Middlesex County Municipal Joint Insurance Fund 2023 Plan of Risk Management

BE IT RESOLVED by the Commissioners Middlesex County Municipal Joint Insurance Fund (FUND) that effective January 1, 2023, the 2023 Plan of Risk Management shall be:

The Perils or Liability to be Insured Against

The Joint Insurance Fund insures the following perils or liability:

1. Workers' Compensation including Employer's Liability
2. Liability including General, Law Enforcement, Automobile and Employee Benefits Liability
3. Property, Automobile Physical Damage and Boiler & Machinery
4. Public Officials and Employment Practices Liability
5. Crime
6. Cyber

The Limits of Coverage

NOTE: Each Member entity is responsible for paying up to its individual self-insured retention/deductible. The above description is a general overview of the coverage and limits provided by the FUND. The actual terms and conditions are defined in the individual policy documents and this Risk Management Plan. All issues and/or conflicts shall be decided upon by the individual policy documents. Additional limits, sublimits, deductibles, retentions, terms and conditions apply.

1. Workers' Compensation
- Workers’ Compensation: Statutory
- Employer's Liability: $2,000,000
2. Liability (General, Automobile, Law Enforcement and Employee Benefits Liability)
- Up to Limit: $10,000,000 each / $10,000,000 aggregate
a.Personal Injury Protection (PIP): $250,000
b.Underinsured/Uninsured Motorists Liability: $15,000 / $30,000 / $5,000
- Deductible: As otherwise defined per member
3. Public Officials / Employment Practices Liability (Claims Made)
- Limit: Up to $10,000,000 each claim / aggregate
- Deductible: As otherwise defined per member
4. Sexual Abuse and/or Molestation (Claims Made)
- Limit: $10,000,000 CSL
- Deductible: As otherwise defined by member
5. Property including Boiler & Machinery
- $200,000,000 Per Occurrence
- Sublimits:
a.Breakdown: included
b.Earthquake: $10,000,000 (Annual Aggregate) c. Flood: $10,000,000 (Annual Aggregate)
1. High Hazard Flood: $5,000,000
2. Low Hazard Flood: $10,000,000.
3. Moderate Hazard: $5,000,000.
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d.Equipment: $2,112,802 (Scheduled) e.Extra Expense: $2,500,000.
f. Off Premises Power: $2,500,000. g.Accounts Receivable: $1,000,000. h.Debris Removal: $2,500,000.
i. Extra Expense – Ingress/Egress:$1,000,000.
j. Property in Transit: $250,000.
k. Newly Constructed or Acquired Building: $5,000,000. l. Newly Constructed Personal Property: $2,500,000. m. Garage keepers Liability: $500,000.
- Deductibles:
a.All Other: As otherwise described per member b.Equipment Breakdown: $5,000 per occurrence c. Flood, Per Building:
1. High Hazard Flood: $500,000
2. Low Hazard Flood: $100,000.
3. Moderate Hazard: $250,000.
6. Crime
- Limit: $1,000,000
- Deductibles:
a.Crime: As otherwise described per member
b.Statutory Bond: $1,000
c.Excess Statutory Bond: Greater of the statutorily required limit or the limit
currently in place
7. Cyber
- Limit: $3,000,000./$6,000,000. aggregate
- Third Party Liability
a. Media
b.Privacy and Cyber Security c. Privacy Regulatory Defense
First Party Coverages
a. Business Interruption - Loss of Business Income & Extra expense b. Data Recovery
c. Cyber Extortion and Ransomware
d. Data Breach Response and Crisis Management
The amount of risk to be retained by the Joint Insurance Fund (except as noted in section 2. Limits of coverage)
1. Workers' Compensation (all coverages): $2,000,000/$5,000,000.
2. Liability $500,000.
3. Public Officials /Employment Practices Liability: $500,000
4. Sexual Abuse and/or Molestation $500,000.
5. Property: $100,000
6. Crime: $50,000
7. Cyber: $325,000.
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Coverage to be purchased from a commercial insurer
The FUND obtains the following Excess Insurance Coverage: Excess Commercial Property – Chubb Insurance Excess Liability – Hudson insurance Group (First Layer)
Gemini Insurance Company (Second Layer) Excess Workers Compensation – ACE American Insurance Company
Cyber Liability – Indian Harbor Insurance Company
Reinsurance to be purchased
The FUND does not purchase reinsurance.
The amount of unpaid claims to be established
The general reserving philosophy is to set reserves based upon the probable total cost of the claim at the time of conclusion. Historically, on claims aged eighteen (18) months, the FUND expects the claims servicing company to set reserves at 85% accuracy. The FUND also establishes reserves recommended by the FUND’s Actuary for claims that have been incurred but not yet reported so that the FUND has adequate reserves to pay all claims and allocated loss adjusted expense liability.
Claims reserves are subject to regular review by the FUND’s Executive Director/Administrator, Attorney, Board of Commissioners and claims servicing company. Reserves on large or unusual claims are also subject to review by the claims departments of the commercial insurance companies or reinsurance companies providing primary or excess coverages to the FUND.
The method of assessing contributions to be paid by each member of the FUND when applicable
By November 15th of each year, the actuary computes the probable net cost for the upcoming FUND year by line of coverage and for each prior FUND year. The Actuary includes all budget items in these computations. The annual assessment of each participating member entity is it’s pro rata share of the probable net cost of the upcoming FUND year for each line of coverage as computed by the Actuary.
The calculation of pro rata shares is based on each member’s experience and the modified manual premium for each line of coverage in which the member participates.
The Treasurer deposits each member's assessment into the appropriate accounts, including the administrative account, and the claim or loss retention trust FUND account by FUND year for each type of coverage in which the member participates.
If an entity becomes a member of the FUND or elects to participate in a line of coverage after the start of the Fund year, such participant's assessments and supplement assessments are adjusted to cover only the remainder of the Fund year remaining.
The FUND’s Governing Body may by majority vote levy upon the participating member entities supplemental assessments wherever needed or so ordered by the Commissioner of Insurance to supplement the FUND’s claim, loss retention or administrative accounts to assure the payment of the FUND’s obligations. All supplemental assessments are charged to the participating member entities by applicable FUND year, and shall be apportioned by the year's assessments for each line of coverage.
Should any member fail or refuse to pay its assessments or supplemental assessments, or should the FUND fail to assess funds required to meet its obligations, the Chairman, or in the event by his or her failure to do so, the custodian of the FUND’s assets, shall notify the Commissioner of Insurance and the Director of Community Affairs. Past due assessments shall bear interest at the rate established annually by the FUND’s Commissioners.

Procedures governing loss adjustment and legal expenses
The FUND engages a claims service company to handle all claims. The performance of the claims adjusters is monitored and periodically audited by the Executive Director's office, the FUND Attorney, the NJ Attorney General’s office, as well as the claims department of the FUND’s excess insurers
Each member entity is provided with a claims reporting procedure and appropriate forms.
In order to control workers' compensation medical costs, the FUND has engaged a managed care organization (MCO) whose procedures are integrated into the FUND’s claims process.
To provide for quality defense and control costs, the FUND has established an approved defense attorney panel with firms which specialize in Title 59 matters. The performance of the defense attorneys is overseen by the FUND Attorney, as well as, the various firms which audit the claims adjusters.
Procedures for the closure of FUND years, including the maintenance of all relevant accounting records
Not applicable.

Assumptions and Methodology used for the calculation of appropriate reserves requirements to be established and administered in accordance with sound actuarial principles.
The general approach in estimating the loss reserves of the FUND is to project ultimate losses for each FUND year using paid and incurred loss data. Two traditional actuarial methodologies are used: the paid loss development method and the incurred loss development method. From the two different indications resulting from these methods the FUND Actuary chooses a "select" estimate of ultimate losses. Subtraction of the paid losses from the select ultimate losses yields the loss reserve liability or FUND funding requirement. The following is an overview of the two actuarial methods used to project the ultimate losses.

1. Paid Loss Development Method - This method uses historical accident year paid loss patterns to project ultimate losses for each accident year. Because this method does not use case reserve data, estimates from it are not affected by changes in case reserving practices. However, the results of this method are sensitive to changes in the rate of which claims are settled and losses are paid, and may underestimate ultimate losses if provisions are not included for very large open claims.
2. Case Incurred Loss Development Method - This method is similar to the paid loss development method except it uses historical case incurred loss patterns (paid plus case outstanding reserves) to estimate ultimate losses. Because the data used includes case reserve estimates, the results from this method may be affected by changes in case reserve adequacy. The maximum amount a certifying and approving officer may approve pursuant to N.J.A.C. 11:15-2.22

1. $25,000 for workers compensation claims
2. $15,000 for liability claims
3. $15,000 for auto physical damage claims and $25,000 for property claims
4. With the advance approval of the FUND Attorney or Executive Director, the certifying and approving officer may also pay hospital bills if waiting until after the next regularly scheduled FUND meeting would result in the loss of a discount on such bills. When the certifying and approving officer utilizes this authority, a report shall be made to the Commissioners at their next meeting.

Adopted by the Governing Body this day of   , 2023.
_______________________________________ FUND CHAIRPERSON
ATTEST:
_______________________________________ SECRETARY