At the beginning of every year, the CIS Board of Trustees, including AOC Executive Director Gina Firman Nikkel, attend a day and a half strategic planning session to discuss the overall strength of the organization. The board reviews the status of CIS’ strategic initiatives and is presented with professional analysis from independent industry experts who assess the health and strength of CIS. Highlights from the board’s most recent session include: 

  • Financial Audit Presentation by Plante Moran, PLLC
  • Property/Casualty (P/C) Trust Actuarial presentation by Aon Risk Consultants, Inc.
  • Capital Adequacy Assessment for CIS Benefits and P/C Trust by PricewaterhouseCoopers (PwC)
  • CIS Collaboration Center Update
  • Managing the Risks of Post-Traumatic Stress Disorder (PTSD) in Public Safety
  • Reinsurance Markets and Planning

Financial Audit

Plante Moran, one of the nation’s largest accounting firms, verified CIS’ good standing and strong financial footing — giving the organization a clean audit. The firm shared with the board that CIS’ accounting principles are solid (see full audit on CIS’ website). The audit report did provide an overview of the investment losses that CIS faced with the decreased market value from bonds and stocks in 2022 — but CIS weathered these adjustments for unrealized market value changes and maintained extremely solid financials. They concluded that CIS’ finances are appropriately reported, and the organization’s accounting systems are well-organized.

Actuarial Report 

The respected actuarial firm, Aon Risk Consultants, analyzed CIS’ past experiences to evaluate the financial impact of current economic and social trends on future events. Aon’s report helps determine CIS’ funding target for the upcoming fiscal year. The actuaries noted that liabilities related to public safety services were increasingly costly to settle. They also noted an increase in auto liability claims. However, they explained that CIS’ experience with public safety services and auto liability claims followed trends that they noticed with other risk pooling programs across the nation. 

PricewaterhouseCoopers Assesses CIS’ Capital Adequacy 

PricewaterhouseCoopers firm (PwC) provided the CIS Board with a capital adequacy assessment for the CIS Benefits Trusts as well as the Property/Casualty (P/C) Trust during the session. They conducted a formal analysis of capital reserve funding requirements. The analysis was based on the requirements of the Member Equity Policy and considered many internal and external factors including underwriting risk, reserving risk, asset and credit risk, and operational risk. 

PwC’s report found that both CIS’ capital for the Benefits Trusts as well as the P/C Trust is adequate and are in the proper range. This was important because it confirms that CIS has enough funds in reserves to cover catastrophic claims and other financial disruptions — such as the market value declines on investments. 

Collaboration Center Update

The CIS Board provided direction to staff to begin plans for a new Collaboration Center to serve as an office for staff and training center for members and agents. CIS sold its Salem and Tigard office buildings, opened a temporary Wilsonville office, and purchased land in Wilsonville for a future Collaboration Center. 

Plans call for a building with multiple meeting rooms, including a large room that can be used for member/agent training. Staff has selected an owner’s representative, architectural firm, and construction manager/general contractor through request for proposal (RFP) processes. CIS plans to meet with the architectural firm this quarter to kick-off the design process.

Managing the Risks of Post-Traumatic Stress Disorder (PTSD) in Public Safety

In June 2019, Senate Bill 507 passed, making PTSD a presumption for public safety workers (i.e., full-time firefighters, police officers, corrections officers, parole/probation officers, and first responders). CIS supports public safety workers having presumptive claims. CIS’ public safety team is working proactively to prevent PTSD claims by: 

  • Providing critical incident grants to public safety personnel and in some cases, non-public safety, to receive mental health services that have a focus on PTSD.
  • Providing training around PTSD via Employee Assistance Program (EAP), peer support, and total worker health.
  • Developing mental health providers around the state that have a focus on PTSD in public safety or military.
  • Including CIS Benefits Director Mike Beyrouty to find ways for the CIS Benefits programs to support PTSD-prevention efforts. 

The purpose of the report was to begin CIS Board discussions on additional services that can help reduce the impact of PTSD. 

Reinsurance Markets and Planning

CIS purchases reinsurance to protect the P/C Trust from catastrophic and high dollar claims.

For property, CIS self-insures the first $500,000 of each claim and offers $600 million of shared limits. For liability, CIS self-insures the first $1 million per claim but offers liability coverage up to $20 million. For cyber, CIS self-insures the first $250,000 of each claim and offers an optional reinsured tier of coverage with limits up to $1.25 million. 

Reinsurance coverage cycles between soft and hard markets. Experts point to missed earnings targets in recent years as evidence that the industry is in a hard market. This means reinsurers have greater bargaining power and can push for higher premiums and restructure terms to their advantage, such as limiting coverage for certain risks or demanding higher retentions (deductibles).

CIS marketed reinsurance coverage to dozens of carriers during 2022 to maintain the best carriers, pricing, and terms to financially back its property and liability programs. Marketing efforts included strengthening partnerships with existing carriers and identifying new carriers to diversify risks and increase capacity.

In this tough environment, CIS’ efforts to build and strengthen its reinsurance partnerships means that they can retain the needed reinsurance despite a hard market. 

Contributed by: Bill LaMarche | CIS Public and Member Relations Manager

*Sponsored content provided by AOC Business Partner.