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Board of Governors Meeting Minutes
February 5, 2016
Fort Orange Club, Albany
Present:
Patti Dwyer
William Cherry
Gerry Decusatis
Tim Whitesell
Don Barber
Dan Depew
Sandy Frankel
Nick Mazza
Margaret Miller
Jon Stead
AOT:
Peter Baynes
Jill Luther
Gerry Geist
Sarah Brancatella
WRM:
Brian Custer
Susan O’Rorke
Roger Cuva
Rob Rowe
Tom Greene
Tom Lalor
Marie Barker
Kevin Crawford, Executive Director
The President called the meeting to order at 10:05 a.m. after reviewing a presentation
of the newly edited NYMIR promotional video. The Board and attendees together rose for the
Pledge of Allegiance. At the conclusion of the pledge and on a motion by Dan Depew with a
second by Tim Whitesell, the minutes of the November 6, 2015 Board of Governor meeting
minutes were Approved Unanimously.
The President provided brief opening remarks, noting an ambitious agenda for the day.
She then announced the appointment of a Nominating Committee Pursuant to Article II,
subdivision 6 of the Board of Governor By-Laws. President Dwyer asked Mike Quill to chair the
Committee along with Bill Cherry and Don Barber. She noted that the three year terms of Gerry
Decusatis, Sandra Frankel, Nick Mazza and Don Barber’s were expiring. Also that Margaret
Miller had filled a two term in 2014 so that she would again stand for election. There was also a
vacancy created by Mitch Alger’s departure from Allegany County. The Committee would
convene in early March once the Executive Director had heard from all existing board members
as to their intension to seek another term. Also, the Association of Counties and Association of
Towns were working on candidates for the Alger vacancy and Don Barber’s position.
At the conclusion of her announcements, the President called on Brian Custer to present
2015 year-end financial results. Brian began by noting that the actuary had concluded her work
just the previous morning. Stacy Mina had provided the IBNR load to NYMIR’s year end
operating numbers with a resulting combined ratio of 98.7. This was a significant improvement
over the last year’s combined ratio of 108 and is essentially on target with the Pro Forma which
NYMIR had filed with A.M. Best last April. With that combined ratio result, it is anticipated that
NYMIR will add between $1.5M to $2M in surplus with investment income offset by just a small
capital return to members of approximately $60,000. Given A.M. Best’s focus on NYMIR’s
missing its projections for 2014 as well as the erosion in its surplus capital position, NYMIR
should be well positioned to argue for the removal of the unstable outlook. Mr. Crawford
noted that the Best meeting has been set for March 31, 2016 and while the 2015 results do
show a continued growth in claim activity, the tone of the Best review should be much more
positive given that NYMIR’s surplus position is now moving in the right direction. It should
continue that way in 2016 as a result of the Board’s 3.5% rate increase adopted at the Summer
Retreat meeting. Also, Mr. Crawford noted that the mild winter thus far could see NYMIR
finishing its first quarter with claim activity significantly improved--especially when compared
with the first quarter of 2015. Given that A.M. Best waited last year to look at those first
quarter 2015 results, the very positive start to 2016 could be an additional factor which might
persuade A.M. Best to reconsider the unstable rating.
The President thanked Brian for his report and that good news and turned to reports
from the Board Committees beginning with Planning & Development. Margaret Miller provided
the report of the P&D Committee beginning with year- end results for 2015. NYMIR finished
the year with 47 new accounts with an entering premium of over $4M. There were 7
Subscribers who left with a departing premium of $693,874, leaving NYMIR with 882 at year
end. Margaret noted that over half of the new members were brought to NYMIR by its
designated service broker partners. Early results in 2016 have seen five new accounts
including the City of Schenectady at $1.1M in premium. There have been some departures
including the Town of DeWitt which left for a considerable premium savings, mostly coming
from the law enforcement line. The Attorney-in-Fact had reported to the Committee on a very
aggressive quarter of marketing activities which focused on newly electeds. NYMIR was also
hosting receptions at each of its municipal association winter meetings and making
presentations on their educational and training programs as well. Susan O’Rorke and Kevin
Crawford had also introduced the new website design which emphasizes linkages to various
social media and NYMIR’s YouTube channel. The meeting had concluded with a discussion on
the NYMIR operating reserve legislation which Governor Cuomo had vetoed late in 2015. A
new bill was attached to the Committee’s minutes. It is to be introduced with language
provided by the Department of Financial Services to address the objections that were raised in
the gubernatorial veto.
The President thanked Margaret for her report and asked for a report from the Finance
Committee by Chairman Tim Whitesell. Tim began with a review of the NYMIR investment
portfolio with had been discussed at the Committee meeting by PFM’s Marty Hammond.
NYMIR finished the fourth quarter with a portfolio market value of $127,375,647 which is a
slight reduction from the October 1 valuation. The portfolio continues to outperform
benchmarks while navigating the very volatile final quarter of 2015. The Committee had also
discussed the advisability and possibility of NYMIR investing in debt obligations issued by New
York State local governments. There are several potential hurdles to making that move, in
particular the small size of a typical offering and the fact that there was no secondary market.
Also, many of the issues are not rated which would require an amendment to NYMIR’s current
investment policy and approval from the Department of Financial Services. The Committee had
also discussed NYMIR’s 2015 combined ratio results which Brian Custer had just reported on at
the front end of the meeting. The Committee also heard from Brian, Kevin and Rob Rowe
regarding ongoing reinsurance renewal negotiations . NYMIR is broadly marketing all three of
its reinsurance programs which is a step that has not been take in five years. It is hoped that by
testing the market while it is flush with capital, a 6% rate reduction target might be achieved on
the property program while a 6-12% rate reduction is possible on the equipment breakdown
and casualty programs. With other highly rated markets exhibiting an appetite for new
business, market forces alone could drive some appreciable savings our way. While the
Committee did not have a quorum to approve the Congdon, Flaherty invoices when it met in
January, it had met just prior to the meeting and on a motion by Bill Cherry with a second by
Gerry Decusatis, the November, December and January invoices in the amounts of $5,670,
$1,185.42 and $4,358.46 were approved unanimously. The Committee had also reviewed the
NYMIR budget and Mr. Crawford reported that NYMIR had finished 2015 with expenditures at
100.83% of budgeted totals. The only two line items that exceeded budgeted targets were the
Engineering & outside consultant line (due to the unbudgeted data exchange project) and the
CFO legal line item due to claim activity associated with member growth over the past few
years.
Patti thanked Tim for his report and asked for a report of the Rules Committee
presented by Nick Mazza. The Committee had began its meeting with a review of the 2016 risk
management and member services training calendar which continues to grow with many new
additions focused on streets, roads and highway vehicle issues. The Committee also reviewed
progress made with high loss ratio accounts. Rob Rowe has developed a new spreadsheet tool
which will systematically identify those accounts with poor experience so that Roger and his
staff can get out to those accounts early with a plan for improvement as well as deliver
additional training and coordination with local safety committees. Efforts involving the Village
of Spring Valley have seen some positive results and they have begun to focus on
implementation of their 2016 risk management action plan. The Village’s loss ratio for 2015
had improved.
The Committee had concluded its work with consideration and discussion of a proposed
Driver/Vehicle Use policy. The intent of the document is to provide guidelines which will
encourage members to adopt a clear written policy on vehicle use while leaving to each
member the ability to flesh out the specifics of that policy in a way that works best for their
individual circumstances. The cyber coverage continues to roll out to the membership with 48
accounts bound thus far with a handful of rejections pending the acquisition of needed IT
security. There are three counties and two cities among the initial 48 with a total cyber
premium collected to date of $37,000. There are many more submissions and risk
management is working its way through those submissions.
The President thanked Mr. Mazza for his report and asked for a report from the
management company. Brian Custer in turn called on Rob Rowe, Susan O’Rorke and Roger
Cuva to brief the Board on developments in underwriting, marketing, and risk management.
Brian himself noted that claim activity has increased with 2015 being the third consecutive year
that NYMIR has experienced double digit percentage increases in new claim arisings . Thus,
despite the positive combined ratio he had reported at the outset of the meeting, NYMIR’s
open claim inventory is higher than at any time in its history. The current NYMIR suit inventory
is 699 claims. The most significant increase in loss payments for the year were seen in the
property, law enforcement and automobile liability lines. Susan reported on WRM’s efforts to
develop an agency broker portal and she and Brian had just met with IT staff and are excited
about the prospect of an enhanced portal being made available during 2016.
At the conclusion of WRM’s report, the President called upon Sarah Brancatella for a
report of the Attorney-in-Fact. She referred the Committee to Tab G of their meeting packets
and described efforts of the AIF on legislative and policy issues. During the last quarter of 2015
the AIF continued to assist in the marketing of NYMIR by contacting new prospects and
providing opportunities for marketing to address municipal officials at a wide range of
associations training and education forums. She and Susan had just presented training at the
Government Finance Officers Association meeting and will be doing so again next month. The
AIF has been participating in the reinsurance marketing negotiation discussions and will
continue to work with NYMIR’s Executive Director in reviewing and auditing the Spain Agency
accounts in the first quarter of 2016.
The President thanked Sarah for her report and on a motion by Sandy Frankel with a
second by Tim Whitesell the meeting was adjourned at 11:50 a.m.