2001 Comprehensive Annual Financial Report

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CITY OF SOUTH BEND, INDIANA NaTES T4 GENERAL-PURPOSE FINANCIAL STATEMENTS ~Cantinued} A. Liability Insurance The City has chosen to establish a risk financing fund for risks associated with fob related ill- nesses or injuries to employees, automobile liability, and comprehensive liability. The risk financing fund is accounted for in the Liability Insurance Premium Reserve Fund, an internal service fund, where assets are set aside for claim settlements. A premium is charged to each fund based on a four year study of workers compensation claims and other liability claims, and based on the number of employees and percent of the total budget. Provisions are also made for unexpected and unusual claims. Claim expenditures and liabilities of the fund are reported when it is probable that a Toss has occurred and the amount of the loss can be reasonably estimated. These lasses include an esti- mate of claims that have been incurred but not reported ~IBNRs}. Claim liabilities are calculated considering the effects of inflation, recent claim settlement trends including frequency and amounts of payouts and other economic and social factors, Changes in the balance of claim liabilities during the past two years are as follows: Unpaid Claims, Beginning 4f Fiscal Year Incurred Claims And Changes In Estimates Claim Payments Unpaid Claims, End Gf Fiscal Year B. Group Health Insurance 2oD0 2001 $ 2oD,47fi $ 481,2fi1 2,141,600 1, 565,473 ~1,8fi0,809) .1 L560s529 481 2fi7 486 211 M,~.y.,..-.,.-....- ._. The City's Self-Funded Employee Benefits Fund, an internal service fund, services the risk of loss related to health claims of employees and their covered dependents. An excess policy through commercial insurance covers aggregate claims in excess of $100,000 per person per year. Settled claims resulting from this risk did not exceed commercial insurance coverage in the past three years. Amounts are paid into the fund by all insured funds and are available to pay claims, claim reserves, and administrative costs of the program. Interfund premiums are based primarily on the insured funds' number of employees and are reported as expenditures of the fund those funds. Claim liabilities of the fund are reported when it is probable that a loss has occurred and the amount of the loss can be reasonably estimated. These losses include an estimate of claims #hat have been incurred but not reported. Claim liabilities are calculated cansidering the effects of inflation, recent claim settlement trends including frequency and amounts of payouts and other economic and social factors. Changes in the balances of claim liabilities during the past two years are as follows: 35