Agenda Packets - 1984/10/22 - Laserfiche WebLink

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Renenues which ultimately pass to the city are generated through returns developed under a prescribed Experience -Rated Formula, The Formular is incorporated as a formal part of all contractual insurance documents defining the relationships among the insured certificate or policyholders. the city, and the insuranco carrier for all CHIP plans which alloy for income to be returned to the city. The policies provide for payment of a premium savings to the insured homeowner when the aggregate of company retention, administrative expenses, commissions. losses, and loss adjustment expenses is less than the aggregate of premiums earned. subject to an annual minimum premium volume and contingency reserve requirement. Inlurn, as a condition of the Master Policy certificate of insurance or the homeowners policy, depending on which plan the city has selected. the insured homeowner agrees. through an assignment clause in his policy, that any such returns be gifted to the city on his behalf for general application to community safely programs. N/e make no representations regarding the lax status of the gift. Note that for California municipalities, these funds are not subject to Article XIIIB of the California Constitution, the so-called Gann Amendment. As noted in Section 9 above, objections have been raised to "mandatory" assignment of premium savings accruing to homeowners holding participative policies. In states where this problem arises non -participating individual policies will be used and premium savings gifted to the city by the insurance carrier rather than ,.ie hc.neuwner. The insurance carrier is, of course, free to distribute its "profit" as it sees fit. Nevertheless, the program must establish a sound premium base to become and remain viable for the insurance carrier and the city. To establish this foundation, the insurance company will begin paying returns only after a specified annual statewide premium volume has been attained by state pool participants. Smaller city groups or cities with individual CHIP programs will also be required to achieve this premium volume level. The income formula is evaluated at the end of each calendar year and the loss ratio is calculated. Quarterly savings payments are based on earned premiums and that loss ratio until the next evaluation. Section 11— Risk Manaqement Aspects of CHIP Effective control of the potential for fire and theft losses, and for injuries, involves tour entities working in concert These are: 1) The owwerroccupant of the insured structure: 2) The body of building and safety codes which establish cartain requirements for the structure and contents; 3) The local public safety forces: 4) The insurance community. The Occupant Loss and injury prevention is largely a matter of vigilance on the part of the user of the structure. Virtually any building can be used safely and maintained securely against theft. Most losses are the result of care- lessness and lack of maintenance. No structure, no matter how well protected by code compliance and the local public safety forces, is proof against hazards that are introduced by the occupant or allowed to form due to wear and deterioration. Codes Building and safety codes are designed to insure that a structure is as inherently safe and securo as may be economically feasible when built, without undue interference with the intended use. Codes generally control only the structure and do not attempt to control what people put into their buildings. Further, codes are almost always developed in response to fires and stnrctttral failures which may be prevented by changing the way shuclures are built or the materials used to build them. Codes can only go so far and, while codes I :hange progressively, buildings generally Miarol he made to comply rolroactively with each revision of codes adopted by cities. 13