 4.3

Local Government 4.3

All NJ Employees 2.3

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FINANCIALS – RESIDUAL CLAIMS FUND (RCF)Valued as of 12/31/18.

Surplus - $11.1 millionCash Balance - $74.9 million

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FINANCIALS – ENVIRONMENTAL JIFValued as of 12/31/18.

Surplus - $20.1 millionCash Balance - $31.8 million

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FINANCIALSMEL AUDITS

MEL, RCF & EJIF ANNUAL AUDITS PERIOD ENDING 12/31/18 No recommendations

MEL INTERNAL AUDIT UNIVERSE 2018

Reinsurance - Completed Underwriting - Completed EDP - Completed

2019 Claims Contract Management – Conflict of Interest Treasury and Investments – On hold for JCMI

2020 Actuarial Second Opinion Actuarial Peer Review Actuarial Pricing Review Accounting and Reporting

LegislationConcerns/Initiatives

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LEGISLATION–CONCERNS/INITIATIVESINVESTMENTSAssembly Bill A-3122 (Burzichelli)Senate Bill S-2663 (Sweeney and Cardinale)

Passed into law in 2018 Allows JIFs to make a broader range of investments including

investing in Municipal BondsJoint Cash Management Investments Program (JCMI)

Formalizing program including operational documents, reporting procedures and professional responsibilities

Operating Committee is working with Investment Manager, Financial Advisor and Custodial Bank

Investments will start with RCF JIF. Target is 10/1 Investment Objectives:Preservation of CapitalProvide Required LiquidityMaximize Returns

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LEGISLATION – CONCERNS/INITIATIVES

FIREFIGHTER PRESUMPTIONAssembly Bill 1741 (Quinjano)Senate Bill 716 (Greenstein)Known as the “Thomas P. Canzanella Twenty First

Century First Responders Protection Act” Signed into law July 8th, 2019 Concerns workers compensation for public safety

workers Multiple versions since 9/11

Legislation introduced left no chance for rebuttal; an impossible standard. (For example if you were a FF for one day and developed cancer at some point in your life one could file a successful WC claim).

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LEGISLATION – CONCERNS/INITIATIVES

FIREFIGHTER PRESUMPTIONResearch established that Firefighters incur cancer at a rate of

9% higher than non Firefighters.# of NJ Firefighters

Career 7,287 (MEL–2,000) Volunteer 37,803 (MEL-17,000) Total 45,090 (MEL-19,000)

Cost Projections per year with Bill as it was introduced $218 million with no amendments – Career & Volunteers $40 million – Career only $13 million – amended to include certain controls $5 to $8 million use of an alternative program in lieu of WC

State by State Analysis

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LEGISLATION – CONCERNS/INITIATIVESFIREFIGHTER PRESUMPTIONMEL chose not to oppose the Bill but rather amend to include certain

controls such as: Legal standard for Rebut Presumption

• The bill originally established “clear and convincing” as the standard to rebut the presumption.

The legislature accepted our proposal to change this to the far more reasonable standard of “preponderance of the evidence.”

Limit the type of cancers• The original bill applied the presumption to all cancers. The legislature limited the presumption to types of cancer identified by a national standard as related to fire fighting.

Include a Statute of limitations• The original Bill was unlimited. We recommended age 65 when

people become eligible for Medicare and the union argued for no age cut off.

The legislature limited to presumption to cancers diagnosed before age 75.

Create an alternative program for volunteers• The legislature would not remove volunteers from the Bill.

It requires minimum of 7 years as a fireman. The WC statute of limitation of 2 years applies.

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LEGISLATION – CONCERNS/INITIATIVESSTATUTE OF LIMITATIONS–SEXUAL ABUSESenate Bill 477 (Vitale)

Signed into law May 13, 2019 subject to amendmentsAmendments introduced via A-5392 (Quijana) and S-3739

(Vitale) Currently on Governors desk. Once signed by the Governor

this Bill goes into effect 12/31/19. MEL opposed to these Bills had been monitoring.

Establishes new liability standards in sexual abuse lawsuits filed against public entities and public employees. Creates new, extended statute of limitations periods for civil

actions by child & adult victims of sexual abuse.The amendments create significant liability for all

government entities for vicarious liability of its employees and exposed all levels of government employees to personal liability including their elected officials, employees and volunteers.

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LEGISLATION – CONCERNS/INITIATIVESSTATUTE OF LIMITATIONS–SEXUAL ABUSEThe MEL, NJ League of Municipalities, NJ School Board

Association and NJ Association of Counties opposed the Bill but had been monitoring Senate bill no. S-477 and the proposed Bill amendments.

In late April, changes were made to the Bill amendments, whereas, eliminating all public entity immunities including immunities under Title 59. The implications of this are significant.

Through the joint effort of the MEL, LOM, NJAC and NJBSAIG and with the help of other parties, the sponsor agreed to amend the Bill to bring back common law immunities and case law immunities for public entities.

Although, we could not get Title 59 immunities reinstated this is a better result than having public entities in a “strict liability” situation.

Final amendments of the bill were formalized, fast tracked and approved in early June 2019.

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LEGISLATION – CONCERNS/INITIATIVESSTATUTE OF LIMITATIONS–SEXUAL ABUSEThe new law:

Replaces the 2 year statute of limitationsExtends the Statute of Limitations for civil actions by child &

adult victims of sexual abuse as follows: Child victim – suit must be filed by 55th birthday or within 7

years of discovering the injury; whichever is later, Adult victim – suit must be filed within 7 years from date of

discovering the injury. Establishes a 2 year window during which actions can

commence for parties to bring previously time barred actions on sexual abuse;

The expectation that there will be a number of claims in the first 2 years following the effective date of the Bill.

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LEGISLATION – CONCERNS/INITIATIVESSEXUAL ABUSE/MOLESTATION PROGRAMNEXT STEPSThe MEL understands that it would be difficult for the Actuary to

quantify what the losses will be but we expect they will be expensive.

The MEL’s objective to address this new exposure is to: Set up a funding mechanism (in conjunction with RCF JIF) to help

membership with the funding for this but to avoid a negative impact on their balance sheet.

Provide a robust training and education program for Protection and Safe Treatment of Minors.

Set up specialized claim adjustment team and specialized panel of defense firms.

Ensure that all coverage policies properly reflect the extent and scope of coverage to be provided.

The program is in the process of being formulated. NOTE: The funding and specialized claims handling will also be set up for the

claims associated with the FF Presumption law.

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LEGISLATION – CONCERNS/INITIATIVESSEXUAL ABUSE/MOLESTATION PROGRAMNEXT STEPS Filing of a revised Plan of Risk Management. This accomplishes three things:

(1) Set up separate accounting of all costs associated with the sexual abuse claims including handling of additional assessments and payment terms.

(2) Establish separate contracts for utilization of claims service company and defense firms specializing in sexual abuse claims

(3) Dividends to held in escrow for departed membersDevelopment of a Training and Education Program

Model Policy Addressing the Protection and Safe Treatment of Minors –Adoption of the policy will be mandatory

Training programs :Elected Officials including Mayors – in person Managers & Supervisors - in personEmployees and volunteers (120,000) – on lineLaw Enforcement - Specialized

Attendance to be recorded on the MEL LMS. Elected Officials & Mayors will be strongly encouraged to attend in

person. Training will kick off at the LOM annual elected officials session as part

of “Changing Landscape for Elected Officials”.

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LEGISLATION – CONCERNS/INITIATIVESSEXUAL ABUSE/MOLESTATION PROGRAMNEXT STEPS A taskforce has been set up to develop other aspects of the program for

consideration by the MEL Board of Commissioners including: Funding, Financing and assessments

• Working with the Actuary on funding for 2020 and beyond• Formalizing the annual retrospective reconciliation with favorable payout

terms.• Developing a cost allocation basis amongst member JIFs.• Determine where does financial responsibility start and end for MEL, RCF

and MEL member JIFs. Marketing

• Working with the marketing manager on a video script and production Claims and Legal

• Working with the Fund Attorney for process for claims handling and protocol for defense as well litigation management.

Coverage • Consider:

o Separate coverage policy versus endorsement o Claims made versus occurrence based. o Address handling of pre membership and post membership claims

MELJIFINITIATIVES

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MELJIF INITIATIVES – SAFETY & EDUCATIONTRAININGIn 2018, MSI offered 24 on line courses and 52 instructor led courses.

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

2014 2015 2016 2017 2018

MSI Training 2014-2018

Instructor Led

On-Line

2014 2015 2016 2017 2018Instructor Led 29,542 28,096 27,976 25,922 24,105On-Line 6,100 12,887 23,761 24,065 29,393Total Classes 35,642 40,983 51,737 49,987 53,498

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MELJIF INITIATIVES– SAFETY & EDUCATIONTRAININGNew Releases and Updates

ADA Accessible Websites Hayride Safety Distracted Driving Safe Patient Lifting for Emergency Responders – on line Cyber Security – on line and on disc Right & Duties of an Employee EPL Training – on line Smart Moves to Avoid Falling Down Model DOT CDL and NON CDL Policies Developed and

Posted Training Programs ongoing in 2019-2020 for the

Designated Employer Representative (DER)

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MELJIF INITIATIVES– SAFETY & EDUCATIONTRAININGContinuing Programs

MEL leadership Skills Training for New Supervisors Camp Counselor online training program Management of Special Events – To Be Updated in

2019 MEL Media Library expanded to 836 titles

including new programs for Law Enforcement, EPL, and Wellness

Collaboration with NJ Safety Institute

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MELJIF INITIATIVES– SAFETY & EDUCATIONTRAININGIn 2018, the NJMEL MSI offered:

24 online courses and 52 instructor led courses, and 53,498 trainees received training.

New Training Platform Video Briefings – “KWIK COURSES”GHS Pictograms for Hazardous MaterialsSafe Backing of VehiclesProper Investigation of Musculoskeletal Injuries Proper Inspection of Turnout GearWebinar OfferingsMEL Website TutorialRight to Know Coordinator Duties and Responsibilities

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MELJIF INITIATIVES– SAFETY & EDUCATIONTRAININGLaw Enforcement

Program Started in 2017:• Risk Management for Police Command Staff Training• Below 100 Training Programs• Police Ad-Hoc Meetings• Loss Control Visitations• Development of Training Programs

o Career Survival for Police Officerso Career Survival for First Line Officerso Risk Management for Fire Departmentso Active Shootero Opiate Crisis

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MELJIF INITIATIVES- SAFETY & EDUCATIONWEBSITE & MOBILE APP

In November 2017: Website Update Development of MEL APP

Since November 2017: Website Use has increased dramatically Current average is over 3,000 users each month Over 1,000 Downloads of the new “APP” 863 “Push” notifications on the APP Effective way to reach a targeted audience on

safety issues.

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MELJIF INITIATIVES – RISK MANAGEMENTINFORMATION SYSTEM (RMIS)

Underwriting Data Collection Successful 2019 Renewal Preparing for 2020 Renewal

• E Mail Links forthcomingReports

Lost Time Accident Frequency Monthly Financial Monitoring Reports Recent OPRA Response

Independent Claims System All TPA claim conversions nearly complete Data Analytic Reports

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MELJIF INITATIVES–INVESTMENTSJOINT CASH MANAGEMENT INVESTMENT (JCMI)

ASSEMBLY BILL A-3122 (BURZICHELLI)SENATE BILL S-2663 (Sweeney and Cardinale)

Passed into law in 2018 Allows JIFs to make a broader range of investments

including investing in Municipal Bonds Investments will start with RCF JIF. Target is 10/1 Operating Committee to include JIF Treasurers Operating Committee will work with Investment

Manager, Financial Advisor and Custodial Bank Investment Objectives:Preservation of CapitalProvide Required LiquidityMaximize Returns

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MELJIF INITIATIVES– MARKETING

WEBSITE Enhance Cyber Risk Management Presence Create News & Success Stories including a series of 1 minute

success story videos Develop a website committee to review content and user friendly Create “How to use Website” Infographic

MOBILE APP Survey current App users for feedback on the App Promote increase in # of users and usage by providing new generic

graphics promoting the benefits for JIFs Exploration of using LinkedIn to help promote App downloads

OTHER Design materials needed for LOM and other key education events Assist with press releases & other communications on key issues

such as changes in legislation

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MELJIF INITIATIVES- SAFETY & EDUCATIONWEBSITE & MOBILE APP

In November 2017: Website Update Development of MEL APP

Since November 2017: Website Use has increased dramatically Current average is over 3,000 users each month Over 1,000 Downloads of the new “APP” 863 “Push” notifications on the APP Effective way to reach a targeted audience on

safety issues.

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Coverage

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2020 Insurance Renewal

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2020 Insurance Renewal

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MEL Coverage Committee

Vacant Buildings 2020

Additional Liability Limits

Additional Statutory Bond Limits

Crime & Liability Policy Rewrites

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Hot Coverage Topics

New Legislation

Cyber Physical Damage

Thank You

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Questions? Comments?

THANK YOU

Edward J. Cooney, MBAVice President, Account ExecutiveUnderwriting ManagerP: 973-659-6424ecooney@connerstrong.com

Joseph P. HrubashSenior Vice PresidentMEL Deputy Executive DirectorP: 973-659-6577jhrubash@permainc.com