|
CITY OF LA PORTE, TEXAS
<br />NOTES TO THE FINANCIAL STATEMENTS (continued)
<br />Note 9 - Risk Management
<br />The City is exposed to various risks of loss related to torts: theft of, damage to, and destruction of assets;
<br />errors and omissions; and natural disasters. The City’s risk management program encompasses various
<br />means of protecting the City against loss by obtaining property, casualty and liability coverage from
<br />participation in a risk pool. The participation of the City in the risk pool is limited to the payment of
<br />premiums. Further information regarding the pool is provided below. Settled claims have not exceeded
<br />insurance coverage in any of the three previous fiscal years. There has not been any significant reduction in
<br />insurance coverage from that of the previous year.
<br />Health Insurance Benefits
<br />The City self-insures a portion of health insurance benefits provided to employees. The City uses an
<br />internal service fund to account for the revenues and expenses for providing health care coverage. Charges
<br />are assessed to various City divisions based on their full-time employee count.
<br />Activity during the year included:
<br />Revenues
<br />Charges to divisions3,624,653$
<br />Interfund transfers478,341
<br />Charges to employees446,174
<br />Charges to retirees102,902
<br />Cobra charges26,727
<br />Insurance proceeds44,197
<br />Interest revenue3,694
<br />Total revenues4,726,688$
<br />Expenses
<br />Personnel expenses153,352$
<br />Other expenses364,992
<br />Claims administration232,876
<br />Claims incurred4,365,339
<br />Re-insurance premiums289,052
<br />Total health services expenses5,405,611$
<br />Included in the claims paid amount is $499,446 for incurred but not reported claims.
<br />Settled claims have not exceeded insurance coverage in any of the previous four fiscal years. Estimates of
<br />claims payable and of claims incurred but not reported at September 30, 2012, are reflected as liabilities
<br />of the Internal Service Fund. Because actual claims liabilities depend on such complex factors as
<br />inflation, changes in legal requirements and damage awards, the process used in computing claims
<br />liability is an estimate based on historical claims. Analysis of claims liability for the fiscal years 2010,
<br />,
<br />2011 and 2012 are as follows:
<br />Beginning of Current year Payments for End of year
<br />year accrualestimatesclaimsaccrual
<br />09/30/10448,000$ 3,703,943$ 3,652,943$ 499,000$
<br />09/30/11499,000 4,286,990 4,212,096 573,894
<br />09/30/12573,894 4,290,891 4,365,339 499,446
<br />47
<br />
<br />
|