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AGRIP Received 5-6-02 from Gary McKnight
MUNICIPAL LIABILITY PROTECTION PLAN
RATING PLAN
EFFECTIVENovember 1, 2001
(Subject to change by the Board of Trustees)
Coverage: OMAG Municipal Liability Protection Plan Agreement (MLPP)
Each time the Rating Plan is updated, a copy should be filed, with the agenda item sheet, in the Liability Rating Plan file.
NOTE: Latest amendments to the
Rating Plan are shown by:
Deleted language - - - ; New language, boldface.
AMENDED BY OMAG BOARD:
November 21, 1980; September 16, 1981; September 16, 1982; August 19, 1983; September 12, 1983; May 24, 1985; October 18, 1985; August 15, 1986; October 16, 1987; June 17, 1988; September 14, 1988; August 18, 1989, September 13, 1989; October 13, 1989; December 21, 1990; October 18, 1991; September 30, 1992; August 27, 1993; June 17, 1994; August 26, 1994; September 16, 1994; October 20, 1995; May 17, 1996; August 23, 1996; September 20, 1996; August 22, 1997; August 21, 1998;August 20, 1999;August 25, 2000, September 28, 2001.
I. COVERAGE DESCRIPTION
A- General Liability-Bodily Injury
B- General Liability-Property Damage
C- General Liability-Personal Injury
D- General Liability-Error and Omissions
E- Automobile Liability-Bodily and Personal Injury
F- Automobile Liability-Property Damage
G- Automobile Physical Damage
H- Equipment Physical Damage
I- Pollution Liability and Clean-up Coverage
J- Criminal Defense Reimbursement Coverage
K- Rider to AB on Defense Reimbursement Coverage
II. BASE RATES
A. Base Rates for General and Personal Liability of cities, towns and their public trusts (Coverages ABCDIJ&K), including gas and electric operations.
1.Base rates as a percent of operating expenditures as follows.
Operating ExpendituresRATE
Under $300,0001.4%, with minimum of $2,000.00.
$300,000 to $3,300,0001.1%
$3,300,000 to $7,000,0001.0%
$7,000,000 to $10,000,0000.9%
$10,000,000 to $17,000,0000.8%
Above $17,000,0000.7%
(Revised 9/28/01)
2.Premium rates may be allocated as follows:
Coverages A & B - 40% of base rate (General Liability)
Coverages C & D - 60% of base rate (Personal Injury & Errors and Omissions)
(Revised 8/23/96)
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B.For those who seek qualification as self insurers under the plan, an option can be developed for which they retain $100,000 of each loss and $100,000 aggregate over the year and participate with OMAG in the excess insurance coverage.
Note: The change to pitch (12) and font (1) must be converted manually.Suggested qualifications:
1.Must show the ability to retain $100,000 losses
2.Must have qualified claims and defense service
3.Must have qualified safety and loss control
4.Pay a premium for the excess coverage similar to the rate that OMAG pays or as agreed with reinsurer.
Note: The change to pitch (12) and font (1) must be converted manually.C.Dams and reservoirs may be endorsed for coverage in the Plan at an annual minimum rate of $3,000 for the first $100,000 of probable property damage exposure, to a maximum annual rate of $12,000 for each endorsed dam or reservoir based on an evaluation of each such exposure by the underwriting representatives of the Plan. (Suspended 8/23/96)
D.The Plan shall have a November 1 to October 31 annual accounting year. Plan coverages may be written for any 12 month time period (Plan Year) as otherwise allowed in Part III. herein. Underwriting for any Plan Year will be based on the Rating Plan guidelines in place at the time the rating is accomplished. (Revised 5/17/96)
E.The Oklahoma Municipal Assurance Group and the Oklahoma Municipal Retirement Fund as public entities may be a Named Insured at a Base Rate of one percent (1%) of Operating Expenditures based on the latest independent audit preceding the period of coverage. (Board Motions 9/20/96 and 7/18/97)
III. OTHER RATING GUIDELINES
A.Rating for Cities Picking Up Plan Coverages at Different Times in a Plan Period
Cities and towns may enroll for coverages phasing in at different times during a plan year under the following conditions:
1. The municipality must purchase the full ABCD package prior to the end of the plan year. The phase-in must be shown on the declarations page and invoice.
2.A municipality may phase-in C and D coverage BEFORE it picks up AB coverage only if it has an existing comprehensive general liability plan in effect accepted by OMAG marketing representatives. Condition (1) on the full ABCD package before end of the plan year still applies.
3.A municipality may phase in AB coverage before CD coverages only if it will purchase the full ABCD package before the end of the plan year.
4.A municipality may purchase EF, G or H coverages without ABCD coverages if the annual net premium for the EF, G or H exceeds $5,000 for a plan year.
5.A municipality may purchase Hired and Non-Owned Auto liability coverage even if they do not own any vehicles.
B.Auto Fleet Rates
- Auto liability coverages (EF) are developed using ISO rates on file as of May 31, 1985, less 30% for new accounts or less the applicable LEC, times 1.19 which develops the $1,000,000 occurrence limit. Applicable territories are 012 (autos) and 023 (trucks).
For both renewal and new accounts, a discount, after Loss Experience Credit, will be allowed of 20% for those who have a Current Basis Premium of $2,000 or less for coverage ABCD and a discount of 40% for all others. (Revised 8/20/98)
2.Physical damage coverage (G) is developed using the ISO physical damage tables as of May 31, 1985, Less 60%, unless the participant has a Loss Ratio of 100% or more AND losses in two or more of the years used to determine an Experience Rated Discount. (Revised 8/21/98)
Physical damage coverages (G) are provided only on owned automobiles covered for liability (EF) under the Plan; except where a member has fire apparatus under the Oklahoma Risk Management Agency program for liability coverages and has other vehicles in the Plan, physical damage coverage (G) may be provided on such fire apparatus.
3.Physical damage coverage (H) for Equipment Physical Damage is developed based on the total value of all scheduled items.
TotalValue Limit Rate/$100 of Value
$ 0 to $25,000 $1.00
$25,001 to $125,000 $ .75
over $125,000 $ .50
Minimum Premium of $25.00.
CREDITS:
Deductible Credits - $ 500 Ded. (No Credit)
$1,000 Ded. or 1% Ded. 5% Credit
$2,500 Ded. 10% Credit
$5,000 Ded. 15% Credit
(Revised 8/23/96)
4.a. Hired Auto Coverage may be endorsed at a premium of $20.00 per plan agreement. Experience credit shall not apply to this coverage.
b.Non-Owned auto coverage may be endorsed based on the number of employees as follows:
0-25 $ 20.
26-100 $ 49.
101-500 $161.
501-1000 $307.
over 1000 $475.
Experience credit shall not apply to this coverage.
5.Credits allowed for new business accounts may be evaluated by the CEO and reduced where warranted by loss experience or other factors.
Note: The change to pitch (12) and font (1) must be converted manually.C.Gas and Electric Utility Rating
Gas or electric utilities may be covered only if approved by OMAG and or reinsurer. (Revised 8/23/96)
D.Minimum Premium
The minimum annualized premium for any municipality for ABCD coverage only is $2,000.00. (Revised 9/28/01)
E.Pro-Rating Premium Costs for Participation less than 12 months, Premium Payment
1.The guideline used to pro-rate premiums for less than a 12 month period will be to divide the annualized premium by 365 and multiply the product by the number of days of actual coverage in the plan.
2.Participants have the option of two installment payments, one at Plan inception and one six months later. (Revised 8/22/97)
F.Operating Expenditures
For premium development purposes, operating expenditures are determined based on the most recent audit report of the entity, except for renewal accounts which will be based on an audit period approved by the Board of Trustees. Supplemental data (e.g. payroll, capital outlay, contract items) will be as provided by the municipality or shown in the audit. If an audit is not available for premium development, this amount is estimated by Liability Plan marketing representatives based on budget figures or prior audits. Operating expenditures means total expenditures of the municipality or a public trust authority less expenditures for capital outlay, debt service, bulk purchases of electric or gas energy for resale contracted services where the participant is protected against losses, as these terms are defined by ISO rate guidelines and state statutes. (Revised 8/22/97)
G.Gas and Electric System Review
Members of the plan with gas utilities will need to submit the latest Department of Transportation or Oklahoma Corporation Commission inspection of the system for rating and approval by OMAG representatives. Those with electric utilities need to describe the types of generation, if any, and secure approval from OMAG. (Revised 8/23/96)
Note: The change to pitch (12) and font (1) must be converted manually.H.Deductibles
Deductibles for auto fleet coverages shall be a minimum of $100 for Comprehensive or Specified Perils and $250 for Collision. Specified perils may also be written with a $1,000 deductible at 15% off the full ISO specified perils rate.
A $1,000.00 per-occurrence deductible for CD is included in the loss rates; however, participants may select higher deductibles for CD coverages or deductibles for other coverages at rates for such deductible as approved by the Oklahoma Municipal Assurance Group Board of Trustees. CD deductibles do not apply to any loss when a bodily injury or property damage loss is also involved.
I.Experience Rating
1. (Suspended 8/23/96)
- Experience Ratingwill be based on losses for the four plan years preceding the current plan year (valued at the end of the fourth month preceding the first day of the plan year).
For Coverage ABCD Experience Rated Premiums(ERP) will be computed as follows:
A. A Current Basis Premium (CBP) is calculated as the plan year exposures times the current Plan rates.
B. For each participant, a Reported Loss Ratio (RLR) is computed as:
Coverage beginning November 1, 2001
The latest four full years incurred losses
Current Basis Premium for same four plan years
(Revised 9/28/01)
C. A Reported Loss Ratio is also calculated for the plan as a whole for each November 1 Plan Year among those participants with four years of credible loss experience by adding all the participants’ incurred losses and dividing by the sum of all participants’ Current Basis Premium in the manner set forth above. Incurred losses are capped at $100,000 per occurrence prior to July 1, 2000 and $125,000 thereafter.
D. Each participant’s experience modification is then calculated as the participants Reported Loss Ratio divided by the plans Reported Loss Ratio times a credibility factor, plus one minus the credibility factor.
Credibility is:
If Credibility
CBP is less than $7,500 (11-1-99) 0 (not experience rated)
CBP is between $7,500 and $750,000 (11-1-99)square root of
CBP
[$750,000 (11-1-99)
CBP is: $750,000 (11-1-99) or greater 1.00
E. Where there is not four years of credible loss experience on an individual participant, the participant will be assigned the latest Reported Loss Ratio of the Plan as a whole.
- If coverage is to be written separately for a currently covered "additional named Plan member" (i.e. a Trust), the Reported Loss Ratio of the Plan member will be assigned to the "Trust" until it has developed four years of loss experience as a separate Plan member. Where a separate Plan member will become an additional named Plan member of another Plan member, the prior Current Basis Premium and loss experience of both will be combined to determine the Reported Loss Ratio for their combined coverage under one Plan Agreement.
- Experience Rated Premium is calculated as the participant’s CBP times its Experience Modifier.
- Further, each participant willreceiveaPremium or Increase equal to one-third of the difference between their ERP and their prior year net premium.
- Discounts may not reduce the ABCD Annual Premium below the minimum premium. (Revised 8/25/00)
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(Revised 8/23/96)
3. For Coverages E&F, Loss Experience Credits (LEC)will be computed as follows:
Effective 11-1-01
Average AnnualPremiumPremium
Loss Ratio Discount Increase
More than 200%50%
150% to 200%40%
125% to 150%30%
100% to 125%25%
85% to 100%20%
75% to 85%15%
50% to 75%10%
30% to 50%10%
10% to 30%25%
Below 10%40%
Note: The change to pitch (12) and font (1) must be converted manually.
J.Agent Participation (Effective November 1, 1994)
Licensed insurance agents may be used to represent the Plan to various participants and/or potential participants. Administration of the agent program will rest with the Plan Services Department and CEOas follows:
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Municipal Liability Protection Plan
Rating Plan
1.Retention of agents to represent the Liability Plan will be the responsibility of the Plan Services Department and CEOupon consultation with the Plan member;
2.The Plan Services Department and CEOwill negotiate commissions with all agents with a maximum 10% allowable commission; and (Revised 8/23/96)
3.The Plan Services Departmentwill use a standard contract between itself and the agent.
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K.Aggregate Limits
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1.The Plan shall have a standard $2 million aggregate limit for coverages CD effective November 1, 1994.
2.Any Plan participant may purchase additional $1 million aggregate limits at a premium of ten percent (10%) of their Current Basis Premium (before experience credits), or a minimum of $1,000, for each additional $1 million in aggregate limits.
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L.Prior Acts Coverage
Prior acts coverage may be purchased at inception of the MLPP coverage by municipalities who have previously purchased claims-made insurance. Prior acts coverage will be written consistent with the expiring plan of coverage. The time period of prior acts coverage will be no more than two years, which will be effected by endorsing the MLPP for acts committed prior to the effective date of MLPP coverage, not to exceed two years prior to MLPP inception. The prior acts coverage will have a sunset clause for filing claims equal in time to the prior acts period.
1.$3,000 deductible is mandatory.
2.Premium for two years of prior acts coverage will be 100% of expiring claims-made premium. One year will be 75% of expiring premium.
3.Premium will be fully earned when billed. 25% of premium will be placed in a profit-sharing account which will be eliminated in the event that any claim is filed. If no claims are filed, the entire 25% will be returned to member upon expiration of the prior acts period.
4.Coverage terms afforded by the prior acts endorsement will be no more than that provided by the Municipal Liability Protection Plan during the period of coverage being assumed.
- Per occurrence and aggregate limits for the prior acts coverage period will be those of the expiring plan, but no more than those of the MLPP during the period of coverage being assumed.
M. (Suspended 7/01/01.)
N.Cancellation Procedure (Effective November 1, 1994)
1.Members may cancel the agreement by returning it to us or by giving us written notice of the date cancellation is to take effect.
2.OMAG may cancel the agreement by mailing the member at least sixty (60) days notice to the last known address. We may deliver any notice by mailing it to the member. Proof of mailing of any notice will be sufficient proof of notice.
3.The effective date of cancellation stated in the notice shall become the end of the agreement period.
4.If the agreement is canceled, the plan member may be entitled to a premium refund. If so, the refund will be calculated and mailed to the member based on the following:
a.If the member cancels, the refund, if any, will be computed in accordance with the short rate table below, subject to a minimum earned premium of not less than twenty-five percent (25%) of the advance estimated premium shown on the declaration page.
b.If OMAG cancels, the refund, if any, will be computed pro-rata.
5.Short Rate Cancellation Rules for agreement with a term other than twelve months (less than or greater than 12 months).
a.If agreement has been in force for 12 months or less, apply the standard short rate table for annual agreement to the full annual premium determined as for an agreement written for a term of one year.
b.If agreement has been in force for more than 12 months:
(1)determine full annual premium as for an agreement written for a term of one year;
(2)deduct such premium from the full agreement premium, and on the remainder, calculate the pro-rata earned premium on the basis of the ratio of the length of time beyond one year the agreement has been in force to the length of time beyond one year for which the agreement was originally written; and
(3)add premium produced in accordance with items (1) and (2) to obtain earned premium during full period agreement has been in force.
SHORT RATE CANCELLATION
TABLE ONE-YEAR POLICIES
DaysPer Cent ofDaysPer Cent ofDaysPer Cent of
PolicyOne YearPolicyOne YearPolicyOne Year
In Force Premium In Force Premium In Force Premium
1...... 5%95-98...... 37% 219-22369...... %
2...... 699-102...... 38 224-22870
3-4...... 7103-105...... 39 229-23271
5-6...... 8106-109...... 40 233-23772
7-8...... 9110-113...... 41 238-24173
9-10...... 10114-116...... 42 242-24674
11-12...... 11117-120...... 43 247-25075
13-14...... 12121-124...... 44 251-25576
15-16...... 13125-127...... 45 256-26077
17-18...... 14128-131...... 46 261-26478
19-20...... 15132-135...... 47 265-26979
21-22...... 16136-138...... 48 270-27380
23-25...... 17139-142...... 49 274-27881
26-29...... 18143-146...... 50 279-28282
30-32...... 19147-149...... 51 283-28783
33-36...... 20150-153...... 52 288-29184
37-40...... 21154-156...... 53 292-29685
41-43...... 22157-160...... 54 297-30186
44-47...... 23161-164...... 55 302-30587
48-51...... 24165-167...... 56 306-31088
52-54...... 25168-171...... 57 311-31489
55-58...... 26172-175...... 58 315-31990
59-62...... 27176-178...... 59 320-32391
63-65...... 28179-182...... 60 324-32892
66-69...... 29183-187...... 61 329-33293
70-73...... 30188-191...... 62 333-33794
74-76...... 31192-196...... 63 338-34295
77-80...... 32197-200...... 64 343-34696
81-83...... 33201-205...... 65 347-35197
84-87...... 34206-209...... 66 352-35598
88-91...... 35210-214...... 67 356-36099
92-94...... 36215-218...... 68 361-365100