R-336 - 09/14/1982 - IRMA - Resolutions Supporting Documents Amok 334
VILLAGE OF OAK BROOK
1200 OAK BROOK ROAD
OAK BROOK, ILLINOIS I'
654-22204
August 13, 1982
f
MEND TO: Trustee Joseph Rush �I
SECT:. Insurance/I.R.M.A. Contribution 1'
� I
The following is a revised I.R.M.A. contribution analysis with conventional j
insurance based on the Board°s approval of th4 first and second supplemental 1
asks rminto. I
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INSURANCE TOTAL PERCENT II
I.R.M.A
PREMIUM PREMIUM : CHANGE
1979 $ 55,615 • $ 55,615 i
I
: . 1977
$120,787 • $1120,787- + 1i7.2X
1978 $139,165 • $139,165 + 15.2%`:' . i .
1979 $ 84,E 234` + $ 4,457 R$ 88,691 I
tp $ -
1980 $110,587 + $ 7,384 a $117,971 + 33.0%
1981 $115,675 + $ 6,661 R:: $122,336 + 3.7%
1982 $122,567 + $ 1,335 • $123,902 + 1.3%
.
4 spec ul \ tted,
th G. Can't @
c. Vi1 age Manager
r. KGC/cak
cc: Nance F. Cern* - Village President
%.11R--33 4, ' 40 ' . '
1 ' OVERNM O AL RISK MANAGEMENT AGENCY
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4900 Main.Street • P.O. Brix 579 * Douuncrs Grove,Minis 60515 • Phone: (312)9604333 1
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Office of the .. . 1
he 1
Risk Manner"
August 16, 1982
TO: Present 33 Members of IRMA
You will recall that at the July 28, 1982 meeting 'of the
Board of Directors of IRMA, the Board recommended. the -
cont#.nuat on of IRMA fcr a four (4-) .year beyond tare
present December 31, 1983 expiration
The management of IRMA has requested from each present'
IRMMA m ir. an expression of interest in continuing as .1c:..-. ‘,
member` of IRMA after the termination of the initial five•
(5) year term on December 31, 1983.
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It was envisioned that this-expression of interest would I
take -the .form. of a resolution adopted by each• municipality. • '
I ,a* forwarding to you herewith a sample resolution which ,I
could be used in your municipality.
We Would like to be in receipt of a certified' copy of this i -
kind of resolution from your municipality' on or before the `-..,_
September 22, 1982:•IRMA Board meeting.
. Very truly yours,
1
INTERGOVERNMENTAL RISK MANAGEMENT AGENCY
Edward D. Hansen - it
Risk Manager
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VILLAGE OF OAK BROOK
1200 OAK BROOK ROAD
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OAK BROOK, ILLINOIS
654-2220
August 19, 1982
• MEMO TO: President and Board of Trustees
SUBJECT: Intergovernmental Risk Management Agency
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RECOMMENDATION: That we continue our.membership in the
Intergovernmental Risk Management Agency through
December, 1987.
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Attached is a.review of the' performance of the Intergovernmental Risk Management
Agency (IRMA) Since its January 1, 1979 inception to date, together with a
projection for years to come.
Also attachedis an analysis of the Village of Oak Brook's performance as a
member of.IRMA and also a: comparison of the conventional 'insurance program
prior to January 1, 1979.
The review of IRMA is divided into three sections: the promise; the.performancei
and the projection.
The promise Stated the recommendations and results following the two years of
study by the •Joint Risk Management Study Group. The Village of Oak Brook was an
original participant in the 3 phase study.
The feasibility study conducted by the consultants chosen by the Study Group in-
dicated
results of savings that members of the Agency could expect.
The performance reviews the 1979, 1980 and 1981 statistics and compares the
results achieved by the Agency.with the promises that were made. IRMA has
achieved the savings promised its members and has grown in membership substantial-
'ly from its beginning 13 members in 1979 to 33 members of 1982. Currently IRMA
has 7 applications on file requesting membership to the Agency for 1983.
The projections have been made for years 1982 through 1987, based on the results
and again comparing the current conditions. These projections predict an on-
going positive performance of the Agency.
The Village of Oak Brook's performance has been somewhat better than the Agency
as a whole:
it
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• Wtka.3340
August 19, 1982
Page 2
President and Board of Trustees
Re: IRMA - Membership Continuation
1. Average overall savings over conventional insurance costs:
I.R.M.A. OAK BROOK
YEAR PERFORMANCE PERFORMANCE
1979 92 13.9%
1980 232 27.1%
1981 36% 42.6%
2. Losses under $1,000 deductible:
I.R.M.A, OAK BROOK
YEAR PERFORMANCE PERFORMANCE
1979 $0.35/$100 of Revenue $O.194/$100 of Revenue
1980 $0.31/$100 of Revenue $0.171/$100 of Revenue
1981 $0.29/$100 of Revenue $0.288/$100 of Revenue
3. Debit and Credit:
In 1981 I.R.M.A.. made its first debit/credit adjustment. Based on
the Village of Oak Brook's performance we received a 10.9% credit
against our 1981 assessment. The credit increased in 1982 re-
presenting a 21.22 credit or reduction in contributions of I.R.M.A.
again, based on our experience.
The maximum credit available in 1983 will be 25%. We receive the
maximum credit available both in 1981 and 1982.
In :ay analysis of the Village of Oak Brook's membership I used the estimated cost
of conventional insurance in 1979 which was determined by I.R.M.A. for the pur-
pose of their projections. However, in 1978, the Village of Oak Brook was in
the conventional insurance market and at that time based on our revenues, our
cost per $100 of revenue base for conventional insurance, had already reached
$3.514 which was greater than the number used by I.R.M.A. in 1979. Our rate in
1978 was $3.205 per $100 worth of revenue which indicated that our insurance
costs were going up approximately 10% per year. The I.R.M.A. projections as they
related to the Village of Oak Brook seem to be conservative so that our savings
in conventional insurance would probably have been greater.
Moreover, 1976 through 1978, the Village of Oak Brook's policy likewise had
deductible or losses under $500.00. Those numbers were not available for the
purpose of comparison at this time which would indicate that our cost of con-
ventional insurance would have been somewhat higher than the conventional in-
surance cost which is quoted.
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August 194-1981
Page 2 II
-President-and Bo of ' uttoes
Re. °- ership tinuation
In any event, I believe that :the Village.of Oak Brook should continue its support
of this progrss should pars th e€ If solution of Intent ixpresaing our desires
to continue with I.R. t.A..
Once I.R.M.A. has received the various Resolutions of Intent they.will•direct
the attorneys to develop the necessary _doeuewtns and ordinances quired°to be
• accted on in 1983 for the continuation of I.R.M.A. throough 1987.
pectfully subs fitted.
;{ th G. Car*i 4. ••
Village der
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KGG/cak
• Atteb.
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OAK BROOK ANALYSIS - I.R.M.A. I4EMBERSEIP
Conventional Insurance Program IRMA M1aabership
1976 1977 1978 1979 1980 1981 1982
2. Oak Brook Revenue Base $3,221,684 $3,768,329 $3,959,791 $4,216,000 $6,023,573 $7,181,658 $9,099,136
3. Contribution to IRMA thru $ 84,236 $ 110,834 $ 134,656 $ 164,694
Asst, 1982
4. Per $100 of Revenue Base $ 1.998 $ 1.840 $ 1.875 $ 1.810
AIL
9. Unfunded Pool Liability $ 34,993 $ 42,165 $ 15,800 $ 16,378'
10. Per $100 Revenue Base $ 0.830 $ 0.700 $ 0.220 $ 0.180
11. Losses Under $1,000 $ 8,169 $ 10,138 $ 20,675 $ 13,054
'12. Per $100,Revenue Base $ 0.194 $ 0.171 $ 0.288 $ 0.144
Debit or (Credit) Based on
Prior Year Experience 0 0 ($ 18,590) ($ 41,174)
Per $100 Revenue Base ($ 0.259) ($ 0452)
13. Total IRMA Cost $ 127,398 $ 163,317 $ 152,541 $ 152,952
14. Per $100 Revenue Base $ 3.022 $ 2.711 $ 2.124 $ 1.681
15. Conventional Insurance
Cost $ 55,615 $ 120,787 $ 139,165 $ 147,982 $ 224,077 $ 265,721 $ 317,560
16. Per $100 Revenue Base $ 1.726 $ 3.205 $ 3.514 $ 3.510 $ 3.720 3.700 3.490
17. Estimated Savings --
IRMA Over Conventional
Insurance $ 20,584 $ 60,760 $ 113,180 $ 164,608
' 1.9. Percent of Savings Over
Conventional Insurance 13.9% 27.1% 42.6% 51.82
Wifft°133fdr
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INTERGOVERNMENTAL RISK
MANAGEMENT AGENCY
The Promise
The Performance
The Projection
A review of the performance of IRMA since Its January I, 1979
inception to date, together with a projection for years to come.
?uty 19$2
THE PROMISE
I. An average overall expected savings over conventional insurance cost
of 38%.
2. Losses under the $1,000 deductible would equal $0.297 per $100 of
revenue base.
3. A positive correlation between losses incurred and the cost of funding
those losses. Further, each IRMA member was afforded a measure of
control over its losses so that less than average losses would result in
tangible credit--and worse than average losses would be penalized by
a debit -- each (credit or debit) to be applied to future annual
assessments.
IRMA is an organization of Illinois municipalities which have joined together
for the managing and funding of the first party property losses and third
party liability claims (Including Workers' Compensation) of its member
communities.
IRMA commenced operations on January 1, 1979 following more than two(2)
years of study by a "Joint Risk Management Study Group" participated In
and financed by municipalities in northeastern Illinois. The Study G:oup was
aided In Its deliberations by recognized consultants In the fields of law,
Insurance, and risk management. The above "Promise" was extracted from
the feasibility studies conducted by these consultants.
Nik)/Rega34
THE PERFORMANCE
I. For the years 1979, 1980, and 1981, IRMA members have enjoyed a
total savings over estimated conventional insurance costs of
$3,583,000. See line 17 of Financial Data. The total IRMA program
cost for the three (3) years has been $10,063,000 (line 13), and the
estimated conventional insurance cost would have been $13,646,000
(lIne 15) -- an average annual savings of 26% over estimated
conventional insurance cost. The actual percent savings has been 9%
for 1979, 23% for 1980, and 36% for 1931. See line 19 of Financial
Data.
2. For the years 1979, 1980, and 1981, losses under the $1,000 deductible
have equaled $0.309 per $100 of revenue base. The actual cost per
$100 of revenue base has been $0.35 for 1979, $0.31 for 1980, and
$0.29 for 1981. See line 12 of Financial Data.
3. Each year, using figures as of the 21st month of each membership
year, a debt-credit computation is made. Each member's loss
experience for that year is compared to the IRMA average. An IRMA
member with less than average losses will be given a credit on the
next annual assessment.. Worse than average losses will result in
a debuts the next year's annual assessment. The debit or credit is
limited to 25% of the next year's annual assessment. The 1979
debit/credit computation (made as of 9/30/80 -- 21st month following
1/1/79) resulted in six (6) IRMA members receiving a credit on their
1981 assessment. These credits ranged from $977.99 to $18,590.10.
Eight (8) members were debited for poor experience and their 1981
assessments were increased anywhere from $4,017.90 to $17,353.85.
The 1980 debit/credit calculation was made using 1979 and 1980 .loss
figures as of 9/30/81. This resulted in 14 members receiving a credit
on their 1982 assessments. These credits ranged from $54.13 to
$41,174.00. Eight (8).members were debited for poor experience and
their 1982 assessments were increased anywhere from $1,528.00 to
$32,086.00.
II
-e
1932
IRMA MEMBERS
and year of joining IRMA
Addison ('81) Hinsdale ('81) Prospect Heights ('81)
Barrington ('79) La Grange('80) Richton Park('81)
Bloomingdale ('82) La Grange Park ('81) River Forest ('82)
Buffalo Grove('79) Lake Forest ('81) Rolling Meadows(79)
Countryside('81) Lombard('79) Roselle (79)
Darien ('81) Mount Prospect (79) Villa Park ('80)
Downers Grove(79) Niles ('79) West Chicago ('79)
Glencoe('80) Northfield('79) Western Springs('81)
Glendale Heights ('79) Oak Brook(79) Westmont ('79)
Glen Ellyn ('79) Palatine(79) Wheeling('80)
Hillside ('79) Park Forest (79) Woodridge('80)
IRMA is governed by a Board of Directors made up of one delegate from each member
municipality. The Board selects a Chairman and a Vice-Chairman from its membership.
The current Chairman of IRMA is Kenneth Carmignani, Village Manager, Oak Brook, and
the Vice-Chairman is Gerald Seals, Village Administrator, Glendale Heights.
The law firm of Ancel, Mink, Diamond, Murphy & Cope, P.C. act.' as counsel to IRMA.
Arthur 3. Gallagher & Co. is IRMA's broker in the purchase of both specific and aggregate
excess insurance coverages. Gallagher Bassett Insurance Service provides loss prevention
and claims handling service. Peat, Marwick, Mitchell & Co. provides an annual audit of
the operations of IRMA.
The day-to-day operations of IRMA are conducted by a Risk Manager who is also the
principal executive officer of the agency. This is Edward D. Hansen who 1s offtced at
4900 Main Street, P.O. Box 579, Downers Grove, Illinois 60313, telephone(312)968.0333.
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tkA6) "3:34
TIE P110 CTION
1. For the years 1932 through 1987, the expected average savings over
conventional Insurance cost will be 34.8%. See line 19 of Financial
Data. The total estintato` savings over conventional costs for the six
(6) years will be $19,742,000. See line 17 of Financial Data.
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2. For the years 1982 through :.34$7, the expected cost of losses under •
$1 will average $0.29 per $100 of revenue base. See line 12 of
Financial Data.
• 3. The debit/credit computation will be continued.
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FINANCIAL MA
THE PERFORMANCE THE PROJECTION
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1979 1980 1981 1982 1983 1984 19115 1911 '
1. Number of Members
15.5 22 31 33 38 41 45 49 53
2. Total Revenue Base (000)(1) $77,662 $124,095 $170,056 $199,177 $228,805 $254,000 $282,000 $313,000 $346,080
3. Member Contrib. as of 7/28/82 (000) 1,552 2,283 3,189 3,494
t 4. Per $100 of Revenue Base 1.998 1.34 1.875 1.81
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1 5. Pool Losses(000)(2)
1,450 2,000 2,200 2,450 2,814 3,124 3,469 3,850 4,256
6. Per $100 of Revenue Base 1.87 1.61 1.29 1.23 1.23 1.23 1.23 1.23 1.23
7. Total Net Pool Cost (000)(3) 2,197 3,147 3,569 3,852 4,485 5,004 5,610 6,260 6,955
8. Per$100 of Revenue Base 2.83 2.54 2.10 1.93 1.96 1.97 1.99 2.00 2.01
9. Unfunded Pool Liability(000) 645 864 380 358
10. Per $100 of Revenue Base .83 .70 .22 .18
11. Losses Under $1,000(000) 271 387 492 540 641 737 846 939 1,031
12. Per $100 of Revenue Base .35 .31 .29 .27 .28 .29 .30 .30 .30
13. Total Program Cost to Members (000) 2,468 3,534 4,061 4,392 5,126 5,741 6,456 7,199 7,993
14. Per $100 of Revenue Base 3.18 2.85 2.39 2.20 2.24 2.26 2.29 2.30 2.31
15. Estimated Conventional Ins. Cost(000) 2,727 4,619 6,300 1 6,958 7,985 8,865 9,842 10,924 12,075
16. Per $100 of Revenue Base 3.51 3.72 3.70 3.49 3.49 3.49 3.49 3.49 3.49
17. Savings Over Cony, Ins. Cost (000) 259 1,035 2,239 2,566 2,859 3,124 3,386 3,725 4,082
18. Per $100 of Revenue Base .33 .87 1.32 1.29 1.25 1.23 1.20 1.19 1.18
19. % Savings Over Cony. Ins. Cost 9% 23% 36% 37% 36% 35% 34% 34% 34%
(1) Revenue of member municipalities against which contributions are assessed at a rate per $100 of revenue.
(2) 1979, 1980, 1981, and 1982 data using "worst case"projections.
(3) Pool losses, plus cost of excess insurance, plus administrative and other expenses, less interest income.
4 ° a 410 -3s4 0
VILLAGE OF OAK BROOK
MINUTES OF THE REGULAR MEETING
September 14, 1982
PP MEETING CALL.
The Regular Meeting of the Board of Trustees was called to order
at 7:30 P.M. by President Cerne in the Samuel E. Dean Board Room
of the Village Commons.
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I . ROL1, CALL:
PRESENT: President Nonce F. Cerne
Trustees George Congreve
Walter Imric
Robert Listecki
Arthur Philip
Joseph Rush
William Watson
ABSENT: None
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II. APPROVAL OF MINUTES:
Trustee Philip moved, seconded by Trustee Congreve . . .
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That the Minutes of the Regular Meeting of August 24, 1982
be approved as presented and waive reading of same.
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Voice Vote: all present, in favor So ordered.
III. ORDINANCES, ABSOLUTIONS, VARIATIONS, PLATS, ETC. :
. A. ORDINANCE S-495 - AN ORDINANCE AUTHORIZING THE SALE OF
CERTAIN PERSONAL PROPERTY.
Sale to be conducted by public auction on October 2, 1982 at
the College of DuPage with DuPage Mayors and Managers Conference
authorized to administer the sale.
Trustee Rush moved, seconded by Trustee Imrie . . .
To adopt Ordinance S-495 as read by Title.
Roll call vote: Ayes: Trustees Congreve, Imrie, Listecki,
Philip, Rush, Watson and President Cerne
Nays: None
Absent; None •
• So ordered.
6 RESOLUTION R-336 - A RESOLUTION EXPRESSING THE INTENT OF
VILLAGE OF OAK BROOK TO CONTINUE-AS A MEMTER OF TILL--
INTERGOVERNMENTAL i2I SrMANAG1iMENN'1 /TI:NCY'-M A}. —
Expression of intent to continue as a member of IRMA for a •
minimum of four (4) years and a maximum of seven (7) years.
Trustee Rush moved, seconded by Trustee Listecki. . . .
To adopt Resolution R-336 as read by Title. ,
Roil call-vote: Ayes: Trustees Congreve, Imrie, Listecki,
Philip, Rush, Watson and President Cerne.
Nays: None
Absent: None
So ordered.
VILLAGE OFF OAK BROOK MINUTES -1- ,September 14, 1982
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' � � Ads .
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VI LL OF OAK BROOK � H
1200 OAK BROOK ROAD
OAK BROOK, ILLINOIS _•' 054-2a20•
September 15, 1�2
IAgervsr 1 Risk' eent Agcy .
4900. Msin Strr . .•
Banc,57
ors Groff, I1liaaois 60515 .
Attent ei ) .
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Attached, is a 1 lution ezpresshng the intent of •the Village of Oak Brook to i
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continue at a " `: r of the'._.Intergovernmental Risk Management Agency._. _: .1 ..•
' Also attached is a copy of the soalysis that. we did •for our Village-Board
•---auring the iltAl of Oak'Brook's performance with .the performance of
I.R.L�A. erred•ay covering memorand qe; for your ,file. I ••
I lciok fo to a successful operation of I,R.MaA. in the'.upcoming years.
S real yours,
th G Carmi'
Villa s Ma sr
KCGC/oak i'•
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