Washington Counties Risk Pool
From WCRP Executive Director Vyrle Hill
independent actuary’s claims reserve estimate for the Pool-only
o the Board of Directors of the
coverage layer ($6.1 million from $7.1 million). Of even greater
significance is the more than $9 million in Net Operating Income
realized since Py2003.
TWashington Counties Risk Pool and to
its Member Counties and their citizens:
Interest Income slipped further (-69%) to a measly $0.1 million. This
was due to the lower interest rates associated with the existing
recession and the nearly non-existent rates available to
municipal investors under Washington State’s regulations.
Presentation of this 2010 Annual Report of the Washington Counties
Risk Pool (“the Pool” or “WCRP”) represents the culmination of the
Pool’s 22nd operating year; that is, except for resolving lingering
claims stemming from Policy Year 2010 (“Py2010”). It is my distinct
pleasure to have been associated with this very unique service
organization, from its establishment more than twenty two years ago
through today.
Total Assets grew $3.2 million (9%) during Py2010 to $38.9 million.
Current assets increased $3.1 million (9%) while non-current
assets increased $0.1 million (12%). Since the low-point that
existed at year end Py2003, the Pool’s Total Assets have grown
nearly $30 million (+300%).
I
found the word journey partially defined as process of
development: a gradual passing from one state to another regarded
as more advanced, e.g. from innocence to mature awareness. That
definition seems very fitting for the WCRP. Though the Pool’s 22-year
journey has been challenging with cyclical peaks and valleys and its
fair share of obstacles, it has also provided considerable learning
experiences intermixed with some pleasant rewards. And while we
know more challenges lay ahead, the Pool’s journey has most
certainly provided maturation for many involved in this “pooling”
concept – from innocence of infancy to the awareness customary of
adulthood. Here are a few examples…
Total Claims Reserves for the Pool’s direct reserving exposures
increased to $14.0 million, up 7% from Py2009 and 31% since
Py2003. This total includes: $6.1 million for losses in the Pool-
only retained layer, down 13% from one year ago and 40% since
Py2003; $7.0 million for losses within the aggregated stop
losses of the “corridor” program for automobile and general
liabilities, up 37% from one year ago; and $0.9 million for
unallocated loss adjustment expenses, down 2% from one year
ago but up 62% from Py2003 levels.
NOTE: The corridor program is only four years old and not fully
matured. Its occurrence coverage maximum was increased to
one million dollars in Py2010, up from the half million level that
existed during the program’s first three years. The program’s
occurrence minimum remains the greater of the applicable
member’s deductible or $100,000.
Membership: Fifteen of Washington’s thirty nine counties were
recognized as the initial voting members when the Pool was
established in August 1988. The Pool’s membership grew to nineteen
counties during its first operating year. And it continued to grow with
eleven counties being added, three counties departing, and one
county returning by 2003 when it membership totaled twenty eight
Washington counties. The Pool’s membership remained stable until
Kitsap County withdrew at the end of Py2010.
Net Assets (aka “Members’ Equity”) increased $2 million this past
year and nearly $12 million since Py2003 to $10.2 million as of
September 30, 2010. Of the total, $5.8 million is classified as
“Restricted Net Assets” — $1.0 million to satisfy the State’s
solvency provisions (WAC 82.60.03001) plus $4.8 million for the
Pool’s Underwriting Policy requirements; $0.2 million invested in
a real property (fraud) recovery; $1.0 million in Capital Assets
(net of debt); and $3.2 million “Non-Restricted” that is available
for use as directed by the Board of Directors.
Joint Self-Insurance Liability Program:
The Pool has been
providing its member counties with occurrence-based, jointly self-
insured and/or jointly purchased 3rd-party liability coverage since
October 1, 1988. Total coverage limits have grown from the $1 million
limit existing during the Pool’s initial two months to $5 million, then to
$10 million and onto $15 million before reaching the $20 million
occurrence limit existing the past seven years
The Confidence Factor determined annually by the Pool’s
independent actuary, which is typically referred to as the
actuarial confidence level, tends to be the most telling measure
The Pool’s claims database increased during Py2010 with the addition
of 769 new claims (and lawsuits) raising the third-party liability claims
to-date total submitted by Member Counties to 17,238. Estimates of
incurred losses (payments made plus reserve estimates for open
claims) increased $17.8 million during the year to $221.4 million.
of the entity’s financial well-being.
The WCRP actuarial
confidence level has grown steadily the past several years and
now far exceeds the 98% goal set by the Board of Directors in
early 2007.
Washington Counties Property Program: Since the Pool began
offering its membership an optional, fully-insured and jointly-
purchased property insurance in October 2005, participation has
grown by more than 50% and the total value of covered properties
has nearly doubled. Twenty seven member counties with covered
properties totaling $2.76 billion participated in this program during
Py2010.
Py2003 year end current assets, excluding the member
reassessments (aka retroactive assessments) receivables,
represented a mere 52% of that year’s current liabilities. Current
assets at the end of Py2010 however totaled 131% of the year’s
current liabilities. As noted earlier, Py2010 ended with Net
Assets of $10.21 million. Py2003, on the other hand, ended with
Net Liabilities of $1.75 million. And the Py2003 Net Liabilities
would have been much larger except for the $2.88 million in
member reassessments receivables included as assets.
There were 7 property claims submitted for processing during Py2010
with incurred losses-to-date totaling $0.33 million. During its first five
years as an optional WCRP insuring program, there have been 65
property claims filed with incurred losses-to-date totaling nearly $9
million.
The Pool’s long arduous journey continues, but there’s greater
optimism and a truer sense of maturation. The Pool’s membership
now consists of twenty seven Washington counties. The Pool’s
qualities, the insuring options it makes available for its membership,
and the very strong financial position that the Pool now possesses
should convince several of the remaining Washington counties over
the course of the next few years to “join our ranks” and become
WCRP Member Counties.
Financial: The Pool’s financial position continues to improve and
again considered the strongest it has ever been. Here are a few
financial highlights:
Net Operating Income was realized during Py2010 of $1.8 million, a
59% increase from the prior year. Substantially contributing to
this improvement was the near million dollar reduction in the
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