Washington Counties Risk Pool
From WCRP Executive Director Vyrle Hill
Respectfully presented to the Board of Directors
Interest Income slipped even further (-17%) in Py2011 due to the
low interest rates associated with the existing national and
global recessions and the nearly non-existent rates available to
municipal investors under Washington State’s regulations.
and the Member Counties of the Washington
Counties Risk Pool, and to the citizens of the state
of Washington served by those Member Counties:
Claims Reserves for the Pool’s direct reserving exposures increased
in total to nearly $15.0 million in Py2011, up 6.7% from Py2010
and an increase of 39.7% since Py2003. This total includes:
$5.6 million for losses in the coverage layer retained by the
Pool, down 9.3% from one year ago and down more than 45%
since Py2003; $8.6 million for the aggregated stop losses in the
retained layers associated with the “corridor” program for
automobile and general liabilities, up 22% from the year before;
and $0.8 million for unallocated loss adjustment expenses,
down 5% from one year ago but up 53% from Py2003.
This presentation of the 2011 Annual Report of the Washington
Counties Risk Pool (“the Pool” or “WCRP”) represents the
culmination of the Pool’s 23rd operating year; that is, except for the
resolution of some outstanding claims. And though the Pool’s long
journey thus far has been challenging with its fair share of obstacles,
it has resulted in many learning experiences intermixed with some
very pleasant rewards. A few examples follow:
Membership: Fifteen of Washington’s thirty nine counties were
recognized as the Pool’s initial voting members when it was
established in August 1988. The Pool’s membership grew to
nineteen counties during its first operating year and continued to
grow over the years with eleven counties added, three departing,
and one returning. By 2003, its membership totaled twenty eight
Washington counties. Membership remained stable until another
withdrawal occurred at the end of Py2010 leaving the present 27
counties.
NOTE: The corridor program is now five years old yet still not
fully matured. Also, its occurrence coverage maximum was
increased to one million dollars beginning with Py2010, up from
the half million dollar 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.
Total Assets grew $2.2 million (6%) during Py2011 to $41.1 million.
Current assets increased $2.3 million (6%) in Py2011 while
non-current assets decreased 4%.
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 that existed 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 that has existed the past eight years.
(Note: Additional occurrence limits of $5 million have been available
as an option for individual members to acquire for several recent
years.)
Since the low-point that existed at year-end Py2003, the Pool’s
Total Assets have more than quadrupled (+348.5%).
Furthermore, year-end Py2003 current assets, excluding
member
reassessments
receivables
(“retroactive
assessments”), represented only 52% of the year’s current
liabilities. Py2011 current assets on the other hand totaled
137% of the year’s current liabilities.
Net Position (also referred to as “Net Assets” or “Members’ Equity”)
increased $0.8 million (+8%) to $11.0 million as of September
30, 2011. Net Position has steadily increased $12.8 million
from the negative $1.75 million existing year end Py2003,
which was aided by $2.88 million in member reassessments
receivables. Of the Py2011 total, $5.5 million is classified
“Restricted” - $0.9 million to satisfy the State’s solvency
provisions (WAC 200.100.03001) plus $4.6 million to address
the Pool’s Underwriting Policy requirements; $0.2 million
remains invested in a real property (fraud) recovery; and $1.0
million held in Capital Assets (net of debt); with $4.4 million
classified “Non-Restricted” and available for use as directed by
the Pool’s Board of Directors.
The Pool’s claims database increased during Py2011 with the
addition of 744 new claims (and lawsuits) raising the third-party
liability claims to-date total submitted by member counties to 17,982.
Incurred loss estimates (payments made plus reserve estimates for
open claims) increased $16 million during the year to nearly $237.4
million.
Washington Counties Property Program: Since the Pool began
offering an optional, fully-insured and jointly-purchased property
insurance coverage six years ago, participation has grown by more
than 50% and the total value of covered properties has nearly
doubled. Twenty six member counties with more than $2.6 billion in
covered properties participated in this program during Py2011.
Confidence Factor, which is determined annually by an independent
actuary and typically referred to as the actuarial confidence
level, remains the more recognized measure of a pooling
entity’s financial well-being. The WCRP actuarial confidence
level has grown steadily the past several years and far exceeds
the 98% goal set by the Board of Directors in early 2007.
There were 13 property claims submitted in Py2011 with incurred
losses-to-date totaling nearly $0.85 million. During its first six years
being offered as a ‘county option’ insuring program through the
WCRP, there have been 78 property claims filed with incurred
losses-to-date totaling nearly $9.75 million. Premiums paid for this
coverage total $13.75 million resulting in a to-date loss ratio of 0.71.
More challenges lie ahead, that we know. But the Pool’s 23-year
journey has provided those involved in this “pooling” concept the
opportunity to mature – from the innocence associated with infancy
to the awareness and wisdom that are customary of adulthood. The
Pool continues on, but now with even greater optimism. Its qualities
and the insuring options available for its membership combined with
its strong financial position should serve to convince several
Washington counties to “join the ranks” and become WCRP
members over the course of the next few years. I remain most
pleased having been associated with this very unique public service
organization from its establishment many years ago.
Financial: The Pool’s financial position continues to improve and
remains the strongest it has ever been. Highlights include:
Net Operating Income realized during Py2011 was $0.8 million, a
58% decrease from the prior year but 105% of the annual
average of the past ten years (2001-10). Of much greater
significance is the $9.8 million in Net Operating Income realized
during the past eight years. Contributing substantially to
Py2011’s improvement was the $0.6 million dollar reduction in
the independent actuary’s claims reserve estimate for the Pool-
only coverage layer ($5.6 million, down from $6.1 million).
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