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TO: |
Board of Trustees |
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THROUGH: |
Mary DeLoretto, Executive Director |
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FROM: |
William Greene, Chief Financial Officer |
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PRESENTER(S): |
William Greene, Chief Financial Officer |
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TITLE:
title
R2021-08-04 - Resolution Establishing a Self-Insurance/Catastrophic Loss Reserve Fund
end
AGENDA ITEM TYPE:
Resolution
RECOMMENDATION:
Approve Resolution R2021-08-04 that will create a Self-Insurance/Catastrophic Loss Reserve Fund
BACKGROUND:
Self-Insurance
Board Policy 2.1 established reserves for financial stability in June of 2019. The current self-insurance reserves were not defined in the policy at that time, but the policy does allow for creation of additional reserves by the Board.
UTA has self-insured since 1986 for losses arising from accidents and claims of damages. The retention amounts have changed since its inception in accordance with the Governmental Immunity Act in State of Utah. As of December 31, 2020 the account balance was $6,728,130 per the adopted 2020 ACFR.
Catastrophic Loss
Guided by actuarial input, UTA would determine the appropriate level for a catastrophic loss component of the proposed reserve to mitigate UTA’s exposure in the event of a large RideShare/Vanpool claim.
RideShare/Vanpool Coverage
The current insurance for this program has been competitively acquired and managed outside of UTA’s current self-insurance program. Due to rising costs in 3rd party insurance premiums, the program is considering self-insuring the RideShare/Vanpool program at UTA.
It is important to note that UTA has received a legal opinion that the RideShare/Vanpool program is not protected by Governmental Immunity UC 63G-7-101 due to drivers not being government employees or volunteers.
DISCUSSION:
UTA is seeking Board approval to establish a self-insurance reserve as allowed in Board Policy 2.1.(II)(A)(2) including a reserve for catastrophic losses not covered by the Governmental Immunity Act in the State of Utah.
ALTERNATIVES:
Do not add a self-insurance and catastrophic loss retention reserve.
FISCAL IMPACT:
The current self-insurance reserve was $7,988,615 as of June 30, 2021. Approving this new reserve would allow UTA to mitigate exposure and potentially increase the reserve amount as recommended by actuarial input and management advice on risk exposure. Funding of the reserve would be approved by the Board through the annual budget process.
ATTACHMENTS:
1. Resolution R2021-08-04