Your SlideShare is downloading. ×
  • Like
SEALED BID REQUEST FOR PROPOSAL
Upcoming SlideShare
Loading in...5
×

Thanks for flagging this SlideShare!

Oops! An error has occurred.

×

Now you can save presentations on your phone or tablet

Available for both IPhone and Android

Text the download link to your phone

Standard text messaging rates apply

SEALED BID REQUEST FOR PROPOSAL

  • 600 views
Published

 

  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Be the first to comment
    Be the first to like this
No Downloads

Views

Total Views
600
On SlideShare
0
From Embeds
0
Number of Embeds
0

Actions

Shares
Downloads
3
Comments
0
Likes
0

Embeds 0

No embeds

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
    No notes for slide

Transcript

  • 1. Department of Buildings and General Services Agency of Administration BGS Financial Operations Office of Purchasing & Contracting 10 Baldwin St [phone] 802-828-2211 Montpelier VT05633-7501 [fax] 802-828-2222 http://bgs.vermont.gov/purchasing SEALED BID REQUEST FOR PROPOSAL Actuarial Services ISSUE DATE: May 17, 2010 QUESTIONS DUE BY: June 7, 2010 @ 4:30 PM DUE DATE and TIME: June 25, 2010 @ 1:30 PM LOCATION OF BID OPENING: 10 Baldwin St, Montpelier PLEASE BE ADVISED THAT ALL NOTIFICATIONS, RELEASES, AND AMENDMENTS ASSOCIATED WITH THIS RFP WILL BE POSTED AT: http://bgs.vermont.gov/purchasing/bids THE STATE WILL MAKE NO ATTEMPT TO CONTACT VENDORS WITH UPDATED INFORMATION. IT IS THE RESPONSIBILITY OF EACH VENDOR TO PERIODICALLY CHECK http://bgs.vermont.gov/purchasing/bids FOR ANY AND ALL NOTIFICATIONS, RELEASES AND AMENDMENTS ASSOCIATED WITH THE RFP. PURCHASING AGENT: Betsy Laraway TELEPHONE: (802) 828-4658 E-MAIL: betsy.laraway@state.vt.us FAX: (802) 828-2222
  • 2. STATE OF VERMONT OFFICE OF PURCHASING & CONTRACTING RFP for Actuarial Services PAGE 1 1. OVERVIEW: 1.1. SCOPE AND BACKGROUND: The Office of Purchasing & Contracting is seeking to establish purchasing agreements with one or more companies that can provide Actuarial Services for review of their two self-insurance funds: Workers’ Compensation and Automobile and General Liability The contract is to provide an actuarial review of self-insured programs provided by the Risk Management Division of Buildings and General Services, claims audit, review of the historic sufficiency of the sovereign immunity limits, and other services as may be called for. 1.2. CONTRACT PERIOD: Contracts arising from this request for proposal will be for a period of 24 months with an option to renew for 2 additional 12 -month periods. Proposed start date will be July 15, 2010. 1.3. CONTRACT VALUE/QUANTITY: The estimated annual value of this contract is $10,000. The annual value and quantities are estimated only based on prior usage; actual purchases may be higher or lower depending on the state’s needs. 1.4. SINGLE POINT OF CONTACT: All communications concerning this Request For Proposal (RFP) are to be addressed in writing to the attention of: Betsy Laraway, Purchasing Agent, State of Vermont, Office of Purchasing & Contracting, 10 Baldwin St - Montpelier, Montpelier, VT 05633-7501. Betsy Laraway, Purchasing Agent is the sole contact for this proposal. Actual contact with any other party or attempts by bidders to contact any other party could result in the rejection of their proposal. 1.5. BIDDERS’ CONFERENCE: There will be no bidders’ conference. 1.6. QUESTION AND ANSWER PERIOD: Any vendor requiring clarification of any section of this proposal or wishing to comment or take exception to any requirements or other portion of the RFP must submit specific questions in writing no later than 4:30 PM June 7, 2010. Questions may be e-mailed to betsy.laraway@state.vt.us . Any objection to the RFP, or to any provision of the RFP, that is not raised in writing on or before the last day of the question period is waived. At the close of the question period a copy of all questions or comments and the State's responses will be posted on the State’s web site http://bgs.vermont.gov/purchasing/bids . Every effort will be made to have these available as soon after the question period ends, contingent on the number and complexity of the questions. 1.7. INSTRUCTIONS FOR BIDDERS: see sections 5 and 6. 2. DETAILED REQUIREMENTS: 2.1. BACKGROUND: The State has been self-insured for workers compensation since February 1, 1990 and liability since July 1, 1990. The last change to sovereign immunity limits was made July 1, 1990 when the limits were fixed at $250,000 per person, $1,000,000 per occurrence. In 1989 the limits had been revised to $250,000 per person, $500,000 per occurrence changing from the initial limits of $75,000 per person, $300,000 per occurrence established in the early 1960’s 2.2. Workers compensation has been fully self-insured from its inception February 1, 1990 with unlimited liability and no commercially purchased excess insurance. The liability program, which is limited by the sovereign immunity statute (referenced below), has purchased excess insurance from its inception July 1, 1990. For the first three years of the liability program the self-insured retention (SIR) was $150,000. From 1993 forward the SIR has been $250,000. 2.3. Statutory Basis: The relevant statutory language pertaining to this study can be found at the following: http://www.leg.state.vt.us/statutes/fullsection.cfm?Title=29&Chapter=055&Section=01408 The Vermont Statutes Online Title 29: Public Property and Supplies Chapter 55: STATE INSURANCE 29 .S.A. § 1408. Workers' compensation insurance
  • 3. STATE OF VERMONT OFFICE OF PURCHASING & CONTRACTING RFP for Actuarial Services PAGE 2 (c) (f) Losses shall be fully reserved and funded in accordance with common insurance industry practices and in accordance with the principle of accuracy rather than adequacy whenever possible. The fund shall be actuarially reviewed annually. And http://www.leg.state.vt.us/statutes/fullsection.cfm?Title=29&Chapter=055&Section=01406 The Vermont Statutes Online Title 29: Public Property and Supplies Chapter 55: STATE INSURANCE 29 .S.A. § 1406. Liability insurance (3) Losses shall be fully reserved and funded and provision shall be made for losses incurred but not reported. The fund shall be actuarially reviewed annually. And http://www.leg.state.vt.us/statutes/fullsection.cfm?Title=12&Chapter=189&Section=05601 The Vermont Statutes Online Title 12: Court Procedure Chapter 189: TORT CLAIMS AGAINST THE STATE 12 .S.A. § 5601. Liability of state (8) (h) The commissioner of buildings and general services shall review the adequacy of the dollar limits on liability imposed by 12 V.S.A. § 5601 and shall report his or her findings to the Judiciary Committees of the House and Senate not later than January 1 in every odd-numbered year. The full chapter regarding sovereign immunity statute can be found at: http://www.leg.state.vt.us/statutes/sections.cfm?Title=12&Chapter=189 The Vermont Statutes Online Title 12: Court Procedure Chapter 189: TORT CLAIMS AGAINST THE STATE 2.4. Actuarial Study: The State of Vermont is seeking qualified vendors to provide an annual actuarial review of its two casualty self-insurance funds, Workers Compensation and Liability (general, auto, and employment practices/discrimination). Specifically we require an estimate of ultimate losses for each expired year and a five- year forecast of future ultimate losses. 2.4.1. Confidence Levels / Future Projections: The estimates of ultimate values need to reflect best estimate of ultimate loss as well as at confidence levels of 50%, 75%, and 95%. The five-year projections should reflect retention levels of $250,000, $500,000, $1,000,000 and unlimited. Additionally the sovereign immunity study will require a retention level study reflecting that specific value. 2.4.2. Data Elements: Information available includes payroll and other broad based exposure data, claims data in general and in detail. The nature and detail of data elements that you request for the study should be outlined in your proposal. 2.4.3. Reserves: All reserves should be developed on an undiscounted basis only. 2.5. Claims Audit: On-site claims audit reviewing claims handling and reserve practices. The purpose of this claims audit is to assess the adequacy and sufficiency of claim reserving practices and to assist in establishing best practices for
  • 4. STATE OF VERMONT OFFICE OF PURCHASING & CONTRACTING RFP for Actuarial Services PAGE 3 the claims handling staff. Ideally timing will have the audit conducted in June so it may be used as a tool to aid in the actuarial study as well. 2.5.1. Data Location: The on-site inspections of specific claim files will be conducted at the Office of Risk Management and Office of Workers Compensation, both in Montpelier. 2.5.2. Data Review: A representative sampling of files is to be reviewed and critique developed. The number of files (open or closed) is indeterminate. It is expected that a representative sample, sufficient to give the auditing entity a clear sense of the practices of the claims adjusting agency would be chosen. The sample must be adequate to determine the current practices and to offer guidance on best practices. It is expected that this selection would be broad based and represent the full range of claims, size of claims, and claims types to best be able to aid in the evaluation of the claims practices in use. Best practices and claims reserve sufficiency and accuracy should be evaluated. 2.5.3. Closing Conference: It is desirable but not required that a closing discussion to involve the RMD claims staff is included. This will give the adjustors an opportunity to hear first impressions and ask questions. 2.6. Sovereign Immunity Limits: An annual review of the sufficiency of the sovereign immunity limits relative to historic goals. The continuing goal is to stay in step with the original principle of that earlier legislative session and to keep faith with their evaluation of just and equitable compensation. To that end we have attempted to maintain current immunity limits at a similar relative dollar value. CPI has been the most widely used measure to establish that value but we are open to other or broader interpretations. 2.7. Miscellaneous Services: From time to time, additional analysis is needed and rates should be provided for such additional services on a time and expense basis. 2.8. Actuarial Study Time Frame: Both the actuarial study and claims audit are to be conducted annually. The study will be conducted in July / August, draft report due in mid August and final figures due September first (dates approximate). Flexibility in scheduling will be important, but the turn-around time will necessarily be short. The claims audit may be conducted separately or jointly. When the contract year allows, it is preferable for the claims audit to be conducted prior to the actuarial study so the actuarial study might benefit from the information in the claims audit. 2.9. Claims Administration: Workers compensation claims have been administered by in-house staff from the program’s inception. From 1990 until July 2005, liability claims had been administered by Crawford & Company as our TPA. In July of 2005 the State began to self administer all new claims regardless of date of occurrence. Crawford continued to run off claims they had received prior to July 2005 until June of 2007 at which time all remaining claims were taken over by the State. All records are now at Risk Management and Worker s Compensation offices in Montpelier. 2.10. Claims Administration Staff: Risk management has four adjusters teamed with four medical case managers handling workers compensation claims. There is one full time liability claims adjuster. 2.11. Legal Representation: With the exception of conflict of interest situations all liability claims are handled by the Office of the Attorney General. There is a dedicated Civil Division staff that handle the bulk of the claims but there are also Human Resources attorneys, and department of corrections dedicated Assistant Attorneys General that will handle some of the claims. Workers compensation claims are handled under contract by one of two private counsel firms that specialize in workers compensation. 2.12. Current Contract: The current contractor is AMI risk Consultants of Miami, Florida. Most recently the annual fee for services was $6,975. 2.13. Current Study: A copy of the most recent actuarial study is attached. A claims audit was not performed in 2009. 2.14. Open Claims: The open claim count as of 5/12/2010 stand at 473 workers compensation claims, 60 auto, and 181 general liability/EPL/discrimination claims. 2.15. Claims RMIS: The current risk management information system is AON’s IVOS.
  • 5. STATE OF VERMONT OFFICE OF PURCHASING & CONTRACTING RFP for Actuarial Services PAGE 4 2.16. Services: It is not necessary that the actuarial firm also conduct the claims audit. This second leg of the contract may by conducted by a sub-contractor. But that subcontractor should be identified in the proposal and references and other qualifications should be provided. There must be a single point entity responsible for all aspects of the contract. 2.17. Reports: The State will require an original hard copy report and six additional copies, including one loose leave copy as well as an electronic copy. These should be presented as an Actuarial Report and a separate Claims Audit. 3. GENERAL REQUIREMENTS: 3.1. PRICING: Any and all costs that you wish the state to consider must be submitted for consideration. If applicable, all equipment pricing is to include F.O.B. delivery to the ordering facility. No request for extra delivery cost will be honored. All equipment shall be delivered assembled, serviced, oiled, and ready for immediate use, unless otherwise requested by the purchasing agency. Proposals should be developed indicating rates for services as well as a “not to exceed” cost for each year, exclusive of additional projects. An estimate of expected costs for each phase of the project is requested. Hourly rates for potential additional projects should be separately identified. Proposals are to reflect all years of the contract term including the possible two one year extensions. Rates for each year must be specifically identified. 3.2. WORKER’S COMPENSATION; STATE CONTRACTS COMPLIANCE REQUIREMENT: The Department of Buildings and General Services in accordance with Act 54, Section 32 of the Acts of 2009 and for total projects costs exceeding $250,000.00, requires bidders comply with the following provisions and requirements. (a) (1) Bidder is required to self report detailed information including information relating to past violations, convictions, suspensions, and any other information related to past performance and likely compliance with proper coding and classification of employees requested by the applicable agency. The bidder is required to report information on any violations that occurred in the previous 12 months. (a) (2) Bidder is required to provide a list of subcontractors on the job along with lists of subcontractor’s subcontractors and by whom those subcontractors are insured for workers’ compensation purposes. Include additional pages if necessary. This is not a requirement for subcontractor’s providing supplies only and no labor to the overall contract or project. In order for a bidder’s response to be considered valid bidders must complete and submit the following two (2) forms at time of bid: Self Reporting Subcontractor Reporting 3.3. AVAILABILITY: Initial work will begin in July, the draft report is due mid August and final report by September 1. These dates necessarily are not firm but they do reflect the intent. 3.4. METHOD OF ORDERING: Purchase orders must be used to order items available under this contract. If verbal orders are given a confirming purchase order must be issued. 3.5. INVOICING: All invoices are to be rendered by the Contractor on the vendor's standard billhead and forwarded directly to the institution or agency ordering materials or services and shall specify the address to which payments will be sent. 3.6. CANCELLATION: The State specifically reserves the right to cancel the contract, or any portion thereof, if, in the opinion of its Commissioner of Buildings and General Services, the services or materials supplied by the contractor are not satisfactory or are not consistent with the terms of the contract 3.7. METHOD OF AWARD: Awards will be made under the provisions of 29 V.S.A. § 903. The State may award one or more contracts and reserves the right to make additional awards to other compliant bidders at any time during the
  • 6. STATE OF VERMONT OFFICE OF PURCHASING & CONTRACTING RFP for Actuarial Services PAGE 5 first year of the contract if such award is deemed to be in the best interest of the State. All other considerations being equal, preference will be given to resident bidders of the state and/or to products raised or manufactured in the state. 3.7.1. Evaluation Criteria: Proposals will be evaluated on the basis of the qualifications of the proposing company(s) (25%), the scope of the funds review and the claims audit (25%), the ability to meet the time constraints (10%), and the cost of the proposal across the entire term of the contract (40%). 3.7.1.1. Bidders must demonstrate for themselves and any subcontractors that they have the organization, experience, technical skills, financial resources, and proven track record to effectively provide the services required. 3.7.1.2. A comprehensive scope of report outline should be provided for both the fund review and claims audit. 3.7.1.3. Bidders should indicate the anticipated time table for report delivery starting with initial delivery of data to final copy. 3.8. CONFIDENTIALITY: The successful response will become part of the contract file and will become a matter of public record, as will all other responses received. If the response includes material that is considered by the bidder to be proprietary and confidential under 1 VSA, Chapter 5, the bidder shall clearly designate the material as such, explaining why such material should be considered confidential. The bidder must identify each page or section of the response that it believes is proprietary and confidential with sufficient grounds to justify each exemption from release, including the prospective harm to the competitive position of the bidder if the identified material were to be released. Under no circumstances can the entire response or price information be marked confidential. Responses so marked may not be considered. 3.9. CONTRACT TERMS: The selected vendors will sign a contract with the State to provide the items named in their responses, at the prices listed. Minimum support levels, terms, and conditions from this RFP, and the vendor’s response will become part of the contract. This contract will be subject to review throughout its term. The State will consider cancellation upon discovery that a vendor is in violation of any portion of the agreement, including an inability by the vendor to provide the products, support, and/or service offered in their response. 3.10. STATEMENT OF RIGHTS: The State of Vermont reserves the right to obtain clarification or additional information necessary to properly evaluate a proposal. Vendors may be asked to give a verbal presentation of their proposal after submission. Failure of vendor to respond to a request for additional information or clarification could result in rejection of that vendor's proposal. To secure a project that is deemed to be in the best interest of the State, the State reserves the right to accept or reject any and all bids, in whole or in part, with or without cause, and to waive technicalities in submissions. The State also reserves the right to make purchases outside of the awarded contracts where it is deemed in the best interest of the State. 3.11. TAXES: Most state purchases are not subject to federal or state sales or excise taxes and must be invoiced tax free. An exemption certificate will be furnished upon request covering taxable items. The contractor agrees to pay all Vermont taxes which may be due as a result of this order. If taxes are to be applied to the purchase it will be so noted in the response. 3.12. ORDER OF PRECEDENCE: The order of precedence for documentation will be the State of Vermont Standard Contract Form and attachments, the bid document and any amendments, and the vendor’s response and any amendments. 3.13. SPECIFICATION CHANGE: Any changes or variations in the specifications must be received in writing from the Office of Purchasing & Contracting. Verbal instructions or written instructions from any other source are not to be considered. 3.14. AMENDMENTS: No changes, modifications, or amendments in the terms and conditions of this contract shall be effective unless reduced to writing, numbered, and signed by the duly authorized representative of the State and Contractor.
  • 7. STATE OF VERMONT OFFICE OF PURCHASING & CONTRACTING RFP for Actuarial Services PAGE 6 3.15. NON COLLUSION: The State of Vermont is conscious of and concerned about collusion. It should therefore be understood by all that in signing bid and contract documents they agree that the prices quoted have been arrived at without collusion and that no prior information concerning these prices has been received from or given to a competitive company. If there is sufficient evidence to warrant investigation of the bid/contract process by the Office of the Attorney General, all bidders should understand that this paragraph might be used as a basis for litigation. 4. VENDOR RESPONSE CONTENT AND FORMAT: The content and format requirements listed below are the minimum required for our evaluation. They are not intended to limit the content of the proposals; vendors may include additional information or offer alternative solutions which may be considered. 4.1. NUMBER OF COPIES: Submit one original bid and one copy of the bid. 4.2. BACKGROUND AND EXPERIENCE. Provide a full description of the experience you have had in supplying actuarial review for a public entity and audits of claims functions. 4.3. REFERENCES. Provide the names, addresses, and phone numbers of at least three companies with whom you have transacted similar business in the last 12 months. You must include contact names who can talk knowledgeably about performance. 4.4. REPORTING REQUIREMENTS: Provide a sample of your current reporting document. 4.5. PRICING: Proposals should be developed indicating rates for services as well as a “not to exceed” cost for each year, exclusive of additional projects. An estimate of expected costs for each phase of the project is requested. Hourly rates for potential additional projects should be separately identified. Proposals are to reflect all years of the contract term including the possible two one year extensions. Rates for each year must be specifically identified. 4.6. CERTIFICATE OF COMPLIANCE: This form must be completed and submitted as part of the response for the proposal to be considered valid. 4.7. WORKERS’ COMPENSATION; STATE CONTRACTS COMPLIANCE REQUIREMENT; SELF REPORTING: This form must be completed and submitted as part of the response for the proposal to be considered valid. 4.8. WORKERS’ COMPENSATION; STATE CONTRACTS COMPLIANCE REQUIREMENT; SUBCONTRACTOR REPORTING: This form must be completed and submitted as part of the response for the proposal to be considered valid. 4.9. OFFSHORE OUTSOURCING QUESTIONNAIRE: This form must be completed and submitted as part of the response for the proposal to be considered valid. 5. SUBMISSION INSTRUCTIONS: 5.1. CLOSING DATE: The closing date for the receipt of proposals is 1:30 p.m. EST, June 25, 2010. 5.2. The bid opening will be held at 10 Baldwin St, Montpelier, VT and is open to the public. 5.3. SEALED BID INSTRUCTIONS: All bids must be sealed and must be addressed to the State of Vermont, Office of Purchasing & Contracting, 10 Baldwin St - Montpelier, VT 05633-7501. BID ENVELOPES MUST BE CLEARLY MARKED ‘SEALED BID’ AND SHOW THE REQUISITION NUMBER AND/OR PROPOSAL TITLE, OPENING DATE AND NAME OF BIDDER. 5.3.1. All bidders are hereby notified that sealed bids must be received and time stamped by the Office of Purchasing & Contracting located at 10 Baldwin St - Montpelier, VT 05633-7501by the time of the bid opening. Bids not in possession of the Office of Purchasing & Contracting at the time of the bid opening will be returned to the vendor, and will not be considered. 5.3.2. Office of Purchasing & Contracting may, for cause, change the date and/or time of bid openings or issue an addendum. If a change is made, the State will make a reasonable effort to inform all bidders by posting at: http://bgs.vermont.gov/purchasing/bids.
  • 8. STATE OF VERMONT OFFICE OF PURCHASING & CONTRACTING RFP for Actuarial Services PAGE 7 5.3.3. All bids will be publically opened. Typically, the Office of Purchasing & Contracting will open the bid, read the name and address of the bidder, and read the bid amount. However, the Office of Purchasing & Contracting reserves the right to limit the information disclosed at the bid opening to the name and address of the bidder when, in its sole discretion, the Office of Purchasing & Contracting determines that the nature, type, or size of the bid is such that the Office of Purchasing & Contracting cannot immediately (at the opening) determine that the bids are in compliance with the RFP. As such, there will be cases in which the bid amount will not be read at the bid opening. Bid openings are open to members of the public. Bid results are a public record however, the bid results are exempt from disclosure to the public until the award has been made and the contract is executed. 5.4. DELIVERY METHODS: 5.4.1. U.S. MAIL: Bidders are cautioned that it is their responsibility to originate the mailing of bids in sufficient time to ensure bids are received and time stamped by the Office of Purchasing & Contracting prior to the time of the bid opening. 5.4.2. EXPRESS DELIVERY: If bids are being sent via an express delivery service, be certain that the RFP designation is clearly shown on the outside of the delivery envelope or box. Express delivery packages will not be considered received by the State until the express delivery package has been received and time stamped by the Office of Purchasing & Contracting. 5.4.3. HAND DELIVERY: Hand carried bids shall be delivered to a representative of the Division prior to the bid opening. 5.4.4. ELECTRONIC: Electronic bids will not be accepted. 5.4.5. FAX BIDS: FAXED responses MAY be acceptable. You must contact the purchasing agent and obtain prior approval. If approval is received, the FAX must be prefixed with the “SEALED BID”. Bidders are cautioned that if a FAXED response is approved it is their responsibility to originate the message in sufficient time to insure receipt by the Office of Purchasing & Contracting prior to the time of the bid opening. All pages must be printed and in the possession of the division prior to the date and time of the bid opening or the bid will not be considered. FAXED bidders are cautioned that bids submitted by the FAX method may be compromised prior to the time of the sealed bid opening. FAXED information is accessible when transmitted and confidentiality cannot be guaranteed. State reserves the right to reject a faxed bid if it appears that the faxed bid is incomplete or portions of the faxed bid or eligible. 6. ATTACHMENTS: 6.1. Attachment C: Standard State Contract Provisions (January 8, 2009) 6.2. Certificate of Compliance 6.3. Price Schedule 6.4. Offshore Outsourcing Questionnaire 6.5. Workers’ Compensation; State Contracts Compliance Requirement; Self Reporting 6.6. Workers’ Compensation; State Contracts Compliance Requirement; Subcontractor Reporting
  • 9. State of Vermont ATTACHMENT C: STANDARD STATE PROVISIONS FOR CONTRACTS AND GRANTS 1. Entire Agreement: This Agreement, whether in the form of a Contract, State Funded Grant, or Federally Funded Grant, represents the entire agreement between the parties on the subject matter. All prior agreements, representations, statements, negotiations, and understandings shall have no effect. 2. Applicable Law: This Agreement will be governed by the laws of the State of Vermont. 3. Definitions: For purposes of this Attachment, “Party” shall mean the Contractor, Grantee or Subrecipient, with whom the State of Vermont is executing this Agreement and consistent with the form of the Agreement. 4. Appropriations: If this Agreement extends into more than one fiscal year of the State (July 1 to June 30), and if appropriations are insufficient to support this Agreement, the State may cancel at the end of the fiscal year, or otherwise upon the expiration of existing appropriation authority. In the case that this Agreement is a Grant that is funded in whole or in part by federal funds, and in the event federal funds become unavailable or reduced, the State may suspend or cancel this Grant immediately, and the State shall have no obligation to pay Subrecipient from State revenues. 5. No Employee Benefits For Party: The Party understands that the State will not provide any individual retirement benefits, group life insurance, group health and dental insurance, vacation or sick leave, workers compensation or other benefits or services available to State employees, nor will the state withhold any state or federal taxes except as required under applicable tax laws, which shall be determined in advance of execution of the Agreement. The Party understands that all tax returns required by the Internal Revenue Code and the State of Vermont, including but not limited to income, withholding, sales and use, and rooms and meals, must be filed by the Party, and information as to Agreement income will be provided by the State of Vermont to the Internal Revenue Service and the Vermont Department of Taxes. 6. Independence, Liability: The Party will act in an independent capacity and not as officers or employees of the State. The Party shall defend the State and its officers and employees against all claims or suits arising in whole or in part from any act or omission of the Party or of any agent of the Party. The State shall notify the Party in the event of any such claim or suit, and the Party shall immediately retain counsel and otherwise provide a complete defense against the entire claim or suit. After a final judgment or settlement the Party may request recoupment of specific defense costs and may file suit in Washington Superior Court requesting recoupment. The Party shall be entitled to recoup costs only upon a showing that such costs were entirely unrelated to the defense of any claim arising from an act or omission of the Party. The Party shall indemnify the State and its officers and employees in the event that the State, its officers or employees become legally obligated to pay any damages or losses arising from any act or omission of the Party. 7. Insurance: Before commencing work on this Agreement the Party must provide certificates of insurance to show that the following minimum coverages are in effect. It is the responsibility of the Party to maintain current certificates of insurance on file with the state through the term of the Agreement. No warranty is made that the coverages and limits listed herein are adequate to cover and protect the interests of the Party for the Party’s operations. These are solely minimums that have been established to protect the interests of the State. Workers Compensation: With respect to all operations performed, the Party shall carry workers’ compensation insurance in accordance with the laws of the State of Vermont. General Liability and Property Damage: With respect to all operations performed under the contract, the Party shall carry general liability insurance having all major divisions of coverage including, but not limited to: Premises - Operations Products and Completed Operations Personal Injury Liability Contractual Liability Revised 01-08-09
  • 10. The policy shall be on an occurrence form and limits shall not be less than: $1,000,000 Per Occurrence $1,000,000 General Aggregate $1,000,000 Products/Completed Operations Aggregate $ 50,000 Fire/ Legal/Liability Party shall name the State of Vermont and its officers and employees as additional insureds for liability arising out of this Agreement. Automotive Liability: The Party shall carry automotive liability insurance covering all motor vehicles, including hired and non-owned coverage, used in connection with the Agreement. Limits of coverage shall not be less than: $1,000,000 combined single limit. Party shall name the State of Vermont and its officers and employees as additional insureds for liability arising out of this Agreement. 8. Reliance by the State on Representations: All payments by the State under this Agreement will be made in reliance upon the accuracy of all prior representations by the Party, including but not limited to bills, invoices, progress reports and other proofs of work. 9. Requirement to Have a Single Audit: In the case that this Agreement is a Grant that is funded in whole or in part by federal funds, and if this Subrecipient expends $500,000 or more in federal assistance during its fiscal year, the Subrecipient is required to have a single audit conducted in accordance with the Single Audit Act, except when it elects to have a program specific audit. The Subrecipient may elect to have a program specific audit if it expends funds under only one federal program and the federal program’s laws, regulating or grant agreements do not require a financial statement audit of the Party. A Subrecipient is exempt if the Party expends less than $500,000 in total federal assistance in one year. The Subrecipient will complete the Certification of Audit Requirement annually within 45 days after its fiscal year end. If a single audit is required, the sub-recipient will submit a copy of the audit report to the primary pass-through Party and any other pass-through Party that requests it within 9 months. If a single audit is not required, the Subrecipient will submit the Schedule of Federal Expenditures within 45 days. These forms will be mailed to the Subrecipient by the Department of Finance and Management near the end of its fiscal year. These forms are also available on the Finance & Management Web page at: http://finance.vermont.gov/forms 10. Records Available for Audit: The Party will maintain all books, documents, payroll papers, accounting records and other evidence pertaining to costs incurred under this agreement and make them available at reasonable times during the period of the Agreement and for three years thereafter for inspection by any authorized representatives of the State or Federal Government. If any litigation, claim, or audit is started before the expiration of the three year period, the records shall be retained until all litigation, claims or audit findings involving the records have been resolved. The State, by any authorized representative, shall have the right at all reasonable times to inspect or otherwise evaluate the work performed or being performed under this Agreement. 11. Fair Employment Practices and Americans with Disabilities Act: Party agrees to comply with the requirement of Title 21V.S.A. Chapter 5, Subchapter 6, relating to fair employment practices, to the full extent applicable. Party shall also ensure, to the full extent required by the Americans with Disabilities Act of 1990 that qualified individuals with disabilities receive equitable access to the services, programs, and activities provided by the Party under this Agreement. Party further agrees to include this provision in all subcontracts. 12. Set Off: The State may set off any sums which the Party owes the State against any sums due the Party under this Agreement; provided, however, that any set off of amounts due the State of Vermont as taxes shall be in accordance with the procedures more specifically provided hereinafter. 13. Taxes Due to the State: Revised 01-08-09
  • 11. a. Party understands and acknowledges responsibility, if applicable, for compliance with State tax laws, including income tax withholding for employees performing services within the State, payment of use tax on property used within the State, corporate and/or personal income tax on income earned within the State. b. Party certifies under the pains and penalties of perjury that, as of the date the Agreement is signed, the Party is in good standing with respect to, or in full compliance with, a plan to pay any and all taxes due the State of Vermont. c. Party understands that final payment under this Agreement may be withheld if the Commissioner of Taxes determines that the Party is not in good standing with respect to or in full compliance with a plan to pay any and all taxes due to the State of Vermont. d. Party also understands the State may set off taxes (and related penalties, interest and fees) due to the State of Vermont, but only if the Party has failed to make an appeal within the time allowed by law, or an appeal has been taken and finally determined and the Party has no further legal recourse to contest the amounts due. 14. Child Support: (Applicable if the Party is a natural person, not a corporation or partnership.) Party states that, as of the date the Agreement is signed, he/she: a. is not under any obligation to pay child support; or b. is under such an obligation and is in good standing with respect to that obligation; or c. has agreed to a payment plan with the Vermont Office of Child Support Services and is in full compliance with that plan. Party makes this statement with regard to support owed to any and all children residing in Vermont. In addition, if the Party is a resident of Vermont, Party makes this statement with regard to support owed to any and all children residing in any other state or territory of the United States. 15. Sub-Agreements: Party shall not assign, subcontract or subgrant the performance of his Agreement or any portion thereof to any other Party without the prior written approval of the State. Party also agrees to include in all subcontract or subgrant agreements a tax certification in accordance with paragraph 13 above. 16. No Gifts or Gratuities: Party shall not give title or possession of any thing of substantial value (including property, currency, travel and/or education programs) to any officer or employee of the State during the term of this Agreement. 17. Copies: All written reports prepared under this Agreement will be printed using both sides of the paper. 18. Certification Regarding Debarment: Party certifies under pains and penalties of perjury that, as of the date that this Agreement is signed, neither Party nor Party’s principals (officers, directors, owners, or partners) are presently debarred, suspended, proposed for debarment, declared ineligible or excluded from participation in federal programs or programs supported in whole or in part by federal funds. (End of Standard Provisions) Revised 01-08-09
  • 12. RFP/PROJECT: ACTUARIAL SERVICES DATE: MAY 17, 2010 CERTIFICATE OF COMPLIANCE This form must be completed in its entirety and submitted as part of the response for the proposal to be considered valid. TAXES: Pursuant to 32 V.S.A. § 3113, bidder hereby certifies, under the pains and penalties of perjury, that the company/individual is in good standing with respect to, or in full compliance with a plan to pay, any and all taxes due to the State of Vermont as of the date this statement is made. A person is in good standing if no taxes are due, if the liability for any tax that may be due is on appeal, or if the person is in compliance with a payment plan approved by the Commissioner of Taxes. INSURANCE: Bidder certifies that the company/individual is in compliance with, or is prepared to comply with, the insurance requirements as detailed in Section 7 of Attachment C: Standard State Contract Provisions. Certificates of insurance must be provided prior to issuance of a contract and/or purchase order. If the certificate(s) of insurance is/are not received by the Office of Purchasing & Contracting within five (5) days of notification of award, the State of Vermont reserves the right to select another vendor. Please reference the RFP and/or RFQ # when submitting the certificate of insurance. CONTRACT TERMS: The undersigned hereby acknowledges and agrees to Attachment C: Standard State Contract Provisions. TERMS OF SALE: The undersigned agrees to furnish the products or services listed at the prices quoted. The Terms of Sales are Net 30 days from receipt of service or invoice, whichever is later. Percentage discounts may be offered for prompt payments of invoices, however such discounts must be in effect for a period of 30 days or more in order to be considered in making awards. FORM OF PAYMENT: Would you accept the Visa Purchasing Card as a form of payment? ____ Yes ____ No Insurance Certificate(s): Attached ______________ Will provide upon notification of award ____________ Delivery Offered: _______ days after notice of award Terms of Sale: ___________________ (If Discount) Quotation Valid for: _____ days Date: __________ Name of Company: __________________________ Contact Name: ______________________________ Address: ___________________________________ Fax Number: ___________________________ ___________________________________________ E-mail: _______________________________ By: _______________________________________ Name: _______________________________ Signature (Bid Not Valid Unless Signed) (Type or Print) All returned quotes and related documents must be identified with our request for quote number.
  • 13. RFP/PROJECT: ACTUARIAL SERIVCES DATE: MAY 17, 2010 WORKERS’ COMPENSATION; STATE CONTRACTS COMPLIANCE REQUIREMENT Self Reporting Form 1 of 2 This form must be completed in its entirety and submitted as part of the response for the proposal to be considered valid. The Department of Buildings and General Services in accordance with Act 54, Section 32 of the Acts of 2009 and for total projects costs exceeding $250,000.00, requires bidders comply with the following provisions and requirements. Bidder is required to self report the following information relating to past violations, convictions, suspensions, and any other information related to past performance relative to coding and classification for worker’s compensation. The state is requiring information on any violations that occurred in the previous 12 months. Summary of Detailed Information Date of Notification Outcome WORKERS’ COMPENSATION STATE CONTRACTS COMPLIANCE REQUIREMENT: Bidder hereby certifies that the company/individual is in compliance with the requirements as detailed in Act 54, Section 32 of the Acts of 2009. Date: Name of Company: Contact Name: Address: Title: Phone Number: E-mail: Fax Number: By: Name: Signature (Bid Not Valid Unless Signed)* (Type or Print) *Form must be signed by individual authorized to sign on the bidder’s behalf.
  • 14. RFP/PROJECT: ACTUARIAL SERVICES DATE: MAY 17, 2010 WORKERS’ COMPENSATION; STATE CONTRACTS COMPLIANCE REQUIREMENT Subcontractor Reporting Form 2 of 2 This form must be completed in its entirety and submitted as part of the response for the proposal to be considered valid. The Department of Buildings and General Services in accordance with Act 54, Section 32 of the Acts of 2009 and for total projects costs exceeding $250,000.00 requires bidders to comply with the following provisions and requirements. Bidder is required to provide a list of subcontractors on the job along with lists of subcontractor’s subcontractors and by whom those subcontractors are insured for workers’ compensation purposes. Include additional pages if necessary. This is not a requirement for subcontractor’s providing supplies only and no labor to the overall contract or project. Subcontractor Insured By Subcontractor’s Sub Insured By Date: Name of Company: Contact Name: Address: Title: Phone Number: E-mail: Fax Number: By: Name: Signature (Bid Not Valid Unless Signed)* (Type or Print) *Form must be signed by individual authorized to sign on the bidder’s behalf.
  • 15. Offshore Outsourcing Questionnaire Vendors must indicate whether or not any services are or will be performed in a country other than the United Sates. Indicate N/A if not applicable. Services: Proposed Service to be Represents what % of total Outsourced Work Location Outsourced Bid Total Offshore Dollars Contract Dollars (Country) Subcontractor If any or all of the services are or will be outsourced offshore, Vendors are required to provide a cost estimate of what the cost would be to provide the same services onshore and/or in Vermont. Proposed Service to be Bid Total if provided Bid Total if provided in Outsourced Onshore Vermont Cost Impact Onshore Work Location Subcontractor Name of Bidder: Signature of Bidder: Date
  • 16. STATE OF VERMONT REQUEST FOR PROPOSAL ACTUARIAL SERVICES PRICING WORKSHEET Year One Actuarial Study Cost $ Claims Audit Cost $ Annual Not to Exceed Figure $ Hourly Rate for Special Projects $ Per Hour Year Two Actuarial Study Cost $ Claims Audit Cost $ Annual Not to Exceed Figure $ Hourly Rate for Special Projects $ Per Hour Year Three (Option) Actuarial Study Cost $ Claims Audit Cost $ Annual Not to Exceed Figure $ Hourly Rate for Special Projects $ Per Hour Year Four (Option) Actuarial Study Cost $ Claims Audit Cost $ Annual Not to Exceed Figure $ Hourly Rate for Special Projects $ Per Hour Name of Bidder: Signature of Bidder: Date:
  • 17. State of Vermont Self - Insurance Program Actuarial Review as of June 30, 2009 Firm: AMI Risk Consultants, Inc. 11410 N. Kendall Drive, Suite 208 Miami, Florida 33176 (305) 273-1589 Contact: Aguedo (Bob) M. Ingco, FCAS, MAAA, CPCU, ARM Date: September 17, 2009 AMI Risk Consultants, Inc.
  • 18. September 17, 2009 Mr. Bill Duchac Manager, Office of Risk Management BGS Financial Operation 200 Governor Aiken Avenue Montpelier, VT 05633-5801 Dear Mr. Duchac: We are pleased to submit to you ten (10) bound and one (1) unbound copies of the final report for our actuarial review of the self-insurance program of the State of Vermont as of June 30, 2009. We very much appreciate the cooperation and courtesies extended to us during the course of this engagement. Please do not hesitate to contact us should you have any questions regarding the report. Sincerely, Bob Ingco, FCAS, MAAA, CPCU, ARM President
  • 19. TABLE OF CONTENTS I. EXECUTIVE SUMMARY PAGE Purpose................................................................................................................................. 1 Conclusions.......................................................................................................................... 2-5 Distribution and Use ............................................................................................................ 6 Reliances and Limitations .................................................................................................... 6 II. ACTUARIAL REPORT PAGE Background .......................................................................................................................... 7 Actuarial Approach .............................................................................................................. 8-10 Results of Calculations......................................................................................................... 11-14 Attached Exhibits................................................................................................................. 15-17 III. ACTUARIAL EXHIBITS EXHIBIT Summary of Results ...................................................................................................... Summary Calculation of Ultimate Losses for Workers' Compensation ............................................... I Calculation of Ultimate Losses for General Liability .......................................................... II Calculation of Ultimate Losses for Automobile Liability.................................................... III Calculation of Projected Losses for Workers' Compensation .............................................. IV Calculation of Projected Losses for General Liability ........................................................ V Calculation of Projected Losses for Automobile Liability .................................................. VI AMI Risk Consultants, Inc.
  • 20. TABLE OF CONTENTS (continued) Analysis Reserve Change for Workers' Compensation....................................................... Appendix A Analysis Reserve Change for General Liability................................................................... Appendix B Analysis of Reserve Change for Automobile Liability ........................................................ Appendix C Future Funding Amounts At Alternate Sovereign Immunity Limits for General Liability and Automobile Liability ..................................... Appendix D IV. GLOSSARY OF TERMS AMI Risk Consultants, Inc.
  • 21. State of Vermont Self-Insurance Program Actuarial Review June 30, 2009 Purpose The State of Vermont (the State) has engaged the services of AMI Risk Consultants, Inc. (AMI) to perform the following for its self-insurance program: • Estimate the funding requirements for outstanding liabilities (loss reserves) at June 30, 2009 for workers’ compensation, general liability, and automobile liability, to comply with the Government Accounting Standards Board Statement Number 10 (GASB 10). • Estimate the funding requirements for prospective fiscal accident years 2009/2010, 2010/2011, 2011/2012, 2012/2013 and 2013/2014 at the State’s current retention. • Review the sufficiency of the current sovereign immunity limits. The funding requirements are liabilities retained by the State for losses and allocated loss adjustment expenses (ALAE). We did not include in our estimates any provision to meet other general and administrative expenses of the State’s self-insurance program. For this report, the term "losses" means losses and ALAE, unless otherwise indicated. AMI Risk Consultants, Inc.
  • 22. Conclusions Funding for Outstanding Liabilities at June 30, 2009 Our estimated outstanding liabilities (or loss reserves) by type of coverage at June 30, 2009 are shown below. This is the estimated unpaid balance on claims that occurred on or before that date. Outstanding Liabilities at June 30, 2009 Undiscounted Expected Confidence Level (amounts in thousands) Workers General Automobile Compensation Liability Liability Total $19,112 $4,946 $1,061 $25,119 Estimates of outstanding liabilities (loss reserves) at higher confidence levels can be seen in the Summary Exhibit, Pages 1 and 2 following this report. O:State of Vermont2009State of Vermont_RPT2009.doc Page 2 AMI Risk Consultants, Inc.
  • 23. Conclusions Funding for New Claims Occurring in Future Fiscal Years (continued) Our estimate of ultimate losses for accidents occurring in prospective fiscal years 2009/2010, 2010/2011, 2011/2012, 2012/2013 and 2013/2014 are shown below. These are the necessary amounts to fund new accidents that will occur during the next five (5) fiscal policy periods: Funding for Future Claims Undiscounted Expected Confidence Level Current Retention (amounts in thousands) Fiscal Workers’ General Automobile Year Compensation Liability Liability TOTAL 2009/2010 $7,780 $1,373 $347 $9,500 2010/2011 8,018 1,436 361 9,815 2011/2012 8,255 1,500 376 10,131 2012/2013 8,500 1,568 391 10,459 2013/2014 8,752 1,638 407 10,797 Estimates at higher confidence levels can be seen on Pages 4-8 of the Summary Exhibit attached to this report. The estimates shown above assume the State will continue with no excess insurance on workers’ compensation and a $250 thousand retention on general and automobile liability claims. O:State of Vermont2009State of Vermont_RPT2009.doc Page 3 AMI Risk Consultants, Inc.
  • 24. Conclusions Reconciliation of Current Reserves to Last Year’s Estimate (continued) Reconciliation to Prior Year’s Estimate – Undiscounted All Coverages Combined – Expected Confidence Level (amounts in thousands) 1. Estimated undiscounted loss reserves at 6/30/2008 $22,305 2. Loss payments during FY 2009 for accident years 2008 and prior. ($5,460) 3. Change in estimated ultimate losses for accident years 2008 and prior $645 due to re-evaluation at 6/30/2009 4. Estimated ultimate losses for AY 2009 $9,781 5. Loss payments during FY 2009 for accident year 2009 ($2,152) 6. Estimated undiscounted loss reserves at 6/30/2009 $25,119 Sum of (1) thru (5) This table shows the components impacting the change in the total reserve level between June 30, 2008 and June 30, 2009. The increase in the reserve level from $22,305 to $25,119 is due primarily to the cost of the new accidents that occurred in 2009 (Item 4). Because this cost exceeds the reduction in the reserve from payments made during the year (Item 2 plus Item 5), there is a net increase in the reserve. It is commonly the case for both insurance companies and self-insurance programs that the cost of new accidents is larger than the payout of older claims. The latest year’s claims are typically more costly than prior years due to increased exposure to loss and the impact of inflation on the average claim cost. In addition to the cost of new claims the reserve was also impacted by an adverse development on prior accidents of $645 (Item 3). This means that claims that occurred in prior accident years developed by more than expected during the past year, and that estimated ultimate losses for past years have increased by $645. Further discussion is included in the next section, “Reserve Change by Coverage”. O:State of Vermont2009State of Vermont_RPT2009.doc Page 4 AMI Risk Consultants, Inc.
  • 25. Conclusions Reserve Change by Coverage (continued) The total undiscounted reserve increased by $2,814 thousand over the estimate from a year ago. The table below shows the change by coverage. Estimated Undiscounted Reserves Expected Confidence Level (000’s) Coverage At June 30, 2008 At June 30, 2009 Change Workers’ Compensation $17,121 $19,112 $1,991 General Liability 4,255 4,946 691 Auto Liability 929 1,061 132 Total $22,305 $25,119 $2,814 The primary increase occurred in Workers’ Compensation. Although the Workers’ Compensation increase was due mainly to the cost of claims for the new 2009 accidents, there was also an adverse development on prior accident years, primarily accident year 2006. The table below details the $548 change in ultimate losses for 2006 claims. It shows the significant increase in case incurred losses over the past year for these claims, and the resulting upward shift in the estimate of ultimate losses. Adverse Development of Workers’ Compensation Accident Year 2006 (000’s) Estimated Estimated Case Incurred Ultimate Case Incurred Ultimate Change in Losses Losses Losses Losses Estimated At 6/30/08 At 6/30/08 At 6/30/09 At 6/30/09 Ultimate Losses $5,848 $6,996 $6,953 $7,544 $548 Overall prior accident year development for Automobile Liability was slightly favorable (by $55 thousand) and for General Liability was slightly adverse (by $13 thousand). Please see Appendices D-F in the Exhibits Section of this report for a complete reconciliation of reserves between June 30, 2008 and June 30, 2009 for each coverage. O:State of Vermont2009State of Vermont_RPT2009.doc Page 5 AMI Risk Consultants, Inc.
  • 26. Distribution This report is for the internal use of the management of the State and their and Use independent accountants, solely to enable the latter to opine on the annual financial statements of the State. We suggest that the user of this report review a complete copy as parts considered out of context might be misleading. Please request our written consent prior to distributing this report to other third parties. Reliance and In performing the analysis we relied without audit or verification on the Limitations following information furnished by the State: • Historical loss development information prepared by the State, by accident year and by type of coverage, for incurred and paid losses through June 30, 2009. The types of coverage are: workers' compensation, general liability, and automobile liability. • Exposure estimates by accident year through June 30, 2009. For workers' compensation and general liability, the State provided payroll; for automobile liability claims, the State provided number of vehicles. In performing the work, we spoke with Mr. Bill Duchac, Manager, Office of Risk Management for the State. Estimates of net reserves are subject to potential errors of estimation because the ultimate liability for claims is subject to the outcome of events yet to occur, e.g., jury decisions and attitudes of claimants with respect to settlements. In projecting loss emergence, we assumed that historical loss development patterns and insurance industry loss development patterns are predictive of future patterns. We have not anticipated any extraordinary changes in the legal, social or economic environment that might affect the ultimate cost of claims. We cannot reasonably estimate the uncertainties that ultimate liabilities are subject to. Therefore, while we believe our assumptions and methods are reasonable, we cannot guarantee that actual results will not differ, perhaps substantially, from our estimates. Loss Development History for General and Automobile Liability This year we appended an additional diagonal to the General Liability and Automobile Liability triangles which were created last year. As the triangle history builds over time, progressively more weight will be assigned to the State’s development pattern and less to industry factors. O:State of Vermont2009State of Vermont_RPT2009.doc Page 6 AMI Risk Consultants, Inc.
  • 27. Background The State has been self-insured for workers compensation since February 1, 1990 and liability since July 1, 1990. The last change to sovereign immunity limits was made July 1, 1990 when the limits were fixed at $250,000 per person, $1,000,000 per occurrence. In 1989 the limits had been revised to $250,000 per person, $500,000 per occurrence changing from the initial limits of $75,000 per person, $300,000 per occurrence established in the early 1960’s. Workers compensation has been fully self-insured from its inception February 1, 1990 with unlimited liability and no commercially purchased excess insurance. The liability program, which is limited by the sovereign immunity statute (referenced below), has purchased excess insurance from its inception July 1, 1990. For the first three years of the liability program the self-insured retention (SIR) was $150,000. From 1993 forward the SIR has been $250,000. O:State of Vermont2009State of Vermont_RPT2009.doc Page 7 AMI Risk Consultants, Inc.
  • 28. Actuarial Recommended Funding Level as of June 30, 2009 Approach To estimate total reserves as of June 30, 2009, we first estimated ultimate losses. Paid losses through June 30, 2009 were then subtracted from ultimate losses to estimate total reserves. To estimate ultimate losses, we used the following four actuarial approaches. They were applied separately by accident year and by type of coverage: • Incurred Loss Development Approach (ILDA) • Paid Loss Development Approach (PLDA) • Bornhuetter-Ferguson Incurred Loss Approach (BFILA) • Bornhuetter-Ferguson Paid Loss Approach (BFPLA). Incurred Loss Development Approach (ILDA) Under the ILDA, we multiplied incurred losses to date by the appropriate loss Description of development factors to estimate ultimate losses. the methods In applying this approach, we used loss development factors that are based on we used to the State's historical loss development patterns, supplemented by insurance estimate the industry loss development patterns as compiled by AM Best. We assumed that reserves as of losses are reported and reserved consistently. June 30, 2009. Paid Loss Development Approach (PLDA) The PLDA is similar to the ILDA. Instead of multiplying incurred losses by loss development factors, we multiplied paid losses by the appropriate loss development factors to estimate ultimate losses. In applying this approach, we used loss development factors that are based on the State's historical loss development patterns, supplemented by insurance industry development patterns as compiled by AM Best. We assumed that losses are paid consistently. Bornhuetter-Ferguson Incurred Loss Approach (BFILA) Under the BFILA, we summed actual incurred losses and expected unreported losses to estimate projected ultimate losses. In applying this approach, we estimated expected unreported losses by using loss development factors that are based on the State's historical loss development patterns, supplemented by insurance industry loss development patterns. We also used the average of estimated loss rates (ultimate losses divided by exposure base) indicated by the ILDA and PLDA. We assumed that losses are reported and reserved consistently. O:State of Vermont2009State of Vermont_RPT2009.doc Page 8 AMI Risk Consultants, Inc.
  • 29. Actuarial Bornhuetter-Ferguson Paid Loss Approach (BFPLA) Approach Under the BFPLA, we summed actual paid losses and expected unpaid losses (continued) to estimate projected ultimate losses. In applying this approach, we estimated expected unpaid losses by using loss development factors that are based on the State's historical loss development patterns, supplemented by insurance industry loss development patterns. We also used the average of estimated loss rates (ultimate losses divided by exposure base) indicated by the ILDA and PLDA. We assumed that losses are paid consistently. Calculation of Ultimate Losses for Accident Year 2008/2009 To react to the immaturity of the paid and incurred losses for accident year 2008/2009, we used the Loss Rate Approach (LRA) instead of the ILDA and PLDA. Under the LRA, a loss rate is estimated for 2008/2009 by averaging net ultimate losses divided by exposure of prior years. This loss rate is multiplied by the 2008/2009 exposure to estimate the 2008/2009 ultimate loss. Risk Margins Our estimates using the various methods and procedures we have described, are based on an expected value. Conceptually, an expected value is an average value. The actual losses of an entity like the State will vary and could be higher or lower than this average value. The more risk margin that is added to this average value in determining the funding level, the higher the likelihood that the State’s funding level will be sufficient to pay for actual losses. In our calculations, we used margins for 60%, 70%, 75%, 85%, 90% and 95% confidence levels. With the 75% confidence level, we are estimating the margin that is necessary so that there is a 75% likelihood that the funding level will be sufficient to cover the actual liabilities. O:State of Vermont2009State of Vermont_RPT2009.doc Page 9 AMI Risk Consultants, Inc.
  • 30. Actuarial Recommended Funding Levels for 2009/2010, 2010/2011, 2011/2012, Approach 2012/2013 and 2013/2014 (continued) To estimate the funding levels for prospective fiscal accident years 2009/2010, 2010/2011, 2011/2012, 2012/2013 and 2013/2014 by coverage, The steps we used we followed these steps: to estimate the recommended • Estimated the historical loss rates by accident year. funding levels for Fiscal Accident • Extrapolated the historical loss rates to fiscal years 2009/2010, Years 2010/2011, 2011/2012, 2012/2013 and 2013/2014. 2009/2010,2010/ 2011, 2011/2012, • Multiplied the extrapolated loss rates by the projected exposures. 2012/2013, and 2013/2014. As we did when estimating the loss reserves as of June 30, 2009, we then estimated a risk margin. O:State of Vermont2009State of Vermont_RPT2009.doc Page 10 AMI Risk Consultants, Inc.
  • 31. Results of Outstanding Liabilities at June 30, 2009 Calculations Our estimated outstanding liabilities by type of coverage at June 30, 2009, are depicted in the pie chart below. We prepared the pie chart to show the proportion of the estimated reserves (prior to the addition of any risk margin for adverse deviations) of $25.1 million associated with each coverage. Roughly three- quarters, or 76% of TOTAL ESTIMATED RESERVES the $25.1 million undiscounted AL 4% reserves as of June GL 30, 2009, are for 20% workers’ compensation. WC 76% Notes: GL - General Liability AL - Auto Liability WC - Workers’ Compensation O:State of Vermont2009State of Vermont_RPT2009.doc Page 11 AMI Risk Consultants, Inc.
  • 32. Results of To give perspective on the prospective funding levels relative to the historical Calculations trend in ultimate losses and loss rates, we prepared the following exhibits by type (continued) of coverage. In each graph the bar chart shows estimate ultimate losses by accident year for both past and future years. The scale on the left-hand side of the graph should be used with the bars. The line graph shows the historical and projected loss rate, and the scale on the right-hand side should be used to read the values. W O R K E R S' C O M P E N SA T IO N U L T IM A T E L O SSE S A N D L O SS R A T E S 10,000 3.00% (LOSSES AS % OF PAYROLL) 9,000 8,000 ULTIMATE LOSSES ($AMT IN '000) 7,000 LOSS RATE 6,000 5,000 2.00% 4,000 3,000 2,000 1,000 0 1.00% 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 A C C ID E N T Y E A R G E N E R A L L IA B IL IT Y U L T IM A T E L O S S E S A N D L O S S R A T E S (LOSSES AS % OF PAYROLL) 2 ,5 0 0 1 .0 0 % ULTIMATE LOSSES ($AMT IN '000) LOSS RATE 2 ,0 0 0 1 ,5 0 0 0 .5 0 % 1 ,0 0 0 500 0 0 .0 0 % 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 A C C ID E N T Y E A R O:State of Vermont2009State of Vermont_RPT2009.doc Page 12 AMI Risk Consultants, Inc.
  • 33. Results of AUTO LIABILITY Calculations ULTIM ATE LOSSES AND LOSS RATES (continued) 1,400 $900 1,200 (DOLLARS OF LOSS ULTIMATE LOSSES PER VEHICLE) ($AMT IN '000) 1,000 LOSS RATE 800 $600 600 400 $300 200 0 $0 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 ACCIDENT YEAR O:State of Vermont2009State of Vermont_RPT2009.doc Page 13 AMI Risk Consultants, Inc.
  • 34. Results of Sovereign Immunity Limits Calculations The State currently enjoys sovereign immunity protection which limits (continued) liability claims to $250,000 per person / $1,000,000 per occurrence. These limits were set in 1990 and at that time represented a significant increase from the previous limits of $75,000 per person / $300,000 per occurrence. It is our understanding that the change was made in keeping with the original principle of the legislation to provide just and equitable compensation to claimants. To this end the State has attempted in the past to maintain the immunity limits at a relative dollar value in keeping with inflation. It has now been 19 years since the current sovereign immunity limits were set, and the State, in keeping with the above ideals, might want to assess the sufficiency of the current limits. The Consumer Price Index (CPI) published by the U.S. Bureau of Labor Statistics is a widely used measure to establish relative value over time. We note that the CPI has increased by 71.3% since 1990. This would suggest an increase of a similar magnitude in the sovereign immunity limits to approximately $425,000 per person / $1,700,000 per occurrence is appropriate in order to adjust the limits for the effects of inflation. Furthermore, to allow for additional inflation between now and the actual implementation period of revised limits, an adjustment of the sovereign immunity limits to $500,000 per person / $2,000,000 per occurrence is recommended. We estimate that adoption of the recommended limits would increase the State’s annual expected losses by 0.8% to 3.5%, assuming the State adjusted its retention to $500,000 as well. Below is the estimated impact of such a change to the projected funding level for 2009/2010 claims. Impact of Proposed Change in Sovereign Immunity Limits For Fiscal Year 2009/2010 Claims (000’s) Range of Projected Projected Ultimate Impact of Coverage Ultimate Losses Losses at Change in at Current Limits Proposed Limits Limits Low High Low High General Liability $1,373 $1,384 $1,421 $11 $48 Automobile Liability $347 $350 $359 $3 $12 Total $1,720 $1,734 $1,780 $14 $60 As shown in the table above, the estimated dollar impact of the proposed change in sovereign immunity limits on the cost of claims occurring during fiscal year 2009/2010 is between $14 thousand and $60 thousand. Please see Appendix D for expected liability losses for each of the next five fiscal accident years assuming alternate sovereign immunity limits. O:State of Vermont2009State of Vermont_RPT2009.doc Page 14 AMI Risk Consultants, Inc.
  • 35. Attached Estimated Funding Levels for Outstanding Liabilities at June 30, 2009 Exhibits We prepared Exhibits I-III estimate the total reserves at June 30, 2009 by coverage: • Exhibit I - Workers' Compensation • Exhibit II - General Liability • Exhibit III - Automobile Liability O:State of Vermont2009State of Vermont_RPT2009.doc Page 15 AMI Risk Consultants, Inc.
  • 36. Attached There are 4 pages to each of the Exhibits I-III. Each page relates to the Exhibits following: (continued) • Page 1 shows how we estimated the loss reserves as of June 30, 2009 before considering future investment income and the margins necessary to raise the confidence levels higher than the expected level. To estimate the loss reserves, we used ultimate losses that are based on the ultimates suggested by the various approaches previously described. • Page 2 shows the calculation of ultimate losses using the ILDA and the PLDA. • Page 3 shows the calculation of the ultimate losses using the BFILA and the BFPLA. • Page 4 (Pages 4A – 4D) shows the calculation of the historical incurred loss and paid loss development factors. Projected Funding Levels for Future Accident Years We prepared the attached Exhibits IV-VI to estimate the prospective funding levels for fiscal years 2009/2010, 2010/2011, 2011/2012, 2012/2013, and 2013/2014. • Exhibit IV- Workers' Compensation • Exhibit V - General Liability • Exhibit VI - Automobile Liability This pages shows the estimation of ultimate losses for prospective fiscal years 2009/2010, 2010/2011, 2011/2012, 2012/2013, and 2013/2014. O:State of Vermont2009State of Vermont_RPT2009.doc Page 16 AMI Risk Consultants, Inc.
  • 37. Attached Appendices Exhibits (continued) We prepared Appendices A-C to show why our undiscounted reserves changed from those estimated last year. Specifically, the exhibits show the calculation and analysis of the change in undiscounted reserves from June 30, 2008 to June 30, 2009 for workers' compensation, general liability, and automobile liability, respectively. Please refer to page 1 of Appendices A, B and C. Page 2 of Appendices A, B and C shows the comparison of total ultimate losses for claims prior to fiscal year 2008/2009, using loss information at June 30, 2008 and June 30, 2009. Page 3 of Appendices A, B and C shows the comparison of paid losses for claims prior to fiscal year 2008/2009, using loss information at June 30, 2008 and June 30, 2009. We prepared Appendix D to show projected General Liability and Automobile Liability losses assuming alternate sovereign immunity limits. O:State of Vermont2009State of Vermont_RPT2009.doc Page 17 AMI Risk Consultants, Inc.
  • 38. SUMMARY EXHIBIT PAGE 1 OF 9 STATE OF VERMONT SELF-INSURANCE PROGRAM ACTUARIAL REVIEW SUMMARY OF UNDISCOUNTED RESERVES BY CONFIDENCE LEVEL ALL COVERAGES COMBINED AS OF JUNE 30, 2009 (AMTS IN THOUSANDS) UNDISCOUNTED LOSS RESERVES AS OF JUNE 30, 2009 COVERAGE EXPECTED 60% CONFIDENCE 70% CONFIDENCE 75% CONFIDENCE LEVEL LEVEL LEVEL LEVEL (1) (2) (3) (4) WORKERS' COMPENSATION $19,112 $19,685 $21,023 $21,788 GENERAL LIABILITY 4,946 5,094 5,391 5,589 AUTOMOBILE LIABILITY 1,061 1,103 1,252 1,337 TOTAL $25,119 $25,882 $27,666 $28,714 COVERAGE 80% CONFIDENCE 85% CONFIDENCE 90% CONFIDENCE 95% CONFIDENCE LEVEL LEVEL LEVEL LEVEL (5) (6) (7) (8) WORKERS' COMPENSATION $22,743 $23,890 $25,419 $27,713 GENERAL LIABILITY 5,787 6,034 6,331 6,825 AUTOMOBILE LIABILITY 1,432 1,538 1,676 1,856 TOTAL $29,962 $31,462 $33,426 $36,394 Notes: (1) - See Summary Exhibit, Page 2, Column (1). (2) - (4) - See Summary Exhibit, Page 2, Column (5) for that confidence level. (5) - (8) - See Summary Exhibit, Page 3, Column (5) for that confidence level. O:State of Vermont2009ALL2009SUMMARY1 9/14/2009 2:56 PM AMI Risk Consultants, Inc.
  • 39. SUMMARY EXHIBIT PAGE 2 OF 9 SELF-INSURANCE PROGRAM ACTUARIAL REVIEW AS OF JUNE 30, 2009 CALCULATION OF ESTIMATED RESERVES BY CONFIDENCE LEVEL ALL COVERAGES ($AMOUNTS IN THOUSANDS) Expected Confidence Level Margin Amount Undiscounted on Undiscounted Coverage Reserves Reserves (1) (2) Workers' Compensation (WC) $19,112 $0 General Liability (GL) 4,946 0 Automobile Liability (AL) 1,061 0 Total $25,119 $0 60% Confidence Level Undiscounted Margin Amount Undiscounted Reserves at on Undiscounted Reserves at Coverage Expected Level Reserves 60% Conf. Level (3) (4) (5)=(3)+(4) Workers' Compensation (WC) $19,112 $573 $19,685 General Liability (GL) 4,946 148 5,094 Automobile Liability (AL) 1,061 42 1,103 Sub Total $25,119 $763 $25,882 70% Confidence Level Undiscounted Margin Amount Undiscounted Reserves at on Undiscounted Reserves at Coverage Expected Level Reserves 70% Conf. Level (3) (4) (5)=(3)+(4) Workers' Compensation (WC) $19,112 $1,911 $21,023 General Liability (GL) 4,946 445 5,391 Automobile Liability (AL) 1,061 191 1,252 Sub Total $25,119 $2,547 $27,666 75% Confidence Level Undiscounted Margin Amount Undiscounted Reserves at on Undiscounted Reserves at Coverage Expected Level Reserves 75% Conf. Level (3) (4) (5)=(3)+(4) Workers' Compensation (WC) $19,112 $2,676 $21,788 General Liability (GL) 4,946 643 5,589 Automobile Liability (AL) 1,061 276 1,337 Sub Total $25,119 $3,595 $28,714 O:State of Vermont2009ALL2009.xlsULT_LOSSES 9/14/2009 12:56 PM AMI Risk Consultants, Inc.
  • 40. SUMMARY EXHIBIT PAGE 3 OF 9 STATE OF VERMONT SELF-INSURANCE PROGRAM ACTUARIAL REVIEW AS OF JUNE 30, 2009 CALCULATION OF ESTIMATED RESERVES BY CONFIDENCE LEVEL ALL COVERAGES ($AMOUNTS IN THOUSANDS) 80% Confidence Level Undiscounted Margin Amount Undiscounted Reserves at on Undiscounted Reserves at Coverage Expected Level Reserves 80% Conf. Level (3) (4) (5)=(3)+(4) Workers' Compensation (WC) $19,112 $3,631 $22,743 General Liability (GL) 4,946 841 5,787 Automobile Liability (AL) 1,061 371 1,432 Sub Total $25,119 $4,843 $29,962 85% Confidence Level Undiscounted Margin Amount Undiscounted Reserves at on Undiscounted Reserves at Coverage Expected Level Reserves 85% Conf. Level (3) (4) (5)=(3)+(4) Workers' Compensation (WC) $19,112 $4,778 $23,890 General Liability (GL) 4,946 1,088 6,034 Automobile Liability (AL) 1,061 477 1,538 Sub Total $25,119 $6,343 $31,462 90% Confidence Level Undiscounted Margin Amount Undiscounted Reserves at on Undiscounted Reserves at Coverage Expected Level Reserves 90% Conf. Level (3) (4) (5)=(3)+(4) Workers' Compensation (WC) $19,112 $6,307 $25,419 General Liability (GL) 4,946 1,385 6,331 Automobile Liability (AL) 1,061 615 1,676 Sub Total $25,119 $8,307 $33,426 95% Confidence Level Undiscounted Margin Amount Undiscounted Reserves at on Undiscounted Reserves at Coverage Expected Level Reserves 95% Conf. Level (3) (4) (5)=(3)+(4) Workers' Compensation (WC) $19,112 $8,601 $27,713 General Liability (GL) 4,946 1,879 6,825 Automobile Liability (AL) 1,061 795 1,856 Total $25,119 $11,275 $36,394 Notes: (3) = Summary Exhibit, Page 2, Column (1). (4) - Per AMI calculation. (5) = (3) + (4). O:State of Vermont2009ALL2009.xls/ULT_LOSSES_2 9/14/2009 12:56 PM AMI Risk Consultants, Inc.
  • 41. SUMMARY EXHIBIT PAGE 4 OF 9 STATE OF VERMONT SELF-INSURANCE PROGRAM ACTUARIAL REVIEW AS OF JUNE 30, 2009 RECOMMENDED FUNDING BY CONFIDENCE LEVEL FOR FISCAL YEAR 2009/2010 ACCIDENTS ALL COVERAGES - CURRENT RETENTION ($AMOUNTS IN THOUSANDS) Expected Level Projected Margin Amount Undiscounted on Undiscounted Coverage Ultimate Losses Ultimate Losses (1) (2) Workers' Compensation (WC) $7,780 $0 General Liability (GL) 1,373 0 Automobile Liability (AL) 347 0 Total $9,500 $0 75% Confidence Level Projected Margin Amount Proj. Net Undiscounted Undiscounted on Undiscounted Ultimate Losses Coverage Ultimate Losses Ultimate Losses @75% Conf. Level (3) (4) (5) Workers' Compensation (WC) $7,780 $1,089 $8,869 General Liability (GL) 1,373 178 1,551 Automobile Liability (AL) 347 90 437 Total $9,500 $1,357 $10,857 85% Confidence Level Projected Margin Amount Proj. Net Undiscounted Undiscounted on Undiscounted Ultimate Losses Coverage Ultimate Losses Ultimate Losses @85% Conf. Level (6) (7) (8) Workers' Compensation (WC) ($3) $1,945 $1,942 General Liability (GL) 1,373 $302 1,675 Automobile Liability (AL) 347 $156 503 Total $1,717 $2,403 $4,120 95% Confidence Level Projected Margin Amount Proj. Net Undiscounted Undiscounted on Undiscounted Ultimate Losses Coverage Ultimate Losses Ultimate Losses @95% Conf. Level (9) (10) (11) Workers' Compensation (WC) $7,780 $3,501 $11,281 General Liability (GL) 1,373 522 1,895 Automobile Liability (AL) 347 260 607 Total $9,500 $4,283 $13,783 Notes: (1) - From Exhibits IV, V & VI for WC, GL and AL, respectively, - Page 1, Column (1), 2009/2010. (2), (4), (7) & (10) - Per AMI calculation, based on Monte Carlo simulations. (5) = (3) + (4); (8) = (6) + (7); (11) = (9) + (10) O:State of Vermont2009ALL2009.xlsPROJ+1 9/14/2009 12:56 PM AMI Risk Consultants, Inc.
  • 42. SUMMARY EXHIBIT PAGE 5 OF 9 STATE OF VERMONT SELF-INSURANCE PROGRAM ACTUARIAL REVIEW AS OF JUNE 30, 2009 RECOMMENDED FUNDING BY CONFIDENCE LEVEL FOR FISCAL YEAR 2010/2011 ACCIDENTS ALL COVERAGES - CURRENT RETENTION ($AMOUNTS IN THOUSANDS) Expected Level Projected Margin Amount Undiscounted on Undiscounted Coverage Ultimate Losses Ultimate Losses (1) (2) Workers' Compensation (WC) $8,018 $0 General Liability (GL) 1,436 0 Automobile Liability (AL) 361 0 Total $9,815 $0 75% Confidence Level Projected Margin Amount Proj. Net Undiscounted Undiscounted on Undiscounted Ultimate Losses Coverage Ultimate Losses Ultimate Losses @75% Conf. Level (3) (4) (5) Workers' Compensation (WC) $8,018 $1,123 $9,141 General Liability (GL) 1,436 187 1,623 Automobile Liability (AL) 361 94 455 Total $9,815 $1,404 $11,219 85% Confidence Level Projected Margin Amount Proj. Net Undiscounted Undiscounted on Undiscounted Ultimate Losses Coverage Ultimate Losses Ultimate Losses @85% Conf. Level (6) (7) (8) Workers' Compensation (WC) $8,018 $2,005 $10,023 General Liability (GL) 1,436 $316 1,752 Automobile Liability (AL) 361 $162 523 Total $9,815 $2,483 $12,298 95% Confidence Level Projected Margin Amount Proj. Net Undiscounted Undiscounted on Undiscounted Ultimate Losses Coverage Ultimate Losses Ultimate Losses @95% Conf. Level (9) (10) (11) Workers' Compensation (WC) $8,018 $3,608 $11,626 General Liability (GL) 1,436 546 1,982 Automobile Liability (AL) 361 271 632 Total $9,815 $4,425 $14,240 Notes: (1) - From Exhibits IV, V & VI for WC, GL and AL, respectively, - Page 1, Column (1), 2009/2010. (2), (4), (7) & (10) - Per AMI calculation, based on Monte Carlo simulations. (5) = (3) + (4); (8) = (6) + (7); (11) = (9) + (10) O:State of Vermont2009ALL2009.xlsPROJ+2 9/14/2009 12:57 PM AMI Risk Consultants, Inc.
  • 43. SUMMARY EXHIBIT PAGE 6 OF 9 STATE OF VERMONT SELF-INSURANCE PROGRAM ACTUARIAL REVIEW AS OF JUNE 30, 2009 RECOMMENDED FUNDING BY CONFIDENCE LEVEL FOR FISCAL YEAR 2011/2012 ACCIDENTS ALL COVERAGES - CURRENT RETENTION ($AMOUNTS IN THOUSANDS) Expected Level Projected Margin Amount Undiscounted on Undiscounted Coverage Ultimate Losses Ultimate Losses (1) (2) Workers' Compensation (WC) $8,255 $0 General Liability (GL) 1,500 0 Automobile Liability (AL) 376 0 Total $10,131 $0 75% Confidence Level Projected Margin Amount Proj. Net Undiscounted Undiscounted on Undiscounted Ultimate Losses Coverage Ultimate Losses Ultimate Losses @75% Conf. Level (3) (4) (5) Workers' Compensation (WC) $8,255 $1,156 $9,411 General Liability (GL) 1,500 195 1,695 Automobile Liability (AL) 376 98 474 Total $10,131 $1,449 $11,580 85% Confidence Level Projected Margin Amount Proj. Net Undiscounted Undiscounted on Undiscounted Ultimate Losses Coverage Ultimate Losses Ultimate Losses @85% Conf. Level (6) (7) (8) Workers' Compensation (WC) $8,255 $2,064 $10,319 General Liability (GL) 1,500 $330 1,830 Automobile Liability (AL) 376 $169 545 Total $10,131 $2,563 $12,694 95% Confidence Level Projected Margin Amount Proj. Net Undiscounted Undiscounted on Undiscounted Ultimate Losses Coverage Ultimate Losses Ultimate Losses @95% Conf. Level (9) (10) (11) Workers' Compensation (WC) $8,255 $3,715 $11,970 General Liability (GL) 1,500 570 2,070 Automobile Liability (AL) 376 282 658 Total $10,131 $4,567 $14,698 Notes: (1) - From Exhibits IV, V & VI for WC, GL and AL, respectively, - Page 1, Column (1), 2009/2010. (2), (4), (7) & (10) - Per AMI calculation, based on Monte Carlo simulations. (5) = (3) + (4); (8) = (6) + (7); (11) = (9) + (10) O:State of Vermont2009ALL2009.xlsPROJ+3 9/14/2009 12:57 PM AMI Risk Consultants, Inc.
  • 44. SUMMARY EXHIBIT PAGE 7 OF 9 STATE OF VERMONT SELF-INSURANCE PROGRAM ACTUARIAL REVIEW AS OF JUNE 30, 2009 RECOMMENDED FUNDING BY CONFIDENCE LEVEL FOR FISCAL YEAR 2012/2013 ACCIDENTS ALL COVERAGES - CURRENT RETENTION ($AMOUNTS IN THOUSANDS) Expected Level Projected Margin Amount Undiscounted on Undiscounted Coverage Ultimate Losses Ultimate Losses (1) (2) Workers' Compensation (WC) $8,500 $0 General Liability (GL) 1,568 0 Automobile Liability (AL) 391 0 Total $10,459 $0 75% Confidence Level Projected Margin Amount Proj. Net Undiscounted Undiscounted on Undiscounted Ultimate Losses Coverage Ultimate Losses Ultimate Losses @75% Conf. Level (3) (4) (5) Workers' Compensation (WC) $8,500 $1,190 $9,690 General Liability (GL) 1,568 204 1,772 Automobile Liability (AL) 391 102 493 Total $10,459 $1,496 $11,955 85% Confidence Level Projected Margin Amount Proj. Net Undiscounted Undiscounted on Undiscounted Ultimate Losses Coverage Ultimate Losses Ultimate Losses @85% Conf. Level (6) (7) (8) Workers' Compensation (WC) $8,500 $2,125 $10,625 General Liability (GL) 1,568 $345 1,913 Automobile Liability (AL) 391 $176 567 Total $10,459 $2,646 $13,105 95% Confidence Level Projected Margin Amount Proj. Net Undiscounted Undiscounted on Undiscounted Ultimate Losses Coverage Ultimate Losses Ultimate Losses @95% Conf. Level (9) (10) (11) Workers' Compensation (WC) $8,500 $3,825 $12,325 General Liability (GL) 1,568 596 2,164 Automobile Liability (AL) 391 293 684 Total $10,459 $4,714 $15,173 Notes: (1) - From Exhibits IV, V & VI for WC, GL and AL, respectively, - Page 1, Column (1), 2009/2010. (2), (4), (7) & (10) - Per AMI calculation, based on Monte Carlo simulations. (5) = (3) + (4); (8) = (6) + (7); (11) = (9) + (10) O:State of Vermont2009ALL2009.xlsPROJ+4 9/14/2009 12:57 PM AMI Risk Consultants, Inc.
  • 45. SUMMARY EXHIBIT PAGE 8 OF 9 STATE OF VERMONT SELF-INSURANCE PROGRAM ACTUARIAL REVIEW AS OF JUNE 30, 2009 RECOMMENDED FUNDING BY CONFIDENCE LEVEL FOR FISCAL YEAR 2013/2014 ACCIDENTS ALL COVERAGES - CURRENT RETENTION ($AMOUNTS IN THOUSANDS) Expected Level Projected Margin Amount Undiscounted on Undiscounted Coverage Ultimate Losses Ultimate Losses (1) (2) Workers' Compensation (WC) $8,752 $0 General Liability (GL) 1,638 0 Automobile Liability (AL) 407 0 Total $10,797 $0 75% Confidence Level Projected Margin Amount Proj. Net Undiscounted Undiscounted on Undiscounted Ultimate Losses Coverage Ultimate Losses Ultimate Losses @75% Conf. Level (3) (4) (5) Workers' Compensation (WC) $8,752 $1,225 $9,977 General Liability (GL) 1,638 213 1,851 Automobile Liability (AL) 407 106 513 Total $10,797 $1,544 $12,341 85% Confidence Level Projected Margin Amount Proj. Net Undiscounted Undiscounted on Undiscounted Ultimate Losses Coverage Ultimate Losses Ultimate Losses @85% Conf. Level (6) (7) (8) Workers' Compensation (WC) $8,752 $2,188 $10,940 General Liability (GL) 1,638 $360 1,998 Automobile Liability (AL) 407 $183 590 Total $10,797 $2,731 $13,528 95% Confidence Level Projected Margin Amount Proj. Net Undiscounted Undiscounted on Undiscounted Ultimate Losses Coverage Ultimate Losses Ultimate Losses @95% Conf. Level (9) (10) (11) Workers' Compensation (WC) $8,752 $3,938 $12,690 General Liability (GL) 1,638 622 2,260 Automobile Liability (AL) 407 305 712 Total $10,797 $4,865 $15,662 Notes: (1) - From Exhibits IV, V & VI for WC, GL and AL, respectively, - Page 1, Column (1), 2009/2010. (2), (4), (7) & (10) - Per AMI calculation, based on Monte Carlo simulations. (5) = (3) + (4); (8) = (6) + (7); (11) = (9) + (10) O:State of Vermont2009ALL2009.xlsPROJ+5 9/14/2009 12:58 PM AMI Risk Consultants, Inc.
  • 46. SUMMARY EXHIBIT PAGE 9 OF 9 STATE OF VERMONT SELF-INSURANCE PROGRAM ACTUARIAL REVIEW DEVELOPMENT OF FUTURE FUNDING AMOUNTS FOR ALTERNATE RETENTIONS $250,000, $500,000 and $1,000,000 RETENTION LIMITS WORKERS' COMPENSATION AS OF JUNE 30, 2009 (AMTS IN THOUSANDS) RETENTION AMOUNT OF $250,000 Expected Expected Undiscounted Self-Funded Unlimited Retention Funding Period Funding Factor Amount at Amount $250,000 Retention (1) (2) (3) 7/1/09-6/30/10 $7,780 0.798 $6,208 7/1/10-6/30/11 8,018 0.798 6,398 7/1/11-6/30/12 8,255 0.798 6,587 7/1/12-6/30/13 8,500 0.798 6,783 7/1/13-6/30/14 8,752 0.798 6,984 RETENTION AMOUNT OF $500,000 Expected Expected Undiscounted Self-Funded Unlimited Retention Funding Period Funding Factor Amount at Amount $500,000 Retention (4) (5) (6) 7/1/09-6/30/10 $7,780 0.882 $6,862 7/1/10-6/30/11 8,018 0.882 7,072 7/1/11-6/30/12 8,255 0.882 7,281 7/1/12-6/30/13 8,500 0.882 7,497 7/1/13-6/30/14 8,752 0.882 7,719 RETENTION AMOUNT OF $1,000,000 Expected Expected Undiscounted Self-Funded Unlimited Retention Funding Period Funding Factor Amount at Amount $1,000,000 Retention (7) (8) (9) 7/1/09-6/30/10 $7,780 0.935 $7,274 7/1/10-6/30/11 8,018 0.935 7,497 7/1/11-6/30/12 8,255 0.935 7,718 7/1/12-6/30/13 8,500 0.935 7,948 7/1/13-6/30/14 8,752 0.935 8,183 Notes: (1), (4) & (7) - Per Exhibit IV, Col. (1). (2), (5) & (8) - Based on NCCI excess loss factors for Vermont. (3) = (1) x (2); (4) = (5) x (6); (9) = (7) x (8). O:State of Vermont2009Retention_Vermont_063009WC 9/14/2009 3:26 PM AMI Risk Consultants, Inc.
  • 47. EXHIBIT I PAGE 1 OF 4 STATE OF VERMONT SELF-INSURANCE PROGRAM ACTUARIAL REVIEW CALCULATION OF SELECTED ULTIMATE LOSSES WORKERS' COMPENSATION AS OF JUNE 30, 2009 (AMTS IN THOUSANDS) NET ALL APPROACHES COMBINED ILDA PLDA BFILA BFPLA SELECTED PAID LOSS ACCIDENT ULTIMATE ULTIMATE ULTIMATE ULTIMATE ULTIMATE LOSSES RESERVES YEAR* LOSSES LOSSES LOSSES LOSSES LOSSES @6/30/2009 @6/30/2009 (1) (2) (3) (4) (5) (6) (7) 1990 $1,887 $1,887 $1,887 $1,887 $1,887 $1,887 $0 1991 3,402 3,402 3,402 3,402 3,402 3,402 0 1992 4,720 4,720 4,720 4,720 4,720 4,720 0 1993 5,768 5,774 5,768 5,772 5,770 5,768 2 1994 4,809 4,809 4,809 4,809 4,809 4,395 415 1995 2,987 2,995 2,990 3,003 2,994 2,974 20 1996 5,831 5,802 5,823 5,802 5,814 5,164 650 1997 3,880 3,922 3,886 3,935 3,906 3,846 60 1998 4,471 4,470 4,471 4,470 4,470 4,347 123 1999 5,816 5,853 5,797 5,818 5,821 5,649 172 2000 4,320 4,387 4,351 4,431 4,372 4,202 171 2001 5,525 5,596 5,531 5,600 5,563 5,309 254 2002 5,109 4,889 5,154 4,889 5,010 4,389 621 2003 5,070 4,796 5,141 4,796 4,951 3,979 972 2004 8,092 7,778 7,990 7,660 7,880 6,907 973 2005 6,329 5,950 6,402 6,112 6,198 5,112 1,086 2006 7,864 7,238 7,809 7,267 7,544 5,832 1,712 2007 5,268 5,468 5,662 6,145 5,903 3,875 2,028 2008 7,700 7,648 7,777 7,822 7,737 4,023 3,714 2009 7,836 7,467 8,686 8,326 8,079 1,938 6,140 TOTAL $106,685 $104,849 $108,055 $106,666 $106,831 $87,719 $19,112 Notes: (1), (2), (3) & (4)- Ultimate incurred losses calculated from Exhibit I, Pages 2 and 3. (5) = Selected based on (1), (2), (3) & (4). (6) - Per STATE OF VERMONT. (7) = (5) - (6). * All Accident years end on 6/30 of the stated year. O:State of Vermont2009WC2009.xlsSELECTED 9/14/2009 12:58 PM AMI Risk Consultants, Inc.
  • 48. EXHIBIT I PAGE 2 OF 4 STATE OF VERMONT SELF-INSURANCE PROGRAM ACTUARIAL REVIEW CALCULATION OF LOSS RESERVES - LOSS DEVELOPMENT APPROACH WORKERS' COMPENSATION AS OF JUNE 30, 2009 (AMTS IN THOUSANDS) NET INCURRED LOSS DEVELOPMENT APPROACH INCURRED LOSS ULTIMATE ESTIMATED ACCIDENT LOSSES DEVLPMT INCURRED PAYROLL LOSS LOSS YEAR* @6/30/2009 FACTORS LOSSES (IN $000'S) RATE RESERVES (1) (2) (3) (4) (5) (6) 1990 $1,887 1.000 $1,887 $95,389 0.020 $0 1991 3,402 1.000 3,402 232,209 0.015 0 1992 4,720 1.000 4,720 228,263 0.021 0 1993 5,768 1.000 5,768 224,939 0.026 0 1994 4,809 1.000 4,809 231,569 0.021 415 1995 2,981 1.002 2,987 239,997 0.012 13 1996 5,802 1.005 5,831 249,420 0.023 666 1997 3,846 1.009 3,880 260,959 0.015 35 1998 4,405 1.015 4,471 255,623 0.017 124 1999 5,696 1.021 5,816 278,640 0.021 167 2000 4,203 1.028 4,320 311,490 0.014 119 2001 5,333 1.036 5,525 325,133 0.017 216 2002 4,889 1.045 5,109 351,909 0.015 720 2003 4,796 1.057 5,070 365,489 0.014 1,090 2004 7,486 1.081 8,092 384,794 0.021 1,185 2005 5,727 1.105 6,329 405,943 0.016 1,217 2006 6,953 1.131 7,864 422,603 0.019 2,032 2007 4,445 1.185 5,268 445,704 0.012 1,392 2008 5,825 1.322 7,700 458,542 0.017 3,677 2009 4,742 7,836 460,921 0.017 5,897 TOTAL $97,716 $106,685 $18,966 PAID LOSS DEVELOPMENT APPROACH PAID LOSS ULTIMATE ESTIMATED ACCIDENT LOSSES DEVLPMT INCURRED PAYROLL LOSS LOSS YEAR* @6/30/2009 FACTORS LOSSES (IN $000'S) RATE RESERVES (7) (8) (9) (10) (11) (12) 1990 $1,887 1.000 $1,887 $95,389 0.020 $0 1991 3,402 1.000 3,402 232,209 0.015 0 1992 4,720 1.000 4,720 228,263 0.021 0 1993 5,768 1.001 5,774 224,939 0.026 6 1994 4,395 1.003 4,809 231,569 0.021 415 1995 2,974 1.007 2,995 239,997 0.012 21 1996 5,164 1.013 5,802 249,420 0.023 637 1997 3,846 1.020 3,922 260,959 0.015 77 1998 4,347 1.028 4,470 255,623 0.017 122 1999 5,649 1.036 5,853 278,640 0.021 203 2000 4,202 1.044 4,387 311,490 0.014 185 2001 5,309 1.054 5,596 325,133 0.017 287 2002 4,389 1.073 4,889 351,909 0.014 500 2003 3,979 1.095 4,796 365,489 0.013 817 2004 6,907 1.126 7,778 384,794 0.020 870 2005 5,112 1.164 5,950 405,943 0.015 838 2006 5,832 1.241 7,238 422,603 0.017 1,406 2007 3,875 1.411 5,468 445,704 0.012 1,593 2008 4,023 1.901 7,648 458,542 0.017 3,625 2009 1,938 7,467 460,921 0.016 5,529 TOTAL $87,719 $104,849 $17,130 Notes: (1), (2), (4), (7), (8) & (10) - Per STATE OF VERMONT. (2) & (8) - Per State's historical loss patterns. (3) = (1) x (2); (9) = (7) x (8). If ultimate incurred losses in (9) are less than the incurred losses in (1), we use the losses in (1). For the most recent year, we used the Loss Rate Approach. (5) = (3) / (4), (11) = (9) / (10). For the most recent year, it is the average of prior years. (6) = (3) - (7); (12) = (9) - (7). * All Accident years end on 6/30 of the stated year. O:State of Vermont2009WC2009.xlsLDA 9/14/2009 12:58 PM AMI Risk Consultants, Inc.
  • 49. EXHIBIT I PAGE 3 OF 4 STATE OF VERMONT SELF-INSURANCE PROGRAM ACTUARIAL REVIEW CALCULATION OF ULTIMATE LOSSES - BORNHUETTER-FERGUSON APPROACH WORKERS' COMPENSATION AS OF JUNE 30, 2009 (AMTS IN THOUSANDS) NET BORNHUETTER-FERGUSON INCURRED LOSS APPROACH ESTIMATED EXPECTED EXPECTED % INCURRED ULTIMATE ACCIDENT LOSS PAYROLL ULTIMATE OF LOSSES IBNR LOSSES INCURRED YEAR* RATE ($ '000s) LOSSES UNREPORTED RESERVES @6/30/2009 LOSSES (1) (2) (3) (4) (5) (6) (7) 1990 0.017 $95,389 $1,667 0.0% $0 $1,887 $1,887 1991 0.017 232,209 4,059 0.0% 0 3,402 3,402 1992 0.017 228,263 3,990 0.0% 0 4,720 4,720 1993 0.017 224,939 3,932 0.0% 0 5,768 5,768 1994 0.017 231,569 4,048 0.0% 0 4,809 4,809 1995 0.017 239,997 4,195 0.2% 8 2,981 2,990 1996 0.017 249,420 4,360 0.5% 22 5,802 5,823 1997 0.017 260,959 4,562 0.9% 41 3,846 3,886 1998 0.017 255,623 4,468 1.5% 66 4,405 4,471 1999 0.017 278,640 4,871 2.1% 100 5,696 5,797 2000 0.017 311,490 5,445 2.7% 148 4,203 4,351 2001 0.017 325,133 5,683 3.5% 197 5,333 5,531 2002 0.017 351,909 6,151 4.3% 265 4,889 5,154 2003 0.017 365,489 6,389 5.4% 345 4,796 5,141 2004 0.017 384,794 6,726 7.5% 504 7,486 7,990 2005 0.017 405,943 7,096 9.5% 674 5,727 6,402 2006 0.017 422,603 7,387 11.6% 856 6,953 7,809 2007 0.017 445,704 7,791 15.6% 1,216 4,445 5,662 2008 0.017 458,542 8,015 24.4% 1,952 5,825 7,777 2009 0.017 460,921 8,057 49.0% 3,944 4,742 8,686 TOTAL $10,339 $97,716 $108,055 BORNHUETTER-FERGUSON PAID LOSS APPROACH ESTIMATED EXPECTED EXPECTED % PAID ULTIMATE ACCIDENT LOSS PAYROLL ULTIMATE OF LOSSES LOSS LOSSES ** INCURRED YEAR* RATE ($ '000s) LOSSES UNPAID RESERVES @6/30/2009 LOSSES (8) (9) (10) (11) (12) (13) (14) 1990 0.017 $95,389 $1,667 0.0% $0 $1,887 $1,887 1991 0.017 232,209 4,059 0.0% 0 3,402 3,402 1992 0.017 228,263 3,990 0.0% 0 4,720 4,720 1993 0.017 224,939 3,932 0.1% 4 5,768 5,772 1994 0.017 231,569 4,048 0.3% 12 4,395 4,809 1995 0.017 239,997 4,195 0.7% 29 2,974 3,003 1996 0.017 249,420 4,360 1.3% 56 5,164 5,802 1997 0.017 260,959 4,562 2.0% 89 3,846 3,935 1998 0.017 255,623 4,468 2.7% 122 4,347 4,470 1999 0.017 278,640 4,871 3.5% 169 5,649 5,818 2000 0.017 311,490 5,445 4.2% 229 4,202 4,431 2001 0.017 325,133 5,683 5.1% 291 5,309 5,600 2002 0.017 351,909 6,151 6.8% 418 4,389 4,889 2003 0.017 365,489 6,389 8.7% 554 3,979 4,796 2004 0.017 384,794 6,726 11.2% 753 6,907 7,660 2005 0.017 405,943 7,096 14.1% 1,000 5,112 6,112 2006 0.017 422,603 7,387 19.4% 1,435 5,832 7,267 2007 0.017 445,704 7,791 29.1% 2,269 3,875 6,145 2008 0.017 458,542 8,015 47.4% 3,799 4,023 7,822 2009 0.017 460,921 8,057 79.3% 6,388 1,938 8,326 TOTAL $17,618 $87,719 $106,666 Notes: (1) & (8) - Exhibit I, Page 2 of 4, Columns (5) and (11). These Loss Rates are selected. (2), (6), (9) & (13) - Per STATE OF VERMONT. (3) = (1) x (2); (10) = (8) x (9). (4) = (1 - (1/ILDF)); (11) = (1 - (1/PLDF)). (5) = (3) x (4); (12) = (10) x (11). (7) = (5) + (6); (14) = (12) + (13). If ultimate incurred losses in (14) are less than the incurred losses in (6), we used the incurred losses in (6). * All Accident years end on 6/30 of the stated year. O:State of Vermont2009WC2009.xlsBFA 9/14/2009 12:59 PM AMI Risk Consultants, Inc.
  • 50. EXHIBIT I PAGE 4A OF 4 STATE OF VERMONT SELF-INSURANCE PROGRAM ACTUARIAL REVIEW CALCULATION OF THE LOSS DEVELOPMENT FACTORS WORKERS' COMPENSATION AS OF JUNE 30, 2009 (AMTS IN THOUSANDS) NET INCURRED LOSS DEVELOPMENT ACCIDENT DEVELOPMENT MONTHS YEAR* 12 24 36 48 60 72 84 96 108 120 132 144 1990 1,603 1,783 1,763 1991 3,228 3,268 3,324 3,313 1992 4,548 4,491 4,626 4,644 4,698 1993 5,332 5,423 5,567 5,679 5,705 5,712 1994 3,811 4,055 4,085 4,102 4,126 4,144 4,318 1995 2,706 2,697 2,785 2,847 2,882 2,934 2,953 3,028 1996 4,370 4,662 4,735 4,775 4,940 5,002 5,082 5,722 5,792 1997 3,322 3,608 3,795 3,751 3,864 3,847 3,860 3,861 3,848 3,848 1998 3,015 3,567 3,661 4,037 4,061 4,279 4,329 4,389 4,397 4,397 4,405 1999 1,678 3,410 4,357 4,571 4,907 5,626 5,756 5,716 5,752 5,726 5,696 2000 1,510 2,975 3,370 4,003 4,163 4,141 4,073 4,240 4,183 4,203 2001 2,124 3,420 5,203 5,353 5,285 4,304 5,396 5,396 5,333 2002 1,524 3,626 4,179 4,536 4,352 4,457 4,527 4,889 2003 2,855 4,408 4,682 4,658 4,784 4,765 4,796 2004 3,380 5,681 6,155 6,897 6,981 7,486 2005 3,807 4,877 5,346 5,349 5,727 2006 4,234 5,611 5,848 6,953 2007 3,313 4,323 4,445 2008 4,066 5,825 2009 4,742 LOSS DEVELOPMENT FACTORS 12 24 36 48 60 72 84 96 108 120 132 144 ACCIDENT TO TO TO TO TO TO TO TO TO TO TO TO YEAR* 24 36 48 60 72 84 96 108 120 132 144 156 1990 1.112 0.989 1.000 1991 1.013 1.017 0.997 1.009 1992 0.987 1.030 1.004 1.012 1.002 1993 1.017 1.026 1.020 1.005 1.001 1.017 1994 1.064 1.008 1.004 1.006 1.004 1.042 1.115 1995 0.997 1.032 1.023 1.012 1.018 1.006 1.026 0.983 1996 1.067 1.015 1.009 1.035 1.012 1.016 1.126 1.012 1.002 1997 1.086 1.052 0.988 1.030 0.996 1.003 1.000 0.997 1.000 0.999 1998 1.183 1.026 1.103 1.006 1.054 1.012 1.014 1.002 1.000 1.002 1999 2.032 1.278 1.049 1.073 1.147 1.023 0.993 1.006 0.996 0.995 2000 1.971 1.133 1.188 1.040 0.995 0.983 1.041 0.986 1.005 2001 1.610 1.522 1.029 0.987 0.814 1.254 1.000 0.988 2002 2.379 1.153 1.085 0.959 1.024 1.016 1.080 2003 1.544 1.062 0.995 1.027 0.996 1.007 2004 1.681 1.084 1.121 1.012 1.072 2005 1.281 1.096 1.000 1.071 2006 1.325 1.042 1.189 2007 1.305 1.028 2008 1.433 AVERAGE 1.656 1.158 1.077 1.039 1.005 1.047 1.021 1.004 1.011 1.027 1.009 1.016 3 YR AVG. 1.354 1.055 1.103 1.037 1.031 1.092 1.040 0.993 1.001 0.997 1.005 0.995 AVG EXCL HI & LO 1.638 1.129 1.073 1.041 1.012 1.029 1.017 1.003 1.010 1.018 1.007 1.005 INDUSTRY (NCCI VT) 1.302 1.079 1.023 1.017 1.021 1.008 1.004 PRIOR SELECTED 1.481 1.117 1.046 1.022 1.020 1.020 1.010 1.010 1.008 1.006 1.006 1.006 SELECTED 1.482 1.116 1.048 1.023 1.022 1.022 1.011 1.009 1.008 1.007 1.006 1.006 CUMULATIVE 1.959 1.322 1.185 1.131 1.105 1.081 1.057 1.045 1.036 1.028 1.021 1.015 * All Accident years end on 6/30 of the stated year. O:State of Vermont2009WC2009.xlsTRI_INC1 9/14/2009 12:59 PM AMI Risk Consultants, Inc.
  • 51. EXHIBIT I PAGE 4B OF 4 STATE OF VERMONT SELF-INSURANCE PROGRAM ACTUARIAL REVIEW CALCULATION OF THE LOSS DEVELOPMENT FACTORS WORKERS' COMPENSATION AS OF JUNE 30, 2009 (AMTS IN THOUSANDS) NET INCURRED LOSS DEVELOPMENT ACCIDENT DEVELOPMENT MONTHS YEAR* 156 168 180 192 204 216 228 240 252 264 276 288 1990 1,763 1,783 1,794 1,897 1,897 1,897 1,887 1,887 1991 3,343 3,351 3,389 3,387 3,387 3,402 3,402 1992 4,707 4,722 4,726 4,728 4,718 4,720 1993 5,810 5,784 5,812 5,768 5,768 1994 4,813 4,810 4,814 4,809 1995 2,977 2,988 2,981 1996 5,802 5,802 1997 3,846 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 LOSS DEVELOPMENT FACTORS 156 168 180 192 204 216 228 240 252 264 276 288 ACCIDENT TO TO TO TO TO TO TO TO TO TO TO TO YEAR* 168 180 192 204 216 228 240 252 264 276 288 ULT. 1990 1.012 1.006 1.057 1.000 1.000 0.995 1.000 1991 1.002 1.011 1.000 1.000 1.004 1.000 1992 1.003 1.001 1.000 0.998 1.001 1993 0.995 1.005 0.992 1.000 1994 0.999 1.001 0.999 1995 1.004 0.998 1996 1.000 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 AVERAGE 1.002 1.004 1.010 1.000 1.002 0.998 3 YR AVG. 1.001 1.001 0.997 0.999 1.002 AVG EXCL HI & LO 1.002 1.003 1.000 1.000 INDUSTRY (NCCI VT) PRIOR SELECTED 1.004 1.003 1.002 1.000 1.000 1.000 SELECTED 1.004 1.003 1.002 1.000 1.000 1.000 1.000 CUMULATIVE 1.009 1.005 1.002 1.000 1.000 1.000 1.000 1.000 * All Accident years end on 6/30 of the stated year. O:State of Vermont2009WC2009.xlsTRI_INC2 9/14/2009 12:59 PM AMI Risk Consultants, Inc.
  • 52. EXHIBIT I PAGE 4C OF 4 STATE OF VERMONT SELF-INSURANCE PROGRAM ACTUARIAL REVIEW CALCULATION OF THE LOSS DEVELOPMENT FACTORS WORKERS' COMPENSATION AS OF JUNE 30, 2009 (AMTS IN THOUSANDS) NET PAID LOSS DEVELOPMENT ACCIDENT DEVELOPMENT MONTHS YEAR* 12 24 36 48 60 72 84 96 108 120 132 144 1990 1,535 1,567 1,735 1991 3,225 3,282 3,311 3,312 1992 4,327 4,364 4,563 4,670 4,694 1993 5,246 5,329 5,532 5,643 5,666 5,691 1994 3,541 3,900 3,959 4,027 4,073 4,122 4,215 1995 2,660 2,682 2,757 2,821 2,843 2,909 2,924 2,929 1996 3,857 4,465 4,635 4,737 4,905 4,961 5,007 5,047 5,094 1997 2,887 3,325 3,562 3,726 3,816 3,836 3,841 3,844 3,844 3,845 1998 2,166 2,924 3,350 3,847 3,970 4,183 4,239 4,331 4,336 4,340 4,347 1999 780 2,384 3,493 4,171 4,385 4,945 5,275 5,621 5,626 5,633 5,649 2000 792 2,432 3,201 3,533 3,910 3,997 4,034 4,063 4,176 4,202 2001 1,355 3,288 4,327 4,818 5,028 5,209 5,265 5,296 5,309 2002 1,068 2,566 3,584 3,998 4,150 4,240 4,341 4,389 2003 1,312 2,637 3,205 3,689 3,804 3,902 3,979 2004 1,612 3,915 5,262 6,128 6,542 6,907 2005 1,389 3,296 4,482 4,956 5,112 2006 1,390 3,708 5,025 5,832 2007 1,143 2,899 3,875 2008 1,731 4,023 2009 1,938 LOSS DEVELOPMENT FACTORS 12 24 36 48 60 72 84 96 108 120 132 144 ACCIDENT TO TO TO TO TO TO TO TO TO TO TO TO YEAR* 24 36 48 60 72 84 96 108 120 132 144 156 1990 1.021 1.107 1.006 1991 1.018 1.009 1.000 1.007 1992 1.009 1.046 1.023 1.005 1.003 1993 1.016 1.038 1.020 1.004 1.004 1.003 1994 1.101 1.015 1.017 1.011 1.012 1.022 1.026 1995 1.008 1.028 1.023 1.008 1.023 1.005 1.002 1.013 1996 1.158 1.038 1.022 1.036 1.011 1.009 1.008 1.009 1.009 1997 1.152 1.071 1.046 1.024 1.005 1.001 1.001 1.000 1.000 1.000 1998 1.350 1.146 1.148 1.032 1.054 1.013 1.022 1.001 1.001 1.002 1999 3.057 1.465 1.194 1.051 1.128 1.067 1.066 1.001 1.001 1.003 2000 3.072 1.316 1.104 1.107 1.022 1.009 1.007 1.028 1.006 2001 2.426 1.316 1.113 1.044 1.036 1.011 1.006 1.002 2002 2.403 1.397 1.116 1.038 1.022 1.024 1.011 2003 2.010 1.216 1.151 1.031 1.026 1.020 2004 2.429 1.344 1.165 1.067 1.056 2005 2.372 1.360 1.106 1.031 2006 2.667 1.355 1.161 2007 2.536 1.337 2008 2.324 AVERAGE 2.530 1.346 1.141 1.075 1.041 1.036 1.020 1.014 1.014 1.009 1.017 1.008 3 YR AVG. 2.509 1.351 1.144 1.043 1.035 1.018 1.008 1.010 1.003 1.001 1.004 1.007 AVG EXCL HI & LO 2.556 1.347 1.139 1.070 1.035 1.031 1.016 1.012 1.011 1.008 1.006 1.007 INDUSTRY (NCCI VT) 2.370 1.260 1.080 1.066 1.040 1.018 1.012 1.144 PRIOR SELECTED 2.544 1.349 1.138 1.067 1.033 1.028 1.021 1.015 1.009 1.008 1.008 1.008 SELECTED 2.539 1.347 1.137 1.066 1.034 1.028 1.021 1.018 1.009 1.008 1.008 1.008 CUMULATIVE 4.827 1.901 1.411 1.241 1.164 1.126 1.095 1.073 1.054 1.044 1.036 1.028 * All Accident years end on 6/30 of the stated year. O:State of Vermont2009WC2009.xlsTRI_PAID1 9/14/2009 1:00 PM AMI Risk Consultants, Inc.
  • 53. EXHIBIT I PAGE 4D OF 4 STATE OF VERMONT SELF-INSURANCE PROGRAM ACTUARIAL REVIEW CALCULATION OF THE LOSS DEVELOPMENT FACTORS WORKERS' COMPENSATION AS OF JUNE 30, 2009 (AMTS IN THOUSANDS) NET PAID LOSS DEVELOPMENT ACCIDENT DEVELOPMENT MONTHS YEAR* 156 168 180 192 204 216 228 240 252 264 276 288 1990 1,746 1,767 1,781 1,887 1,887 1,887 1,887 1,887 1991 3,336 3,353 3,361 3,380 3,381 3,402 3,402 1992 4,709 4,711 4,712 4,718 4,718 4,720 1993 5,708 5,765 5,767 5,768 5,768 1994 4,325 4,346 4,372 4,395 1995 2,966 2,973 2,974 1996 5,139 5,164 1997 3,846 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 LOSS DEVELOPMENT FACTORS 156 168 180 192 204 216 228 240 252 264 276 288 ACCIDENT TO TO TO TO TO TO TO TO TO TO TO TO YEAR* 168 180 192 204 216 228 240 252 264 276 288 ULT. 1990 1.012 1.008 1.059 1.000 1.000 1.000 1.000 1991 1.005 1.002 1.006 1.000 1.006 1.000 1992 1.000 1.000 1.001 1.000 1.001 1993 1.010 1.000 1.000 1.000 1994 1.005 1.006 1.005 1995 1.003 1.000 1996 1.005 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 AVERAGE 1.006 1.003 1.014 1.000 1.002 1.000 3 YR AVG. 1.004 1.002 1.002 1.000 1.002 AVG EXCL HI & LO 1.006 1.002 1.004 1.000 INDUSTRY (NCCI VT) PRIOR SELECTED 1.007 1.006 1.003 1.000 1.000 1.000 SELECTED 1.007 1.006 1.004 1.002 1.001 1.000 1.000 CUMULATIVE 1.020 1.013 1.007 1.003 1.001 1.000 1.000 1.000 * All Accident years end on 6/30 of the stated year. O:State of Vermont2009WC2009.xlsTRI_PAID2 9/14/2009 1:00 PM AMI Risk Consultants, Inc.
  • 54. EXHIBIT II PAGE 1 OF 4 STATE OF VERMONT SELF-INSURANCE PROGRAM ACTUARIAL REVIEW CALCULATION OF SELECTED ULTIMATE LOSSES GENERAL LIABILITY AS OF JUNE 30, 2009 (AMTS IN THOUSANDS) NET ALL APPROACHES COMBINED ILDA PLDA BFILA BFPLA SELECTED PAID LOSS ACCIDENT ULTIMATE ULTIMATE ULTIMATE ULTIMATE ULTIMATE LOSSES RESERVES YEAR* LOSSES LOSSES LOSSES LOSSES LOSSES @6/30/2009 @6/30/2009 (1) (2) (3) (4) (5) (6) (7) 1991 $630 $630 $630 $630 $630 $630 $0 1992 1,230 1,230 1,230 1,230 1,230 1,230 0 1993 858 858 858 858 858 858 0 1994 441 441 441 441 441 441 0 1995 449 449 449 449 449 449 0 1996 1,047 1,047 1,047 1,047 1,047 1,047 0 1997 622 639 622 642 622 621 1 1998 488 488 488 488 488 488 0 1999 1,045 1,045 1,045 1,045 1,045 1,045 0 2000 1,267 1,267 1,267 1,267 1,267 1,267 0 2001 1,118 1,184 1,116 1,159 1,144 1,054 91 2002 695 673 706 673 687 406 280 2003 773 824 790 874 815 663 153 2004 1,700 1,622 1,651 1,553 1,632 1,199 433 2005 720 819 782 943 816 551 265 2006 2,179 1,753 1,996 1,753 1,920 897 1,023 2007 621 427 838 914 700 162 537 2008 1,102 1,423 1,222 1,370 1,279 348 931 2009 1,291 1,291 1,400 1,328 1,327 95 1,232 TOTAL $18,274 $18,108 $18,578 $18,662 $18,396 $13,450 $4,946 Notes: (1), (2), (3) & (4) - Ultimate incurred losses calculated from Exhibit II, Pages 2 & 3. (5) = Selected based on (1), (2), (3) & (4). (6) - Per STATE OF VERMONT. (7) = (5) - (6). * All Accident years end on 6/30 of the stated year. O:State of Vermont2009GL2009.xlsSELECTED 9/14/2009 1:02 PM AMI Risk Consultants, Inc.
  • 55. EXHIBIT II PAGE 2 OF 4 STATE OF VERMONT SELF-INSURANCE PROGRAM ACTUARIAL REVIEW CALCULATION OF LOSS RESERVES - LOSS DEVELOPMENT APPROACH GENERAL LIABILITY AS OF JUNE 30, 2009 (AMTS IN THOUSANDS) NET INCURRED LOSS DEVELOPMENT APPROACH INCURRED LOSS ULTIMATE ESTIMATED ACCIDENT LOSSES DEVLPMT INCURRED PAYROLL LOSS LOSS YEAR* @6/30/2009 FACTORS LOSSES (IN $000'S) RATE RESERVES (1) (2) (3) (4) (5) (6) 1991 $630 1.000 $630 $232,209 0.003 $0 1992 1,230 1.000 1,230 228,263 0.005 0 1993 858 1.000 858 224,939 0.004 0 1994 441 1.000 441 231,569 0.002 0 1995 449 1.000 449 239,997 0.002 0 1996 1,047 1.000 1,047 249,420 0.004 0 1997 622 1.000 622 260,959 0.002 1 1998 488 1.000 488 255,623 0.002 0 1999 1,045 1.000 1,045 278,640 0.004 0 2000 1,267 1.000 1,267 311,490 0.004 0 2001 1,104 1.013 1,118 325,133 0.003 64 2002 673 1.033 695 351,909 0.002 289 2003 728 1.061 773 365,489 0.002 110 2004 1,553 1.095 1,700 384,794 0.004 501 2005 625 1.151 720 405,943 0.002 169 2006 1,753 1.243 2,179 422,603 0.005 1,281 2007 427 1.455 621 445,704 0.001 458 2008 575 1.916 1,102 458,542 0.002 755 2009 407 1,291 460,921 0.003 1,195 TOTAL $15,921 $18,274 $4,824 PAID LOSS DEVELOPMENT APPROACH PAID LOSS ULTIMATE ESTIMATED ACCIDENT LOSSES DEVLPMT INCURRED PAYROLL LOSS LOSS YEAR* @6/30/2009 FACTORS LOSSES (IN $000'S) RATE RESERVES (7) (8) (9) (10) (11) (12) 1991 $630 1.000 $630 $232,209 0.003 $0 1992 1,230 1.000 1,230 228,263 0.005 0 1993 858 1.000 858 224,939 0.004 0 1994 441 1.000 441 231,569 0.002 0 1995 449 1.000 449 239,997 0.002 0 1996 1,047 1.000 1,047 249,420 0.004 0 1997 621 1.029 639 260,959 0.002 18 1998 488 1.000 488 255,623 0.002 0 1999 1,045 1.000 1,045 278,640 0.004 0 2000 1,267 1.000 1,267 311,490 0.004 0 2001 1,054 1.124 1,184 325,133 0.004 131 2002 406 1.180 673 351,909 0.002 266 2003 663 1.244 824 365,489 0.002 162 2004 1,199 1.353 1,622 384,794 0.004 423 2005 551 1.487 819 405,943 0.002 268 2006 897 1.746 1,753 422,603 0.004 856 2007 162 2.333 427 445,704 0.001 264 2008 348 4.089 1,423 458,542 0.003 1,075 2009 95 1,291 460,921 0.003 1,195 TOTAL $13,450 $18,108 $4,658 Notes: (1), (2), (4), (7), (8) & (10) - Per STATE OF VERMONT. (2) & (8) - Per State's historical loss patterns. (3) = (1) x (2); (9) = (7) x (8). If ultimate incurred losses in (9) are less than the incurred losses in (1), we use the losses in (1). For the most recent year, we used the Loss Rate Approach. (5) = (3) / (4), (11) = (9) / (10). For the most recent year, it is the average of prior years. (6) = (3) - (7); (12) = (9) - (7). * All Accident years end on 6/30 of the stated year. O:State of Vermont2009GL2009.xlsLDA 9/14/2009 1:03 PM AMI Risk Consultants, Inc.
  • 56. EXHIBIT II PAGE 3 OF 4 STATE OF VERMONT SELF-INSURANCE PROGRAM ACTUARIAL REVIEW CALCULATION OF ULTIMATE LOSSES - BORNHUETTER-FERGUSON APPROACH GENERAL LIABILITY AS OF JUNE 30, 2009 (AMTS IN THOUSANDS) NET BORNHUETTER-FERGUSON INCURRED LOSS APPROACH ESTIMATED EXPECTED EXPECTED % INCURRED ULTIMATE ACCIDENT LOSS PAYROLL ULTIMATE OF LOSSES IBNR LOSSES INCURRED YEAR* RATE ($ '000s) LOSSES UNREPORTED RESERVES @6/30/2009 LOSSES (1) (2) (3) (4) (5) (6) (7) 1991 0.003 $232,209 $650 0.0% $0 $630 $630 1992 0.003 228,263 639 0.0% 0 1,230 1,230 1993 0.003 224,939 630 0.0% 0 858 858 1994 0.003 231,569 648 0.0% 0 441 441 1995 0.003 239,997 672 0.0% 0 449 449 1996 0.003 249,420 698 0.0% 0 1,047 1,047 1997 0.003 260,959 731 0.0% 0 622 622 1998 0.003 255,623 716 0.0% 0 488 488 1999 0.003 278,640 822 0.0% 0 1,045 1,045 2000 0.003 311,490 919 0.0% 0 1,267 1,267 2001 0.003 325,133 959 1.3% 12 1,104 1,116 2002 0.003 351,909 1,038 3.2% 33 673 706 2003 0.003 365,489 1,078 5.7% 62 728 790 2004 0.003 384,794 1,135 8.7% 98 1,553 1,651 2005 0.003 405,943 1,198 13.1% 157 625 782 2006 0.003 422,603 1,247 19.5% 244 1,753 1,996 2007 0.003 445,704 1,315 31.3% 411 427 838 2008 0.003 458,542 1,353 47.8% 647 575 1,222 2009 0.003 460,921 1,360 73.0% 993 407 1,400 TOTAL $2,658 $15,921 $18,578 BORNHUETTER-FERGUSON PAID LOSS APPROACH ESTIMATED EXPECTED EXPECTED % PAID ULTIMATE ACCIDENT LOSS PAYROLL ULTIMATE OF LOSSES LOSS LOSSES ** INCURRED YEAR* RATE ($ '000s) LOSSES UNPAID RESERVES @6/30/2009 LOSSES (8) (9) (10) (11) (12) (13) (14) 1991 0.003 $232,209 $650 0.0% $0 $630 $630 1992 0.003 228,263 639 0.0% 0 1,230 1,230 1993 0.003 224,939 630 0.0% 0 858 858 1994 0.003 231,569 648 0.0% 0 441 441 1995 0.003 239,997 672 0.0% 0 449 449 1996 0.003 249,420 698 0.0% 0 1,047 1,047 1997 0.003 260,959 731 2.8% 21 621 642 1998 0.003 255,623 716 0.0% 0 488 488 1999 0.003 278,640 822 0.0% 0 1,045 1,045 2000 0.003 311,490 919 0.0% 0 1,267 1,267 2001 0.003 325,133 959 11.0% 106 1,054 1,159 2002 0.003 351,909 1,038 15.3% 158 406 673 2003 0.003 365,489 1,078 19.6% 211 663 874 2004 0.003 384,794 1,135 26.1% 296 1,199 1,553 2005 0.003 405,943 1,198 32.8% 392 551 943 2006 0.003 422,603 1,247 42.7% 533 897 1,753 2007 0.003 445,704 1,315 57.1% 751 162 914 2008 0.003 458,542 1,353 75.5% 1,022 348 1,370 2009 0.003 460,921 1,360 90.6% 1,232 95 1,328 TOTAL $4,723 $13,450 $18,662 Notes: (1) & (8) - Exhibit II, Page 2 of 4, Columns (5) and (11). These Loss Rates are fitted values. (2), (6), (9) & (13) - Per STATE OF VERMONT. (3) = (1) x (2); (10) = (8) x (9). (4) = (1 - (1/ILDF)); (11) = (1 - (1/PLDF)). (5) = (3) x (4); (12) = (10) x (11). (7) = (5) + (6); (14) = (12) + (13). If ultimate incurred losses in (14) are less than the incurred losses in (6), we used the incurred losses in (6). * All Accident years end on 6/30 of the stated year. O:State of Vermont2009GL2009.xlsBFA 9/14/2009 1:03 PM AMI Risk Consultants, Inc.
  • 57. EXHIBIT II PAGE 4A OF 4 STATE OF VERMONT SELF-INSURANCE PROGRAM ACTUARIAL REVIEW CALCULATION OF THE LOSS DEVELOPMENT FACTORS GENERAL LIABILITY AS OF JUNE 30, 2009 (AMTS IN THOUSANDS) NET INCURRED LOSS DEVELOPMENT ACCIDENT DEVELOPMENT MONTHS YEAR* 12 24 36 48 60 72 84 96 108 120 132 144 1990 1991 1992 1993 847 1994 434 434 1995 444 444 445 1996 1,028 1,028 1,041 1,052 1997 563 536 574 574 575 1998 1,044 1,037 786 786 449 488 1999 1,091 1,192 1,256 987 983 1,045 2000 1,469 1,692 1,538 1,252 1,325 1,267 2001 1,042 1,054 811 902 1,029 1,104 2002 532 624 564 568 360 673 2003 1,543 797 835 869 1,206 728 2004 492 719 949 1,014 1,337 1,553 2005 139 450 462 690 625 2006 263 569 1,568 1,753 2007 85 355 427 2008 364 575 2009 407 LOSS DEVELOPMENT FACTORS 12 24 36 48 60 72 84 96 108 120 132 144 ACCIDENT TO TO TO TO TO TO TO TO TO TO TO TO YEAR* 24 36 48 60 72 84 96 108 120 132 144 156 1990 1991 1992 1993 1.000 1994 1.000 1.007 1995 1.000 1.001 1.002 1996 1.000 1.013 1.010 1.000 1997 0.951 1.072 1.000 1.001 1.082 1998 0.993 0.758 1.000 0.571 1.086 1999 1.092 1.053 0.786 0.996 1.062 2000 1.151 0.909 0.814 1.058 0.956 2001 1.011 0.770 1.112 1.141 1.073 2002 1.174 0.902 1.008 0.634 1.869 2003 0.516 1.049 1.040 1.388 0.604 2004 1.460 1.320 1.069 1.319 1.161 2005 3.231 1.026 1.494 0.906 2006 2.159 2.755 1.118 2007 4.173 1.203 2008 1.579 AVERAGE 2.520 1.364 1.181 1.036 1.096 0.870 1.174 0.925 1.005 0.929 1.020 1.018 3 YR AVG. 2.637 1.661 1.227 1.088 1.186 0.783 1.275 0.972 0.984 0.878 1.032 1.028 AVG EXCL HI & LO 2.695 1.183 1.120 0.986 1.107 0.878 1.062 0.932 0.999 1.004 1.004 1.003 INDUSTRY 1.673 1.310 1.161 1.087 1.043 1.040 1.027 1.019 1.023 1.016 1.014 1.012 PRIOR SELECTED 1.857 1.308 1.170 1.085 1.043 1.029 1.016 1.000 1.000 1.000 1.000 1.000 SELECTED 1.933 1.317 1.170 1.080 1.052 1.032 1.027 1.019 1.005 1.004 1.002 1.002 CUMULATIVE 3.703 1.916 1.455 1.243 1.151 1.095 1.061 1.033 1.013 1.008 1.004 1.002 * All Accident years end on 6/30 of the stated year. O:State of Vermont2009GL2009.xlsTRI_INC1 9/14/2009 1:03 PM AMI Risk Consultants, Inc.
  • 58. EXHIBIT II PAGE 4B OF 4 STATE OF VERMONT SELF-INSURANCE PROGRAM ACTUARIAL REVIEW CALCULATION OF THE LOSS DEVELOPMENT FACTORS GENERAL LIABILITY AS OF JUNE 30, 2009 (AMTS IN THOUSANDS) NET INCURRED LOSS DEVELOPMENT ACCIDENT DEVELOPMENT MONTHS YEAR* 156 168 180 192 204 216 228 240 252 264 276 288 1990 1991 605 631 630 630 630 1992 1,227 1,227 1,227 987 1,227 1,230 1993 847 847 847 847 858 1994 437 437 436 441 1995 446 446 449 1996 1,052 1,047 1997 622 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 LOSS DEVELOPMENT FACTORS 156 168 180 192 204 216 228 240 252 264 276 288 ACCIDENT TO TO TO TO TO TO TO TO TO TO TO TO YEAR* 168 180 192 204 216 228 240 252 264 276 288 ULT. 1990 1991 1.044 0.998 1.001 1.000 1992 1.000 1.000 0.804 1.243 1.002 1993 1.001 1.000 1.000 1.013 1994 1.001 0.999 1.011 1995 0.999 1.007 1996 0.995 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 AVERAGE 0.999 1.002 0.965 1.085 1.002 1.000 3 YR AVG. 0.998 1.002 0.938 1.085 AVG EXCL HI & LO 1.000 1.000 1.006 1.013 INDUSTRY 1.010 1.009 1.008 1.008 1.007 PRIOR SELECTED 1.000 1.000 1.000 1.000 1.000 1.000 SELECTED 1.000 1.000 1.000 1.000 1.000 1.000 CUMULATIVE 1.000 1.000 1.000 1.000 1.000 1.000 1.000 * All Accident years end on 6/30 of the stated year. O:State of Vermont2009GL2009.xlsTRI_INC2 9/14/2009 1:04 PM AMI Risk Consultants, Inc.
  • 59. EXHIBIT II PAGE 4C OF 4 STATE OF VERMONT SELF-INSURANCE PROGRAM ACTUARIAL REVIEW CALCULATION OF THE LOSS DEVELOPMENT FACTORS GENERAL LIABILITY AS OF JUNE 30, 2009 (AMTS IN THOUSANDS) NET PAID LOSS DEVELOPMENT ACCIDENT DEVELOPMENT MONTHS YEAR* 12 24 36 48 60 72 84 96 108 120 132 144 1990 1991 1992 1993 621 1994 338 338 1995 326 326 326 1996 869 869 882 1,052 1997 393 393 438 574 574 1998 226 226 226 449 449 488 1999 422 422 842 985 983 1,045 2000 963 993 993 1,237 1,325 1,267 2001 526 632 632 867 979 1,054 2002 143 403 460 484 261 406 2003 223 550 704 750 893 663 2004 127 519 684 848 1,003 1,199 2005 16 204 386 469 551 2006 177 233 744 897 2007 75 278 162 2008 203 348 2009 95 LOSS DEVELOPMENT FACTORS 12 24 36 48 60 72 84 96 108 120 132 144 ACCIDENT TO TO TO TO TO TO TO TO TO TO TO TO YEAR* 24 36 48 60 72 84 96 108 120 132 144 156 1990 1991 1992 1993 1.000 1994 1.000 1.008 1995 1.000 1.000 1.367 1996 1.000 1.015 1.193 1.000 1997 1.000 1.114 1.309 1.000 1.082 1998 1.000 1.000 1.984 1.000 1.086 1999 1.000 1.995 1.169 0.998 1.062 2000 1.031 1.000 1.246 1.071 0.956 2001 1.202 1.000 1.373 1.129 1.076 2002 2.823 1.143 1.052 0.540 1.555 2003 2.462 1.281 1.065 1.191 0.742 2004 4.090 1.318 1.240 1.183 1.195 2005 13.021 1.896 1.216 1.173 2006 1.314 3.195 1.205 2007 3.701 2008 AVERAGE 5.532 2.218 1.553 1.153 1.094 0.931 1.385 1.063 1.210 1.077 1.056 1.091 3 YR AVG. 2.508 2.546 1.220 1.140 1.146 0.885 1.310 1.105 1.313 1.124 1.093 1.150 AVG EXCL HI & LO 3.896 2.179 1.246 1.166 1.091 0.914 1.310 1.049 1.037 1.026 1.029 1.030 INDUSTRY 2.049 1.608 1.317 1.178 1.100 1.066 1.042 1.029 1.032 1.027 1.022 1.019 PRIOR SELECTED 2.455 1.690 1.336 1.176 1.098 1.070 1.060 1.045 1.035 1.007 1.004 1.004 SELECTED 2.607 1.753 1.336 1.174 1.099 1.088 1.054 1.050 1.050 1.013 1.013 1.013 CUMULATIVE 10.661 4.089 2.333 1.746 1.487 1.353 1.244 1.180 1.124 1.070 1.056 1.042 * All Accident years end on 6/30 of the stated year. O:State of Vermont2009GL2009.xlsTRI_PAID1 9/14/2009 1:04 PM AMI Risk Consultants, Inc.
  • 60. EXHIBIT II PAGE 4D OF 4 STATE OF VERMONT SELF-INSURANCE PROGRAM ACTUARIAL REVIEW CALCULATION OF THE LOSS DEVELOPMENT FACTORS GENERAL LIABILITY AS OF JUNE 30, 2009 (AMTS IN THOUSANDS) NET PAID LOSS DEVELOPMENT ACCIDENT DEVELOPMENT MONTHS YEAR* 156 168 180 192 204 216 228 240 252 264 276 288 1990 1991 455 495 512 630 630 630 1992 989 989 989 987 1,227 1,230 1993 621 621 847 847 858 1994 340 437 436 441 1995 446 446 449 1996 1,052 1,047 1997 621 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 LOSS DEVELOPMENT FACTORS 156 168 180 192 204 216 228 240 252 264 276 288 ACCIDENT TO TO TO TO TO TO TO TO TO TO TO TO YEAR* 168 180 192 204 216 228 240 252 264 276 288 ULT. 1990 1991 1.088 1.036 1.229 1.001 1.000 1992 1.000 1.000 0.998 1.243 1.002 1993 1.000 1.364 1.000 1.013 1994 1.284 0.999 1.011 1995 0.999 1.007 1996 0.995 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 AVERAGE 1.056 1.092 1.011 1.162 1.002 1.000 3 YR AVG. 1.093 1.123 1.003 1.162 AVG EXCL HI & LO 1.000 1.032 1.006 1.229 INDUSTRY 1.016 1.016 1.012 1.012 1.010 1.010 PRIOR SELECTED 1.003 1.003 1.003 1.003 1.001 1.000 SELECTED 1.011 1.011 1.003 1.003 1.001 1.000 1.000 CUMULATIVE 1.029 1.018 1.007 1.004 1.001 1.000 1.000 1.000 * All Accident years end on 6/30 of the stated year. O:State of Vermont2009GL2009.xlsTRI_PAID2 9/14/2009 1:04 PM AMI Risk Consultants, Inc.
  • 61. EXHIBIT III PAGE 1 OF 4 STATE OF VERMONT SELF-INSURANCE PROGRAM ACTUARIAL REVIEW CALCULATION OF SELECTED ULTIMATE LOSSES AUTOMOBILE LIABILITY AS OF JUNE 30, 2009 (AMTS IN THOUSANDS) NET ALL APPROACHES COMBINED ILDA PLDA BFILA BFPLA SELECTED PAID LOSS ACCIDENT ULTIMATE ULTIMATE ULTIMATE ULTIMATE ULTIMATE LOSSES RESERVES YEAR* LOSSES LOSSES LOSSES LOSSES LOSSES @6/30/2009 @6/30/2009 (1) (2) (3) (4) (5) (6) (7) 1991 $413 $413 $413 $413 $413 $413 $0 1992 203 203 203 203 203 203 0 1993 506 506 506 506 506 506 0 1994 113 113 113 113 113 113 0 1995 301 302 301 302 301 301 0 1996 1,198 1,201 1,198 1,199 1,199 1,198 1 1997 460 462 460 462 461 460 1 1998 189 190 190 192 190 189 1 1999 220 221 221 223 221 219 2 2000 740 745 739 742 741 735 6 2001 277 280 279 284 280 275 5 2002 421 427 421 428 424 416 8 2003 807 795 801 795 799 545 255 2004 359 371 361 375 367 350 17 2005 329 317 331 317 324 144 180 2006 279 265 285 265 273 200 74 2007 216 269 233 334 263 171 92 2008 225 437 267 444 343 182 162 2009 304 353 374 470 375 119 257 TOTAL $7,562 $7,870 $7,697 $8,067 $7,799 $6,738 $1,061 Notes: (1), (2), (3), & (4) - Ultimate incurred losses calculated from Exhibit III, Pages 2, & 3. (5) = Selected based on (1), (2), (3), & (4). (6) - Per STATE OF VERMONT. (7) = (5) - (6). * All Accident years end on 6/30 of the stated year. O:State of Vermont2009AL2009.xlsSELECTED 9/14/2009 1:06 PM AMI Risk Consultants, Inc.
  • 62. EXHIBIT III PAGE 2 OF 4 STATE OF VERMONT SELF-INSURANCE PROGRAM ACTUARIAL REVIEW CALCULATION OF LOSS RESERVES - LOSS DEVELOPMENT APPROACH AUTOMOBILE LIABILITY AS OF JUNE 30, 2009 (AMTS IN THOUSANDS) NET INCURRED LOSS DEVELOPMENT APPROACH INCURRED LOSS ULTIMATE ESTIMATED ACCIDENT LOSSES DEVLPMT INCURRED NO. OF LOSS LOSS YEAR* @6/30/2009 FACTORS LOSSES VEHICLES RATE RESERVES (1) (3) (4) (5) (6) (7) 1991 $413 1.000 $413 1,688 0.245 $0 1992 203 1.000 203 1,699 0.120 0 1993 506 1.000 506 1,353 0.374 0 1994 113 1.000 113 1,307 0.086 0 1995 301 1.000 301 1,397 0.215 0 1996 1,198 1.000 1,198 1,307 0.916 0 1997 460 1.000 460 1,556 0.296 0 1998 189 1.002 189 1,930 0.098 0 1999 219 1.004 220 1,930 0.114 1 2000 735 1.006 740 2,171 0.341 4 2001 275 1.008 277 2,141 0.130 2 2002 416 1.011 421 1,944 0.216 5 2003 795 1.016 807 1,719 0.470 263 2004 350 1.027 359 1,719 0.209 9 2005 317 1.039 329 1,545 0.213 185 2006 265 1.055 279 1,591 0.175 79 2007 201 1.076 216 1,810 0.119 45 2008 183 1.228 225 1,809 0.125 43 2009 165 304 1,807 0.168 185 TOTAL $7,304 $7,562 $823 PAID LOSS DEVELOPMENT APPROACH PAID LOSS ULTIMATE ESTIMATED ACCIDENT LOSSES DEVLPMT INCURRED NO. OF LOSS LOSS YEAR* @6/30/2009 FACTORS LOSSES VEHICLES RATE RESERVES (8) (10) (11) (12) (13) (14) 1991 $413 1.000 $413 1,688 0.245 $0 1992 203 1.000 203 1,699 0.120 0 1993 506 1.000 506 1,353 0.374 0 1994 113 1.001 113 1,307 0.087 0 1995 301 1.002 302 1,397 0.216 1 1996 1,198 1.003 1,201 1,307 0.919 4 1997 460 1.004 462 1,556 0.297 2 1998 189 1.007 190 1,930 0.099 1 1999 219 1.010 221 1,930 0.114 2 2000 735 1.013 745 2,171 0.343 10 2001 275 1.017 280 2,141 0.131 5 2002 416 1.026 427 1,944 0.220 11 2003 545 1.041 795 1,719 0.462 250 2004 350 1.061 371 1,719 0.216 21 2005 144 1.086 317 1,545 0.205 173 2006 200 1.192 265 1,591 0.166 65 2007 171 1.571 269 1,810 0.148 98 2008 182 2.405 437 1,809 0.242 256 2009 119 353 1,807 0.195 235 TOTAL $6,738 $7,870 $1,132 Notes: (1), (2), (5), (8), (9) & (12) - Per STATE OF VERMONT. (3) & (10) - Per State's historical loss patterns. (4) = [ (1) - (2) ] x (3); (11) = [ (8) - (9)] x (10). If ultimate incurred losses in (11) are less than the incurred losses in (1), we use the losses i For the most recent year, we used the Loss Rate Approach. (6) = (4) / (5), (13) = (11) / (12). For the most recent year, it is the average of prior 8 years. (7) = (4) - (8); (14) = (11) - (8). * All Accident years end on 6/30 of the stated year. O:State of Vermont2009AL2009.xlsLDA 9/14/2009 1:07 PM AMI Risk Consultants, Inc.
  • 63. EXHIBIT III PAGE 3 OF 4 STATE OF VERMONT SELF-INSURANCE PROGRAM ACTUARIAL REVIEW CALCULATION OF ULTIMATE LOSSES - BORNHUETTER-FERGUSON APPROACH AUTOMOBILE LIABILITY AS OF JUNE 30, 2009 (AMTS IN THOUSANDS) NET BORNHUETTER-FERGUSON INCURRED LOSS APPROACH ESTIMATED EXPECTED EXPECTED % INCURRED ULTIMATE ACCIDENT LOSS NO. OF ULTIMATE OF LOSSES IBNR LOSSES INCURRED YEAR* RATE VEHICLES LOSSES UNREPORTED RESERVES @6/30/2009 LOSSES (1) (2) (3) (4) (5) (6) (7) 1991 0.248 1,688 $419 0.0% $0 $413 $413 1992 0.248 1,699 422 0.0% 0 203 203 1993 0.248 1,353 336 0.0% 0 506 506 1994 0.248 1,307 324 0.0% 0 113 113 1995 0.248 1,397 347 0.0% 0 301 301 1996 0.248 1,307 324 0.0% 0 1,198 1,198 1997 0.248 1,556 386 0.0% 0 460 460 1998 0.248 1,930 479 0.2% 1 189 190 1999 0.248 1,930 479 0.4% 2 219 221 2000 0.248 2,171 539 0.6% 3 735 739 2001 0.248 2,141 531 0.8% 4 275 279 2002 0.248 1,944 482 1.1% 5 416 421 2003 0.248 1,719 427 1.6% 7 795 801 2004 0.248 1,719 427 2.6% 11 350 361 2005 0.248 1,545 383 3.8% 14 317 331 2006 0.248 1,591 395 5.2% 21 265 285 2007 0.248 1,810 449 7.1% 32 201 233 2008 0.248 1,809 449 18.6% 83 183 267 2009 0.248 1,807 448 46.6% 209 165 374 TOTAL $393 $7,304 $7,697 BORNHUETTER-FERGUSON PAID LOSS APPROACH ESTIMATED EXPECTED EXPECTED % PAID ULTIMATE ACCIDENT LOSS NO. OF ULTIMATE OF LOSSES LOSS LOSSES INCURRED YEAR* RATE VEHICLES LOSSES UNPAID RESERVES @6/30/2009 LOSSES (8) (9) (10) (11) (12) (13) (14) 1991 0.248 1,688 $419 0.0% $0 $413 $413 1992 0.248 1,699 422 0.0% 0 203 203 1993 0.248 1,353 336 0.0% 0 506 506 1994 0.248 1,307 324 0.1% 0 113 113 1995 0.248 1,397 347 0.2% 1 301 302 1996 0.248 1,307 324 0.3% 1 1,198 1,199 1997 0.248 1,556 386 0.4% 2 460 462 1998 0.248 1,930 479 0.7% 3 189 192 1999 0.248 1,930 479 1.0% 5 219 223 2000 0.248 2,171 539 1.3% 7 735 742 2001 0.248 2,141 531 1.7% 9 275 284 2002 0.248 1,944 482 2.5% 12 416 428 2003 0.248 1,719 427 3.9% 17 545 795 2004 0.248 1,719 427 5.7% 25 350 375 2005 0.248 1,545 383 7.9% 30 144 317 2006 0.248 1,591 395 16.1% 64 200 265 2007 0.248 1,810 449 36.3% 163 171 334 2008 0.248 1,809 449 58.4% 262 182 444 2009 0.248 1,807 448 78.5% 352 119 470 TOTAL $952 $6,738 $8,067 Notes: (1) & (8) - Exhibit III, Page 2 of 4, Columns (5) and (11). These Loss Rates are fitted values. (2), (6), (9) & (13) - Per STATE OF VERMONT. (3) = (1) x (2); (10) = (8) x (9). (4) = (1 - (1/ILDF)); (11) = (1 - (1/PLDF)). (5) = (3) x (4); (12) = (10) x (11). (7) = (5) + (6); (14) = (12) + (13). If ultimate incurred losses in (14) are less than the incurred losses in (6), we used the incurred losses in (6). * All Accident years end on 6/30 of the stated year. O:State of Vermont2009AL2009.xlsBFA 9/14/2009 1:07 PM AMI Risk Consultants, Inc.
  • 64. EXHIBIT III PAGE 4A OF 4 STATE OF VERMONT SELF-INSURANCE PROGRAM ACTUARIAL REVIEW CALCULATION OF THE LOSS DEVELOPMENT FACTORS AUTOMOBILE LIABILITY AS OF JUNE 30, 2009 (AMTS IN THOUSANDS) NET INCURRED LOSS DEVELOPMENT ACCIDENT DEVELOPMENT MONTHS YEAR* 12 24 36 48 60 72 84 96 108 120 132 144 1990 1991 1992 1993 455 1994 72 72 1995 266 266 266 1996 1,159 1,159 1,159 1,120 1997 409 409 409 503 503 1998 221 221 151 228 228 189 1999 254 177 177 240 240 219 2000 442 411 667 682 704 735 2001 431 380 233 301 301 275 2002 454 406 404 442 442 416 2003 431 888 683 433 776 795 2004 221 488 511 511 367 350 2005 100 244 199 228 317 2006 74 251 264 265 2007 128 172 201 2008 212 183 2009 165 LOSS DEVELOPMENT FACTORS 12 24 36 48 60 72 84 96 108 120 132 144 ACCIDENT TO TO TO TO TO TO TO TO TO TO TO TO YEAR* 24 36 48 60 72 84 96 108 120 132 144 156 1990 1991 1992 1993 1.000 1994 1.000 1.000 1995 1.000 1.000 1.145 1996 1.000 1.000 0.967 1.035 1997 1.000 1.000 1.231 1.000 0.915 1998 1.000 0.682 1.510 0.999 0.829 1999 0.697 1.000 1.357 1.001 0.910 2000 0.929 1.624 1.022 1.032 1.045 2001 0.882 0.612 1.292 0.998 0.916 2002 0.896 0.994 1.095 1.000 0.941 2003 2.059 0.769 0.634 1.793 1.023 2004 2.212 1.046 1.000 0.719 0.953 2005 2.435 0.814 1.147 1.389 2006 3.396 1.054 1.000 2007 1.345 1.168 2008 0.865 AVERAGE 2.051 1.228 0.962 0.924 1.076 1.127 0.992 0.997 1.111 1.028 0.959 1.019 3 YR AVG. 1.869 1.012 1.049 0.914 1.280 1.105 0.987 1.102 1.185 1.047 0.932 1.032 AVG EXCL HI & LO 2.324 1.089 0.965 0.865 0.992 1.105 0.999 0.983 1.015 1.000 0.989 1.012 INDUSTRY 1.352 1.150 1.067 1.029 1.011 1.004 1.001 1.002 1.001 1.001 1.001 1.001 PRIOR SELECTED 1.464 1.144 1.023 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 SELECTED 1.526 1.141 1.020 1.015 1.012 1.011 1.005 1.003 1.002 1.002 1.002 1.002 CUMULATIVE 1.874 1.228 1.076 1.055 1.039 1.027 1.016 1.011 1.008 1.006 1.004 1.002 * All Accident years end on 6/30 of the stated year. O:State of Vermont2009AL2009.xlsTRI_INC1 9/14/2009 1:07 PM AMI Risk Consultants, Inc.
  • 65. EXHIBIT III PAGE 4B OF 4 STATE OF VERMONT SELF-INSURANCE PROGRAM ACTUARIAL REVIEW CALCULATION OF THE LOSS DEVELOPMENT FACTORS AUTOMOBILE LIABILITY AS OF JUNE 30, 2009 (AMTS IN THOUSANDS) NET INCURRED LOSS DEVELOPMENT ACCIDENT DEVELOPMENT MONTHS YEAR* 156 168 180 192 204 216 228 240 252 264 276 288 1990 1991 393 393 393 313 393 413 1992 153 153 153 206 206 203 1993 455 455 416 455 506 1994 72 118 118 113 1995 304 304 301 1996 1,159 1,198 1997 460 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 LOSS DEVELOPMENT FACTORS 156 168 180 192 204 216 228 240 252 264 276 288 ACCIDENT TO TO TO TO TO TO TO TO TO TO TO TO YEAR* 168 180 192 204 216 228 240 252 264 276 288 ULT. 1990 1991 1.000 1.000 0.796 1.256 1.051 1992 1.000 1.000 1.350 1.000 0.987 1993 1.000 0.913 1.095 1.111 1994 1.628 0.999 0.958 1995 1.001 0.989 1996 1.034 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 AVERAGE 1.133 0.980 1.101 0.969 1.122 1.051 3 YR AVG. 1.221 0.967 1.134 0.969 AVG EXCL HI & LO 1.012 0.996 1.048 INDUSTRY 1.000 1.000 1.000 1.000 1.000 PRIOR SELECTED 1.000 1.000 1.000 1.000 1.000 1.000 SELECTED 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 CUMULATIVE 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 * All Accident years end on 6/30 of the stated year. O:State of Vermont2009AL2009.xlsTRI_INC2 9/14/2009 1:08 PM AMI Risk Consultants, Inc.
  • 66. EXHIBIT III PAGE 4C OF 4 STATE OF VERMONT SELF-INSURANCE PROGRAM ACTUARIAL REVIEW CALCULATION OF THE LOSS DEVELOPMENT FACTORS AUTOMOBILE LIABILITY AS OF JUNE 30, 2009 (AMTS IN THOUSANDS) NET PAID LOSS DEVELOPMENT ACCIDENT DEVELOPMENT MONTHS YEAR* 12 24 36 48 60 72 84 96 108 120 132 144 1990 1991 1992 1993 441 1994 71 71 1995 257 257 257 1996 1,043 1,043 1,043 1,120 1997 402 402 402 503 503 1998 117 117 129 228 228 189 1999 171 171 171 240 240 219 2000 221 221 526 682 704 735 2001 170 202 202 301 301 275 2002 123 381 399 442 442 416 2003 143 143 393 407 526 545 2004 35 58 304 367 367 350 2005 37 47 73 99 144 2006 142 121 200 200 2007 120 171 171 2008 134 182 2009 119 LOSS DEVELOPMENT FACTORS 12 24 36 48 60 72 84 96 108 120 132 144 ACCIDENT TO TO TO TO TO TO TO TO TO TO TO TO YEAR* 24 36 48 60 72 84 96 108 120 132 144 156 1990 1991 1992 1993 1.000 1994 1.000 1.000 1995 1.000 1.000 1.184 1996 1.000 1.000 1.074 1.035 1997 1.000 1.000 1.253 1.000 0.915 1998 1.000 1.102 1.761 0.999 0.829 1999 1.000 1.000 1.406 1.001 0.910 2000 1.000 2.381 1.297 1.032 1.045 2001 1.188 1.000 1.488 0.998 0.916 2002 3.090 1.046 1.108 1.000 0.941 2003 1.000 2.747 1.035 1.294 1.034 2004 1.653 5.249 1.206 1.001 0.953 2005 1.272 1.544 1.356 1.455 2006 0.853 1.650 1.000 2007 1.425 1.000 2008 1.360 AVERAGE 1.313 2.089 1.880 1.145 1.071 1.381 1.047 1.091 1.161 1.032 0.981 1.027 3 YR AVG. 1.213 1.398 1.187 1.164 1.118 1.174 1.079 1.118 1.269 1.054 0.968 1.045 AVG EXCL HI & LO 1.349 1.398 1.770 1.090 1.036 1.174 0.999 1.045 1.015 1.000 1.000 1.012 INDUSTRY 2.101 1.445 1.216 1.101 1.045 1.020 1.009 1.006 1.002 1.000 1.003 1.002 PRIOR SELECTED 2.005 1.520 1.285 1.094 1.013 1.000 1.000 1.000 1.000 1.000 1.000 1.000 SELECTED 1.933 1.531 1.318 1.098 1.024 1.019 1.015 1.008 1.004 1.003 1.003 1.003 CUMULATIVE 4.650 2.405 1.571 1.192 1.086 1.061 1.041 1.026 1.017 1.013 1.010 1.007 * All Accident years end on 6/30 of the stated year. O:State of Vermont2009AL2009.xlsTRI_PAID1 9/14/2009 1:08 PM AMI Risk Consultants, Inc.
  • 67. EXHIBIT III PAGE 4D OF 4 STATE OF VERMONT SELF-INSURANCE PROGRAM ACTUARIAL REVIEW CALCULATION OF THE LOSS DEVELOPMENT FACTORS AUTOMOBILE LIABILITY AS OF JUNE 30, 2009 (AMTS IN THOUSANDS) NET PAID LOSS DEVELOPMENT ACCIDENT DEVELOPMENT MONTHS YEAR* 156 168 180 192 204 216 228 240 252 264 276 288 1990 1991 359 359 359 313 393 413 1992 150 150 150 206 206 203 1993 441 441 416 455 506 1994 71 118 118 113 1995 304 304 301 1996 1,159 1,198 1997 460 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 LOSS DEVELOPMENT FACTORS 156 168 180 192 204 216 228 240 252 264 276 288 ACCIDENT TO TO TO TO TO TO TO TO TO TO TO TO YEAR* 168 180 192 204 216 228 240 252 264 276 288 ULT. 1990 1991 1.000 1.000 0.871 1.256 1.051 1992 1.000 1.000 1.377 1.000 0.987 1993 1.000 0.943 1.095 1.111 1994 1.673 0.999 0.958 1995 1.001 0.989 1996 1.034 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 AVERAGE 1.142 0.986 1.108 0.994 1.122 1.051 3 YR AVG. 1.236 0.977 1.143 0.994 AVG EXCL HI & LO 1.012 0.996 1.048 INDUSTRY 1.002 1.002 1.001 1.001 1.001 1.001 PRIOR SELECTED 1.000 1.000 1.000 1.000 1.000 1.000 SELECTED 1.001 1.001 1.001 1.001 1.000 1.000 1.000 CUMULATIVE 1.004 1.003 1.002 1.001 1.000 1.000 1.000 1.000 * All Accident years end on 6/30 of the stated year. O:State of Vermont2009AL2009.xlsTRI_PAID2 9/14/2009 1:08 PM AMI Risk Consultants, Inc.
  • 68. EXHIBIT IV STATE OF VERMONT SELF-INSURANCE PROGRAM ACTUARIAL REVIEW CALCULATION OF PROJECTED LOSSES WORKERS' COMPENSATION AS OF JUNE 30, 2009 (AMTS IN THOUSANDS) NET PROJECTED ULTIMATE LOSSES SELECTED ACCIDENT ULTIMATE PAYROLL LOSS YEAR* LOSSES (IN $000'S) RATE (1) (2) (3) 1990 $1,887 $95,389 0.020 1991 3,402 232,209 0.015 1992 4,720 228,263 0.021 1993 5,770 224,939 0.026 1994 4,809 231,569 0.021 1995 2,994 239,997 0.012 1996 5,814 249,420 0.023 1997 3,906 260,959 0.015 1998 4,470 255,623 0.017 1999 5,821 278,640 0.021 2000 4,372 311,490 0.014 2001 5,563 325,133 0.017 2002 5,010 351,909 0.014 2003 4,951 365,489 0.014 2004 7,880 384,794 0.020 2005 6,198 405,943 0.015 2006 7,544 422,603 0.018 2007 5,903 445,704 0.013 2008 7,737 458,542 0.017 2009 8,079 460,921 0.018 (PROJ.)2009/2010 $7,780 444,406 0.018 (PROJ.)2010/2011 $8,018 451,233 0.018 (PROJ.)2011/2012 $8,255 457,712 0.018 (PROJ.)2012/2013 $8,500 464,302 0.018 (PROJ.)2013/2014 $8,752 471,003 0.019 Notes: (1) - Exhibit I, Page 1, Column (5). For the projection years (1) = (2) x (3) (2) - Per STATE OF VERMONT. (3) = (1) / (2). For the projection years (3) is the trended average of prior years * All Accident years end on 6/30 of the stated year O:State of Vermont2009WC2009.xlsPROJ1 9/14/2009 1:00 PM AMI Risk Consultants, Inc.
  • 69. EXHIBIT V STATE OF VERMONT SELF-INSURANCE PROGRAM ACTUARIAL REVIEW CALCULATION OF PROJECTED LOSSES GENERAL LIABILITY AS OF JUNE 30, 2009 (AMTS IN THOUSANDS) NET PROJECTED ULTIMATE LOSSES SELECTED ACCIDENT ULTIMATE PAYROLL LOSS YEAR* LOSSES (IN $000'S) RATE (1) (2) (3) 1991 630 232,209 0.003 1992 1,230 228,263 0.005 1993 858 224,939 0.004 1994 441 231,569 0.002 1995 449 239,997 0.002 1996 1,047 249,420 0.004 1997 622 260,959 0.002 1998 488 255,623 0.002 1999 1,045 278,640 0.004 2000 1,267 311,490 0.004 2001 1,144 325,133 0.004 2002 687 351,909 0.002 2003 815 365,489 0.002 2004 1,632 384,794 0.004 2005 816 405,943 0.002 2006 1,920 422,603 0.005 2007 700 445,704 0.002 2008 1,279 458,542 0.003 2009 1,327 460,921 0.003 (PROJ.)2009/2010 $1,373 444,406 0.003 (PROJ.)2010/2011 $1,436 451,233 0.003 (PROJ.)2011/2012 $1,500 457,712 0.003 (PROJ.)2012/2013 $1,568 464,302 0.003 (PROJ.)2013/2014 $1,638 471,003 0.003 Notes: (1) - Exhibit II, Page 1, Column (5). For the projection years (1) = (2) x (3). (2) - Per STATE OF VERMONT. (3) = (1) / (2). For the projection years (3) is the trended average of prior years. * All Accident years end on 6/30 of the stated year. O:State of Vermont2009GL2009.xlsPROJ1 9/14/2009 1:04 PM AMI Risk Consultants, Inc.
  • 70. EXHIBIT VI STATE OF VERMONT SELF-INSURANCE PROGRAM ACTUARIAL REVIEW CALCULATION OF PROJECTED LOSSES AUTOMOBILE LIABILITY AS OF JUNE 30, 2009 (AMTS IN THOUSANDS) NET PROJECTED ULTIMATE LOSSES SELECTED ACCIDENT ULTIMATE VEHICLE LOSS YEAR* LOSSES COUNT RATE (1) (2) (3) 1991 $413 1,688 0.245 1992 203 1,699 0.120 1993 506 1,353 0.374 1994 113 1,307 0.087 1995 301 1,397 0.216 1996 1,199 1,307 0.917 1997 461 1,556 0.296 1998 190 1,930 0.099 1999 221 1,930 0.115 2000 741 2,171 0.342 2001 280 2,141 0.131 2002 424 1,944 0.218 2003 799 1,719 0.465 2004 367 1,719 0.213 2005 324 1,545 0.209 2006 273 1,591 0.172 2007 263 1,810 0.145 2008 343 1,809 0.190 2009 375 1,807 0.208 (PROJ.)2009/2010 $347 1,825 0.190 (PROJ.)2010/2011 $361 1,843 0.196 (PROJ.)2011/2012 $376 1,862 0.202 (PROJ.)2012/2013 $391 1,880 0.208 (PROJ.)2013/2014 $407 1,899 0.214 Notes: (1) - Exhibit III, Page 1, Column (5). For the projection years (1) = (2) x (3). (2) - Per STATE OF VERMONT. (3) = (1) / (2). For the projection years (3) is the trended average of prior years. * All Accident years end on 6/30 of the stated year. O:State of Vermont2009AL2009.xlsPROJ1 9/14/2009 1:09 PM AMI Risk Consultants, Inc.
  • 71. APPENDIX A PAGE 1 OF 3 STATE OF VERMONT SELF-INSURANCE PROGRAM ACTUARIAL REVIEW ANALYSIS OF RESERVE CHANGE WORKERS' COMPENSATION AS OF JUNE 30, 2009 (AMTS IN THOUSANDS) NET RECONCILIATION TO PRIOR YEAR'S RESERVE ESTIMATE - UNDISCOUNTED 1. Estimated undiscounted reserves at 6/30/2008 $17,121 2. Loss payments during AY 2009 for accident years 2008 and prior ($4,836) 3. Change in estimated ultimate losses for accident years 2008 and prior $687 due to re-evaluation at 6/30/2009 4. Estimated ultimate losses for AY 2009 $8,079 5. Loss payments during AY 2009 for accident year 2009 ($1,938) 6. Estimated undiscounted reserves at 6/30/2009 $19,112 Notes: (1) - Per AMI's 2008 Actuarial Report, Appendix D, Page 1, Item (6) (2) - Total from Appendix A, Page 3 of 3, Column (3). (3) - Total from Appendix A, Page 2 of 3, Column (3). (4) - See Exhibit I, Page 1 of 4, Column (5) for accident year 2009. (5) - Per STATE OF VERMONT. (6) - Sum of (1) through (5). O:State of Vermont2009WC2009.xls/RECON 9/14/2009 1:01 PM AMI Risk Consultants, Inc.
  • 72. APPENDIX A PAGE 2 OF 3 STATE OF VERMONT SELF-INSURANCE PROGRAM ACTUARIAL REVIEW COMPARISON OF ESTIMATED ULTIMATE LOSSES AS OF JUNE 30, 2009 WORKERS' COMPENSATION (AMTS IN THOUSANDS) NET ESTIMATED ULTIMATE LOSSES INCREASE ACCIDENT OR YEAR* @6/30/2008 @6/30/2009 DECREASE (1) (2) (3) 1990 $1,887 $1,887 0 1991 3,402 3,402 (1) 1992 4,718 4,720 2 1993 5,768 5,770 2 1994 4,819 4,809 (9) 1995 3,005 2,994 (12) 1996 5,825 5,814 (11) 1997 3,927 3,906 (22) 1998 4,484 4,470 (13) 1999 5,853 5,821 (32) 2000 4,376 4,372 (4) 2001 5,640 5,563 (77) 2002 4,798 5,010 212 2003 4,970 4,951 (19) 2004 7,565 7,880 315 2005 6,132 6,198 66 2006 6,996 7,544 548 2007 6,355 5,903 (452) 2008 7,546 7,737 191 TOTAL $98,066 $98,753 $687 Notes: (1) - Sum of Exhibit I, Page 1, Column (5) for of the 2008 AMI Actuarial Report (2) - Exhibit I, Page 1 of 4, Column (5). (3) = (2) - (1). * All Accident years end on 6/30 of the stated year. O:State of Vermont2009WC2009.xlsULT_COMPARE 9/14/2009 1:01 PM AMI Risk Consultants, Inc.
  • 73. APPENDIX A PAGE 3 OF 3 STATE OF VERMONT SELF-INSURANCE PROGRAM ACTUARIAL REVIEW COMPARISON OF PAID LOSSES AS OF JUNE 30, 2009 WORKERS' COMPENSATION (AMTS IN THOUSANDS) NET PAID LOSSES INCREASE ACCIDENT OR YEAR* @6/30/2008 @6/30/2009 DECREASE (1) (2) (3) 1990 $1,887 $1,887 $0 1991 3,402 3,402 0 1992 4,718 4,720 2 1993 5,768 5,768 0 1994 4,372 4,395 23 1995 2,973 2,974 1 1996 5,139 5,164 25 1997 3,845 3,846 1 1998 4,340 4,347 7 1999 5,633 5,649 16 2000 4,176 4,202 25 2001 5,296 5,309 13 2002 4,341 4,389 48 2003 3,902 3,979 77 2004 6,542 6,907 366 2005 4,956 5,112 156 2006 5,025 5,832 807 2007 2,899 3,875 976 2008 1,731 4,023 2,292 TOTAL $80,945 $85,781 $4,836 Notes: (1) - Sum of Exhibit I, Page 1, Column (6) for of the 2008 AMI Actuarial Report (2) - Exhibit I, Page 1 of 4, Column (6). (3) = (2) - (1). * All Accident years end on 6/30 of the stated year. O:State of Vermont2009WC2009.xlsPAID_COMPARE 9/14/2009 1:02 PM AMI Risk Consultants, Inc.
  • 74. APPENDIX B PAGE 1 OF 3 STATE OF VERMONT SELF-INSURANCE PROGRAM ACTUARIAL REVIEW ANALYSIS OF RESERVE CHANGE GENERAL LIABILITY AS OF JUNE 30, 2009 (AMTS IN THOUSANDS) NET RECONCILIATION TO PRIOR YEAR'S RESERVE ESTIMATE - UNDISCOUNTED 1. Estimated undiscounted reserves at 6/30/2008 $4,255 2. Loss payments during AY 2009 for accident years 2008 and prior ($554) 3. Change in estimated ultimate losses for accident years 2008 and prior $13 due to re-evaluation at 6/30/2009 4. Estimated ultimate losses for AY 2009 $1,327 5. Loss payments during AY 2009 for accident year 2009 ($95) 6. Estimated undiscounted reserves at 6/30/2009 $4,946 Notes: (1) - Per AMI's 2008 Actuarial Report, Appendix E, Page 1, Item (6) (2) - Total from Appendix B, Page 3 of 3, Column (3). (3) - Total from Appendix B, Page 2 of 3, Column (3). (4) - See Exhibit II, Page 1 of 4, Column (5) for accident year 2009. (5) - Per STATE OF VERMONT. (6) - Sum of (1) through (5). O:State of Vermont2009GL2009.xls/RECON 9/14/2009 1:05 PM AMI Risk Consultants, Inc.
  • 75. APPENDIX B PAGE 2 OF 3 STATE OF VERMONT SELF-INSURANCE PROGRAM ACTUARIAL REVIEW COMPARISON OF ESTIMATED ULTIMATE LOSSES AS OF JUNE 30, 2009 GENERAL LIABILITY (AMTS IN THOUSANDS) NET ESTIMATED ULTIMATE LOSSES INCREASE ACCIDENT OR YEAR* @6/30/2008 @6/30/2009 DECREASE (1) (2) (3) 1991 $630 $630 $0 1992 1,227 1,230 3 1993 847 858 11 1994 436 441 5 1995 446 449 3 1996 1,052 1,047 (5) 1997 575 622 47 1998 449 488 39 1999 983 1,045 61 2000 1,325 1,267 (58) 2001 1,056 1,144 89 2002 381 687 306 2003 1,231 815 (416) 2004 1,405 1,632 227 2005 850 816 (34) 2006 1,819 1,920 101 2007 967 700 (267) 2008 1,377 1,279 (98) TOTAL $17,056 $17,069 $13 Notes: (1) - Sum of Exhibit II, Page 1, Column (5) for of the 2008 AMI Actuarial Report (2) - Exhibit II, Page 1 of 5, Column (5). (3) = (2) - (1). * All Accident years end on 6/30 of the stated year. O:State of Vermont2009GL2009.xlsULT_COMPARE 9/14/2009 1:06 PM AMI Risk Consultants, Inc.
  • 76. APPENDIX B PAGE 3 OF 3 STATE OF VERMONT SELF-INSURANCE PROGRAM ACTUARIAL REVIEW COMPARISON OF PAID LOSSES AS OF JUNE 30, 2009 GENERAL LIABILITY (AMTS IN THOUSANDS) NET PAID LOSSES INCREASE ACCIDENT OR YEAR* @6/30/2008 @6/30/2009 DECREASE (1) (2) (3) 1991 $630 $630 $0 1992 1,227 1,230 3 1993 847 858 11 1994 436 441 5 1995 446 449 3 1996 1,052 1,047 (5) 1997 574 621 47 1998 449 488 39 1999 983 1,045 61 2000 1,325 1,267 (58) 2001 979 1,054 75 2002 261 406 145 2003 893 663 (230) 2004 1,003 1,199 196 2005 469 551 81 2006 744 897 153 2007 278 162 (115) 2008 203 348 145 TOTAL $12,801 $13,355 $554 Notes: (1) - Sum of Exhibit II, Page 1, Column (6) for of the 2008 AMI Actuarial Report (2) - Exhibit II, Page 1 of 5, Column (6). (3) = (2) - (1). * All Accident years end on 6/30 of the stated year. O:State of Vermont2009GL2009.xlsPAID_COMPARE 9/14/2009 1:06 PM AMI Risk Consultants, Inc.
  • 77. APPENDIX C PAGE 1 OF 3 STATE OF VERMONT SELF-INSURANCE PROGRAM ACTUARIAL REVIEW ANALYSIS OF RESERVE CHANGE AUTOMOBILE LIABILITY AS OF JUNE 30, 2009 (AMTS IN THOUSANDS) NET RECONCILIATION TO PRIOR YEAR'S RESERVE ESTIMATE - UNDISCOUNTED 1. Estimated undiscounted reserves at 6/30/2008 $929 2. Loss payments during AY 2009 for accident years 2008 and prior ($70) 3. Change in estimated ultimate losses for accident years 2008 and prior ($55) due to re-evaluation at 6/30/2009 4. Estimated ultimate losses for AY 2009 $375 5. Loss payments during AY 2009 for accident year 2009 ($119) 6. Estimated undiscounted reserves at 6/30/2009 $1,061 Notes: (1) - Per AMI's 2008 Actuarial Report, Appendix F, Page 1, Item (6) (2) - Total from Appendix C, Page 3 of 3, Column (3). (3) - Total from Appendix C, Page 2 of 3, Column (3). (4) - See Exhibit III, Page 1 of 4, Column (5) for accident year 2009. (5) - Per STATE OF VERMONT. (6) - Sum of (1) through (5). O:State of Vermont2009AL2009.xls/RECON 9/14/2009 1:09 PM AMI Risk Consultants, Inc.
  • 78. APPENDIX C PAGE 2 OF 3 STATE OF VERMONT SELF-INSURANCE PROGRAM ACTUARIAL REVIEW COMPARISON OF ESTIMATED ULTIMATE LOSSES AS OF JUNE 30, 2009 AUTOMOBILE LIABILITY (AMTS IN THOUSANDS) NET ESTIMATED ULTIMATE LOSSES INCREASE ACCIDENT OR YEAR* @6/30/2008 @6/30/2009 DECREASE (1) (2) (3) 1991 $393 $413 $20 1992 206 203 (3) 1993 455 506 50 1994 118 113 (5) 1995 304 301 (3) 1996 1,159 1,199 40 1997 503 461 (42) 1998 228 190 (37) 1999 240 221 (19) 2000 704 741 38 2001 301 280 (20) 2002 442 424 (18) 2003 776 799 23 2004 370 367 (3) 2005 228 324 95 2006 287 273 (13) 2007 307 263 (44) 2008 458 343 (114) TOTAL $7,478 $7,424 ($55) Notes: (1) - Sum of Exhibit III, Page 1, Column (5) for of the 2008 AMI Actuarial Report (2) - Exhibit III, Page 1 of 4, Column (5). (3) = (2) - (1). * All Accident years end on 6/30 of the stated year. O:State of Vermont2009AL2009.xlsULT_COMPARE 9/14/2009 1:09 PM AMI Risk Consultants, Inc.
  • 79. APPENDIX C PAGE 3 OF 3 STATE OF VERMONT SELF-INSURANCE PROGRAM ACTUARIAL REVIEW COMPARISON OF PAID LOSSES AS OF JUNE 30, 2009 AUTOMOBILE LIABILITY (AMTS IN THOUSANDS) NET PAID LOSSES INCREASE ACCIDENT OR YEAR* @6/30/2008 @6/30/2009 DECREASE (1) (2) (3) 1991 $393 $413 $20 1992 206 203 (3) 1993 455 506 50 1994 118 113 (5) 1995 304 301 (3) 1996 1,159 1,198 39 1997 503 460 (43) 1998 228 189 (39) 1999 240 219 (22) 2000 704 735 32 2001 301 275 (25) 2002 442 416 (26) 2003 526 545 18 2004 367 350 (17) 2005 99 144 45 2006 200 200 0 2007 171 171 0 2008 134 182 48 TOTAL $6,550 $6,620 $70 Notes: (1) - Sum of Exhibit III, Page 1, Column (6) for of the 2008 AMI Actuarial Report (2) - Exhibit III, Page 1 of 4, Column (6). (3) = (2) - (1). * All Accident years end on 6/30 of the stated year. O:State of Vermont2009AL2009.xlsPAID_COMPARE 9/14/2009 1:10 PM AMI Risk Consultants, Inc.
  • 80. APPENDIX D STATE OF VERMONT SELF-INSURANCE PROGRAM ACTUARIAL REVIEW FUTURE FUNDING AMOUNTS AT ALTERNATE SOVEREIGN IMMUNITY LIMITS GENERAL LIABILITY AND AUTOMOBILE LIABILITY AS OF JUNE 30, 2009 (AMTS IN THOUSANDS) GENERAL LIABILITY SOVEREIGN IMMUNITY LIMITS Self-Funded CURRENT ALTERNATE 1: ALTERNATE 2: Period $250,000 PER PERSON $425,000 PER PERSON $500,000 PER PERSON $1,000,000 PER OCCURRENCE $1,700,000 PER OCCURRENCE $2,000,000 PER OCCURRENCE (1) (2) (3) 7/1/09-6/30/10 $1,373 $1,396 $1,403 7/1/10-6/30/11 1,436 1,460 1,467 7/1/11-6/30/12 1,500 1,525 1,532 7/1/12-6/30/13 1,568 1,594 1,602 7/1/13-6/30/14 1,638 1,665 1,673 AUTOMOBILE LIABILITY SOVEREIGN IMMUNITY LIMITS Self-Funded CURRENT ALTERNATE 1: ALTERNATE 2: Period $250,000 PER PERSON $425,000 PER PERSON $500,000 PER PERSON $1,000,000 PER OCCURRENCE $1,700,000 PER OCCURRENCE $2,000,000 PER OCCURRENCE (4) (5) (6) 7/1/09-6/30/10 $347 $353 $354 7/1/10-6/30/11 361 367 369 7/1/11-6/30/12 376 382 384 7/1/12-6/30/13 391 397 399 7/1/13-6/30/14 407 414 416 Notes: (1), (4) - Per Exhibit V and Exhibit VI, Col. (1). (2), (3), (5) & (6) - Based on Monte Carlo simulation. O:State of Vermont2009Retention_Vermont_063009/SOVEREIGN IMMUNITY AMI Risk Consultants, Inc.
  • 81. Glossary of Terms Accident Year Attributing to a given year the total cost of losses which occur in that year. Bornhuetter- Ferguson Approach which combines reported and paid losses with the expected Approach unreported and unpaid losses to estimate ultimate losses. (BFA) Case Reserve Estimate of unpaid loss on reported claims. Discount Reserve The present value, calculated at selected interest rates and payout patterns, of the payment of outstanding losses. Expected Loss Exposures multiplied by the loss rate. Exposure Extent of risk and/or possibility of loss (for workers' compensation the exposure is payroll in hundreds, for general liability it is expenditure in thousands, and for auto liability it is the number of vehicles). IBNR Reserve Reserve for claims incurred but not reported and for future changes to the case reserves. Incurred Loss Paid loss plus the case reserve. Loss Adjustment Loss adjustment expenses may be broken down into: Allocated and Unallocated Expenses loss adjustment expenses (ALAE and ULAE). ALAE expenses are expenses (LAE) (other than in-house administrative) for claims handling which can be identified as pertaining to a specific claim (such as outside legal expense). ULAE expenses are general administrative expenses such as salaries of employees. O:State of Vermont2009GLOSSARY.doc PAGE 1 AMI Risk Consultants, Inc.
  • 82. Glossary of Terms (continued) Loss Development Refer to the increase in number of claims, paid and incurred losses from a given accident year. The number of claims “develop” because in some cases, significant delay in the reporting losses occurs. Paid losses “develop” because claims are paid over several years. Incurred losses “develop” because of the increase in reported claims and because initial reserves tend to be inadequate at settlement. Loss Development Methods under which historical claim data are recorded and used to estimate Approach the future development of existing claims. (LDA) Loss Rate The value of losses per unit of exposure. Paid Loss Amount paid on open and closed claims. Ultimate Loss The incurred loss plus the IBNR reserve. The ultimate loss is the estimate of the total cost to settle all claims in the accident year. O:State of Vermont2009GLOSSARY.doc PAGE 2 AMI Risk Consultants, Inc.