Work Session
January 30, 2012
Present were: Mayor Grenier, Councilors Otis, Remillard, Ducharme, Morgan-Allain, Higbee, Rozek, Nelson and Théberge
Others present: Merilese O’Connor, and Maura Carroll of the Local Government Center, Pamela Laflamme, media and public
Mayor Grenier opened the meeting at 6:30 p.m.
Local Government Center
Maura Carroll Director of the Local Government Center addressed the Council with information regarding a bill before the Legislature. Senate Bill 212 proposes to make changes to RSA 5-B which has been found to be in need of clarification. The RSA was adopted in 1987 with not much change in how risk pools, Primex, NHMA and School Care, are regulated. The pools function with member boards governing how they operate and abide by what is in the statute. These pools are dealing with insurances for municipalities, counties, and school districts, in the state.
Ms. Carroll went on to say that a complaint against the largest risk pool was issued to the Secretary of State with a concern about whether they were abiding by the statute. In a report issued, it was recommended that suggestions put forth by the Firefighters Association be adopted. This would limit the amount of reserves the pools carry to be sure that they can pay all claims. Not being in the business of insurance, those making the decisions don’t fully understand that the pool needs to be financially sound to provide coverage for members.
The Senate bill causes three major concerns.
- There is a provision in the bill for the return of a check to the individual employee of the municipality or school district and issuing those checks could jeopardize the pools’ tax exempt status. The pools are asking to continue with the ability to return surplus with reduced rates to their member municipalities, counties or school districts.
2. Reserves need to continue to be determined by actuaries to be sure there is enough in reserve to pay claims or to cover a year with unforeseen costs.
3. Concern about oversight by the Bureau of Securities since the pools are not buying or selling securities. They do invest and expect a return; however they are not buying coverage with the expectation of getting money back.
Ms. Carroll stated that cities and towns are being encouraged to speak with their senators about the risk pools and their benefits to the municipalities, counties and school districts.
Mayor Grenier asked if this legislation is a knee jerk reaction because firefighters asked for an audit and the LGC refused. Ms. Carroll responded that David Lang is the head of the Firefighters Group and was a member of the LGC Board until he resigned because he did not like some of the decisions being made by the board. There have been lawsuits ever since, and in some cases, the lawsuits have brought about change. The LGC was found to be subject to the Right to Know law and has provided over 33,000 documents.
In the wake of the Financial Resource Management ponzi scheme, the Legislature panicked and moved quickly with this legislation. Ms. Carroll reasoned that clarification to the RSA can be done a little at a time, adding that the process is not all broken.
Mayor Grenier asked how reserves are set for specific cases? Ms. Carroll explained that they are set differently for health than for property and casualty. For health claims, the risk base capital method is used. With an RBC of 2 or below, the insurance commissioner will look to see if a company is solvent. Some have an RBC as high as 8 or 10; however the NHMA Board sets an RBC of 4.2 for the pool. The Board considers what factors will lead to solvency, with consideration of rates and the ability to return surplus.
Mayor Grenier stated that the pools have been an invaluable service to the community and he hoped they would patch up their differences and move on. He asked what is being asked of the Council. Ms. Carroll noted that a low key approach with local officials informing them of the City’s experience with the pools and rational will benefit everyone in the long run. There being no further questions, Mayor Grenier thanked the representatives from the Local Government Center and Ms. Carroll and Ms. O’Connor left the meeting at this time (7:00 pm)
Non-Public Session
Councilor Rozek moved to go into non-public session per RSA 91-A:3,II (d) Land Matters and RSA 91-A:3,II(e) Litigation; Councilor Nelson seconded and the motion carried unanimously by roll call.
Councilor Rozek moved to come out of non-public session; Councilor Remillard seconded and the motion carried unanimously by roll call.
Councilor Rozek moved to seal the minutes as releasing them would render the proposed action ineffective; Councilor Nelson seconded and the motion carried unanimously by roll call.
Councilor Rozek moved to adjourn; Councilor Remillard seconded and the motion carried. The meeting ended at 7:28.
Respectfully Submitted
Susan Tremblay
Administrative Assistant
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