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11i09/98 bION 16:15 FAX 50a2489035 PG~E LLP PDk [~009 TABLE 136 - SUMMARY OF 1997-98 & 1998-99 ADOPTED BUDGETS -(ALL FUNDS} ~ 1997-98 1998-99 Resources Requirements Source~ Marion Caunty 1997-98 and 1998-99 ~dopted Budgets INSURANCE ~4a~ierrThe County is exposed to vatious risks of loss related to: torts; tl~efrs of, damage to, and destruction of asscts; errors and omissions; injuries ta emgloyees; employment and civil rights claims; and naturai disasters. The County has established an insurance fund (an intemol fund) est~l~stis~to account for risk management activities, including payment of insurance poliey premiums, payment of claims, third_ patty administrators, adjusters and related costs; and co fmance any and all uninsured losses. The insurance fitnd is governed by an ordinance adopted by the Board of County Commissioners. Periodically an actuarial study is conducted by the County's Broker/Agc.nt af Record and a repart is delivered to the Director of Support Services. This study includes the County's Workers' Compensation and Liability funding as well as a thorough cvaioation of the incurred but not reported ("IBNR") claims. Employee medical insarance benefits are provided by insurance companies. Deparnnent assessments are madc based on projected numbers of full•time employees that are allocated through the budget process. Premiums are projected based an utilization and demographics of current employees. Any funds eollected and not paid out in premietm costs are saved in reserves and used to offset inereases in health insurance premiums. All IBNR claims are recorded as an expense in the year they aze incurred and a carresponding liabiliry claim is recorded. In 1998 an actusrial study was eonducted and a new cost allocation system for workers' compensation and liability claims was developed_ This systcm is based upon an actuarial determination of each dcparment's prorated share of the "fixed" costs such as personncl and M& S, and the "loss sensitive", or actual claims related costs. With this formula, a deparnnent's fixed cost is ~-its total payroll in relatian to the Count~~ total. The los~ sensitive portion is based on a ten_ year ralling avera~e of actual ciaim costs, versus the ~unounts previously charged thtough the cost allocation system for the sFUne time period. The lnsurance Fund allocates the cost of providing insurance and claims administration by chazging a premiutn to the various Counry programs based on the actuarial estimates needed to pay prior and current year claims, to establish sufficient reserves and pay for any actual insurance premiums. These charge backs take into consideration reccnt a-ends in actual claims e~perience as a County as a whote. Cl~ims liabilities also take into consideration recently settl~d claims, the frequency of claims and othcr economic and social factocs. The Insurance Fund provides risk•-~of-loss coverages as follows: • Geaeral liability, bodily injury and property damage of third partiea resulting from the negligencc of the Caunty or its employees and errors and omissions; These risks are covered by the Insurance Fund; 43