membership58e94294-ca71...2021/03/04 · 3) mallory crecelius, blythe 4) chris mann, canyon lake 5)...

BOARD OF DIRECTORS MEETING AGENDA

Thursday, March 4, 2021 at 10:00 a.m.

NOTICE OF TELECONFERENCING IN COMPLIANCE WITH EXECUTIVE ORDER N-29-20

Join by Computer: https://zoom.us/j/99550420612?pwd=MDZ3QjdHb2h6ZkF4Yy9iemxDbllNZz09

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Zoom Meeting ID: 995 5042 0612 Pass Code: 208656

In compliance with the Americans with Disabilities Act, if you are a disabled person and need a disability-related modification or accommodation to participate in this meeting, please contact PERMA at (760) 360-4966. Notification 48 hours prior to the meeting will enable PERMA to make reasonable arrangements to ensure accessibility to this meeting.

MEMBERSHIP

1. City of Banning2. City of Barstow3. City of Blythe4. City of Canyon Lake5. City of Cathedral City6. City of Coachella7. City of Desert Hot Springs8. City of Eastvale9. City of Hesperia10. City of Holtville11. Imperial County Transportation

Comm (ICTC) 12. Imperial Valley Emergency

Communications Authority (IVECA)13. City of Jurupa Valley14. City of La Mesa15. March Joint Powers Authority16. Mojave Desert & Mountain

Integrated Waste ManagementAuthority

17. City of Moreno Valley

18. Mount San Jacinto Winter ParkAuthority (Palm Springs Aerial Tramway)

19. City of Murrieta20. City of Norco21. Palo Verde Valley Transit Agency

(PVVTA) 22. City of Perris23. City of Rancho Mirage24. City of San Jacinto25. So. Cal. Intergovernmental Training

& Development Center (Gov’t Training Agency)

26. SunLine Transit Agency27. Victor Valley Economic

Development Authority (VVEDA) 28. Victor Valley Transit Authority

(VVTA) 29. City of Victorville30. City of Westmorland

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1. CALL TO ORDER

2. ESTABLISHMENT OF A QUORUM / ROLL CALL

3. APPROVAL OF AGENDA AS POSTED (OR AMENDED)At this time the Board members may announce any items being pulled from the agendaor continued to another date or request the moving of an item on the agenda.

4. PUBLIC COMMENTSThe public may address the Board of Directors on any matter pertaining to PERMA thatis not on the agenda. The President reserves the right to limit the time of presentationsby individual or topic.

5. CONSENT CALENDARAll items on the Consent Calendar will be approved by one motion, and there will beno discussion of individual items unless a Board member or member of the publicrequests a specific item be pulled from the calendar for separate discussion.

A. Minutes of the December 3, 2020 Board of Directors Meeting……….. 3 B. Monthly Financial Reports (October – December 2020)………………. 8 C. WeTip 2020 Annual Report and Estimated 2021-22 Dues……………. 9 D. PERMA Credit Card Policy……………………………………………….. 11

Recommendation: Approve the Consent Calendar as presented.

6. ACTION / DISCUSSION ITEMSA. Market Update…………………………………………………………… 17

Recommendation: Receive and consider

B. Annual Contribution Estimates for 2021-22…………………………... 73 Recommendation: Receive and file

7. CLOSING COMMENTSThis time is set aside for Board members and staff to announce items/activities whichmay be of general interest to the Board of Directors. There will be no Board discussionon various matters involving PERMA except to ask questions or refer matters to staff,and no action will be taken unless listed on a subsequent agenda.

8. ADJOURNMENT

NOTICES: Documents and materials related to an open session agenda item that are provided to the Board of Directors less than 72 hours prior to a regular meeting will be available for public inspection and copying at: PERMA, 36-951 Cook Street, Suite 101, Palm Desert, California 92211.

DECLARATION OF POSTING: I, Jennifer Martin, Secretary of the Public Entity Risk Management Authority, certify that a copy of this agenda was posted in the Authority’s main office, 36-951 Cook Street, Suite 101, Palm Desert, CA.

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PUBLIC ENTITY RISK MANAGEMENT AUTHORITY MINUTES OF THE BOARD OF DIRECTORS’ MEETING

DECEMBER 3, 2020 1. CALL TO ORDER

A regular meeting of the Board of Directors of the Public Entity RiskManagement Authority was called to order by President Kevin Kane at 9:02a.m. on Thursday, December 3, 2020. The meeting was conducted viateleconference in accordance with Government Code Section 54953(b) andunder Governor Gavin Newsom’s Executive Order N-25-20, wherein publicnoticing of teleconference locations for each meeting participant issuspended.

2. ROLL CALLA roll call was taken and it was determined that a quorum was present.

MEMBERS PRESENT 1) Jennifer Christensen, Banning2) Darcy Wigington, Barstow3) Mallory Crecelius, Blythe4) Chris Mann, Canyon Lake5) Tami Scott, Cathedral City6) Sandy Krause, Coachella7) Pamela Meuse, Desert Hot

Springs8) Angelica Zepeda, Eastvale9) Stephanie Antunez, Hesperia10) Nick Wells, Holtville11) Michelle Bastidas, ICTC12) Rodolfo Aguayo, IVECA

13) Rod Butler, Jurupa Valley14) Sheryl Sherman, La Mesa15) Matthew Schenk, March JPA16) Marjorie De La Cruz, MtSJWPA17) Michelle Antonetty, Murrieta18) Andy Okoro, Norco19) George Colangeli, PVVTA20) Saida Amozgar, Perris21) Mike Gray, SoCal RTC22) Luis Garcia, SunLine Transit23) Kevin Kane, VVTA24) Chuck Buquet, Victorville

MEMBERS ABSENT MD&MIWMA, Moreno Valley, Rancho Mirage, San Jacinto, VVEDA,

Westmorland

OTHERS PRESENT 1) Maricela Mejia, Eastvale2) Myrna Paakkonen, Norco3) Josefina Trevino, Victorville4) Darcy Mahoney, Victorville5) Karem Ostrum, Victorville6) Christine Plasting, VVTA7) Seth Cole, Alliant8) Matt McManus, Alliant9) Banesa Laird, Alliant10) Mujtaba Datoo, AON11) Brenda Craigmyle, AON

12) Byrne Conley, Gibbons & Conley13) David Becker, James Marta &

Company14) Richard Babbe, PFM15) Lisa Harvey, Sedgwick16) Beth Lyons, PERMA17) Yumi Augustus, PERMA18) Mike Caton, PERMA19) Carol Robinson, PERMA20) Jennifer Martin, PERMA of 79

Board of Directors’ Minutes – December 3, 2020 Page 2

3. APPROVAL OF AGENDA AS POSTED (OR AMENDED)Motion by Director Buquet to approve the agenda as posted. Seconded by DirectorChristensen. Directors Christensen, Wigington, Crecelius, Mann, Scott, Krause,Meuse, Zepeda, Antunez, Wells, Bastidas, Aguayo, Butler, Sherman, Schenk, De LaCruz, Antonetty, Okoro, Colangeli, Amozgar, Gray, Garcia, Buquet, and Kane votedfor approval of the motion. Motion passed unanimously.

4. PUBLIC COMMENTSNone.

5. CONSENT CALENDARA. Minutes of the Board of Directors’ Meeting – June 4, 2020B. Office of Self Insurance Plans – Public Self Insurers Annual Reports for Year

2019/20C. Annual Report - 2020D. Target Equity Policy and Benchmark RatiosE. Financial Reports for May, June, July, August, and September 2020F. Employment Agreement – General ManagerG. Meeting Dates for Calendar Year 2021

Motion by Director Mann to approve the Consent Calendar as posted. Seconded by Director Wigington. Directors Christensen, Wigington, Crecelius, Mann, Scott, Krause, Meuse, Zepeda, Antunez, Wells, Bastidas, Aguayo, Butler, Sherman, Schenk, De La Cruz, Antonetty, Okoro, Colangeli, Amozgar, Gray, Garcia, Buquet, and Kane voted for approval of the motion. Motion passed unanimously.

6. ACTION / DISCUSSION ITEMSA. Actuarial Studies as of June 30, 2020

Mr. Caton presented a recommendation to increase liability confidence levelfunding to 80% for the 2021-22 General Liability program due to the increasingliabilities and decreasing net position in accordance with previous Board actionsbeginning in 2019-20. He noted increasing the confidence level funding willincrease deposit contributions for next year.

Mr. Datoo, actuary from AON Risk Solutions, reviewed the estimated outstandinglosses and funding rates of both the Liability and Workers’ CompensationPrograms. He explained the actuarial study conclusions of evaluating outstandinglosses and future projected funding.

Mr. Datoo reviewed the Workers’ Compensation program. He explained thatestimated outstanding losses are $30.2 million, an increase of $1.6 million. Theoutstanding losses of $30.2 million are made up of $19.3 of case reserves and$10.9 million IBNR. He advised the 2021-22 loss rate of $45.40 per $1,000 ofpayroll represents a 0.5% decrease from the 2020-21.

Motion by Director Christensen to accept and file the Actuarial Executive Summary

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report and approve the 2021-22 funding rates for both programs at the 80% confidence level. Seconded by Director Amozgar. Directors Christensen, Wigington, Crecelius, Mann, Scott, Krause, Meuse, Zepeda, Antunez, Wells, Bastidas, Aguayo, Butler, Sherman, Schenk, De La Cruz, Antonetty, Okoro, Colangeli, Amozgar, Gray, Garcia, Buquet, and Kane voted for approval of the motion. Motion passed unanimously.

B. Comprehensive Annual Financial Report (CAFR) for the Years Ended June30, 2020 and 2019Mr. Mike Caton presented the Comprehensive Annual Financial Report and auditby James Marta and Company. He stated the auditors provided an unqualifiedopinion (no financial deficiencies were identified).

Mr. Caton announced that the report was submitted to the Government FinancialOfficers Association (GFOA) for review. He reminded members that PERMA hasreceived the Certificate of Achievement for Excellence in Financial Reporting (COA)since 2013.

Mr. Caton encouraged members to read the summary and highlights of the report.He added that the total net position is 6.5 million reflects a decrease of 1.1 million,which was mainly due to liability program losses.

Mr. David Becker of James Marta and Company provided audit highlights andencouraged members to review the discussion and analysis summary. He reportedthat the audit did not identify any internal control deficiencies. He provided afinancial overview of the year and reviewed changes of net position.

Director Wells of Holtville and De La Cruz of MtSJWPA left the meeting.

Motion by Director Gray to accept the Comprehensive Annual Financial Report(CAFR) for the Years Ended June 30, 2020 and 2019 as presented. Seconded byDirector Buquet. Directors Christensen, Wigington, Crecelius, Mann, Scott,Krause, Meuse, Zepeda, Antunez, Bastidas, Aguayo, Butler, Sherman, Schenk,Antonetty, Okoro, Colangeli, Amozgar, Gray, Garcia, Buquet, and Kane voted forapproval of the motion. Motion passed unanimously.

C. Investment Portfolio and Advisory ServicesRichard Babbe of PFM Asset Management presented a market update, trends,and portfolio review. He detailed the portfolio and relayed the efforts PFM makesto actively manage the portfolio.

Treasurer Andy Okoro of Norco commented that the portfolio has done extremelywell due to active management and Board policy regarding the use of long termsecurity investments.

No action taken.

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D. Statement of Investment Policy and Authority to InvestThe Board annually reviews and approves PERMA’s Statement of InvestmentPolicy and delegates authority to the Treasurer to invest or reinvest funds for aone-year period pursuant to Government Code §53607.

Motion by Director Buquet to approve the Statement of Investment Policy as presented and delegate authority to the Treasurer to invest or reinvest funds for one-year period pursuant to Government Code §53607. Seconded by Director Schenk. Directors Christensen, Wigington, Crecelius, Mann, Scott, Krause, Meuse, Zepeda, Antunez, Bastidas, Aguayo, Butler, Sherman, Schenk, Antonetty, Okoro, Colangeli, Amozgar, Gray, Garcia, Buquet, and Kane voted for approval of the motion. Motion passed unanimously.

E. Risk Control Services – SedgwickMs. Beth Lyons discussed the Risk Control Services available to members. Shementioned PERMA’s risk control team is working on a summary sheet thatmembers can share with department directors to ensure everyone is aware ofservices. Ms. Lyons referred members to the PERMA website and the PolicyLibrary, and provided contact information for Lisa Harvey, Senior Manager RiskControl of Sedgwick.

Harvey encouraged members to take advantage of the services and resourcesthat are available. Ms. Harvey provided an overview of services, FocusedMember Services, and Regional Training Workshops. She announced that due toCOVID, many workshops have been provided virtually.

No action taken.

Director Bastidas of ICTC left the meeting.

F. Election of Treasurer and AuditorThe Board annually elects a Treasurer and Auditor in accordance with Article 10 ofthe Joint Powers Agreement. Andy Okoro has agreed to again serve as Treasurerand the Auditor position has historically been filled by the General Manager.

Motion by Director Schenk to elect Andy Okoro (Norco) as Treasurer and BethLyons (PERMA) as Auditor. Seconded by Director Colangeli. DirectorsChristensen, Wigington, Crecelius, Mann, Scott, Krause, Meuse, Zepeda,Antunez, Aguayo, Butler, Sherman, Schenk, Antonetty, Okoro, Colangeli,Amozgar, Gray, Garcia, Buquet, and Kane voted for approval of the motion. Motionpassed unanimously.

G. Executive Committee ElectionsExecutive Committee seats are staggered so that four members are elected ineven-years and three members in odd years. Once selected, Executive

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Committee members elect the president and vice president from their body.

Ms. Lyons announced that Chuck Buquet, of Victorville would not be seeking re-election and thanked him for his service on the committee. Several members complimented and voiced appreciation of Chuck’s contributions to the committee.

Kevin Kane (VVTA), Marjorie De La Cruz (Palm Springs Aerial Tramway), Tami Scott (Cathedral City), and Chris Mann (Canyon Lake) have all expressed interest and willingness to serve on the Executive Committee. A recommendation was also made to waive the consecutive term limit for Kevin Kane.

No nominations were made from the floor.

Motion by Director Schenk to elect Kevin Kane (VVTA), Marjorie De La Cruz (Palm Springs Aerial Tramway), Tami Scott (Cathedral City), and Chris Mann (Canyon Lake) to two-year terms on the Executive Committee and to waive the consecutive term limit for Kevin Kane. Seconded by Director Colangeli. Directors Christensen, Wigington, Crecelius, Mann, Scott, Krause, Meuse, Zepeda, Antunez, Aguayo, Butler, Sherman, Schenk, Antonetty, Okoro, Colangeli, Amozgar, Gray, Garcia, Buquet, and Kane voted for approval of the motion. Motion passed unanimously.

7. CLOSING COMMENTSNone

8. ADJOURNMENTThere being no further business, the meeting of the Board of Directors adjourned at11:10 a.m.

Respectfully submitted,

Beth Lyons General Manager

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Board of Directors March 4, 2021 _____________________________________________________________________________________

Subject: Financial Reports for October – December 2020

Action for Consideration: Approve the financial reports for October – December 2020.

Background: The financial reports were previously distributed electronically to the membership at the close of each month. The monthly reports are also available on the PERMA website.

Fiscal Impact: Not applicable

Attachment: None

Prepared By: Beth Lyons, General Manager

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Subject: WeTip 2020 Annual Report & Estimated Dues

Action for Consideration: Receive and file

Background: WeTip is an anonymous citizen crime reporting system and is an optional service available to all PERMA members at a negotiated group discount rate. WeTip promises anonymity and provides intelligence and information to local, state, federal and international law enforcement agencies relating to criminal activity obtained from online and telephone crime reporting hotline. Callers may be eligible for a reward up to $1,000 if their tip results in an arrest and conviction. WeTip recently provided PERMA with a detailed annual report as well as updated pricing for the 2021-22 fiscal year. Annual dues for WeTip are allocated to PERMA members that elect to participate based upon population at 4 cents per capita. Membership dues for members with no population are charged at a fixed amount of $1,500. PERMA invoices the $18K cost for participating members as part of the liability program deposit contribution. Most participating members are utilizing the WeTip Live 24/7/365 phone call center for service. WeTip recently partnered with an online service provider, and now offers online and text reporting in addition to phone calls. This service carries an additional cost. Listed on the second page of this memo are the PERMA members that participate in the program, usage during the 2020 calendar year, the associated annual membership dues for 2020-21, and estimated pricing for 2021-22 utilizing the online reporting. Some members (Barstow, Perris, and San Jacinto) already have access to the WeTip online reporting through their sheriff department contracts. WeTip representatives will be in contact with individual members to discuss the enhanced reporting and to determine interest in program participation. Members interested in receiving more information about WeTip, including ideas and resources to increase citizen awareness and reporting, are asked to contact Kristen Arnel, Contract Manager, at (909) 987-5005, ext. 230 or by email [email protected]. Fiscal Impact: Varies by participating member

Attachment: None (full 52 page report available upon request)


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mailto:[email protected]

WeTip 2020 Annual Report & Estimated Dues Page 2 March 4, 2021 _____________________________________________________________________________________

Estimated FY 20-21 FY 21-221/1/2019 2020 Total-to-Date Membership Estimated

Population Tips reported Tips reported Dues Dues(online reporting)

1 Banning - - -2 Barstow 24,150 150 2255 966$ 966$ 3 Blythe - - 4 Canyon Lake - - 5 Cathedral City - - 6 Coachella - - 7 Desert Hot Springs - - 8 Eastvale - - 9 Hesperia - - 10 Holtville - 11 ICTC - - 12 IVECA - - 13 Jurupa Valley - - 14 La Mesa - - 15 March JPA - - 16 MD&MIWMA - 1 150 1,500$ 3,000$ 17 Moreno Valley - - 18 Murrieta 118,125 28 552 4,725$ 9,322$ 19 Norco - - 20 Perris 76,971 117 1877 3,079$ 3,079$ 21 PS Tramway - - 22 PVVTA - - 23 Rancho Mirage - - 24 RTC - - 25 San Jacinto 48,878 27 709 1,955$ 1,955$ 26 SunLine Transit - - 27 Victorville 126,543 409 9135 5,062$ 10,005$ 28 VVEDA - - 29 VVTA - 0 0 1,500$ 3,000$ 30 Westmorland 2,461 0 3 98$ 196$

Total 397,128 732 14,681 18,885$ 31,522$

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Subject: PERMA Credit Card Policy

Action for Consideration: Review and approve the PERMA Credit Card Policy. Background: PERMA has historically issued a credit card to the General Manager to use for official PERMA business. In accordance with best practices for public employees and officials, a policy governing use of the card is being presented for Executive Committee review and Board approval before card issuance to the new General Manager. The policy outlines authorized users, expenses for which credit cards may be used, a procedure for reporting lost or stolen cards, actions that qualify as misuse, and processes for collecting receipts. The Executive Committee will review the policy at its meeting on March 4, and recommended revisions, if any, will be presented verbally at the Board meeting. Fiscal Impact: Not applicable

Attachment: PERMA Credit Card Policy


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PERMA - Credit Card Policy Page 1 of 5 March 4, 2021

PERMA Credit Card Policy

Change Record Date Description of Change(s)

March 4, 2021 Policy adopted by the Board of Directors

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Public Entity Risk Management Authority Credit Card Policy

Definition: The Public Entity Risk Management Authority’s (PERMA) credit card is a business credit card that can be utilized for purchases or expenditures necessary to carry out the business of PERMA. Purpose: The issued credit card is a procurement tool intended to streamline the paperwork process, pay invoices when appropriate, and improve the acquisition time of materials, supplies and services. General Information: The issued credit card will be embossed with both PERMA’s and the individual cardholder’s name. This credit card is limited to “Official PERMA Business Only” and is prohibited for any use that would be of a personal nature. No member of the cardholder’s family will be authorized to use this credit card. The cardholder may authorize his/her clerical staff member to secure travel arrangements or other materials and supplies needed to be purchased. The cardholder will be responsible for authorized purchases secured by a clerical staff member. Credit Card Usage Conditions: The cardholder will be responsible for ensuring that the credit card is used in accordance with established policies and procedures. Use of the issued credit card must follow PERMA’s policies. PERMA’s finance team may audit monthly credit card transactions and the Treasurer may revoke cardholder privileges if there are procedural violations or inappropriate expenditures. Credit cards will be issued once a signed Credit Card Agreement has been received for PERMA’s records. A credit card will be issued to PERMA’s General Manager. Issuance of additional cards require Executive Committee approval. PERMA Processing Guidelines: Records must be retained for all credit card transactions. Receipts must be submitted to the Finance team or designee electronically within fifteen (15) business days of the charge. The credit card transactions must be clearly defined. Submission of receipts more than fifteen (15) business days after the charge must include a written statement from the cardholder as to the reason for tardiness. Charges that result due to the late submission of receipts are the responsibility of the credit card holder (General Manager). Charges that result due to late payment are the responsibility of the Finance team. Invoice audit and verification will be handled by the PERMA Finance team or designee on a monthly basis. The Cardholders’ Monthly Statement of the Credit Card Account and documentation will be reviewed for accuracy and acceptability of charges.

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Original receipts, signed by the credit card holder verifying the expenditure was accurate, will be submitted to the PERMA Finance team or designee electronically for payment. The PERMA Finance team or designee will conduct an audit of all expenditures to evaluate the effectiveness of the credit card program. Intentional use of credit card expenditures for reasons other than “Official Use Only” may be considered an attempt to commit fraud against PERMA. Proof of such fraud will result in the cancellation of the credit card. If the credit card is accidentally used for personal purposes, the cardholder shall immediately reimburse PERMA for the amount of the unauthorized purchase(s) and any other fees associated with the unauthorized purchase(s). Disputes: Credit cardholders should immediately coordinate with the vendor in attempt to resolve any billing disputes. If the dispute is unresolved, the Cardholder must contact the credit card issuer as indicated on the billing statement. Also, provide a written statement to the Finance team or designee regarding the dispute. It is the cardholder’s responsibility to clear any disputes on his/her assigned credit card. The credit cardholder is responsible for:

1. Security of the credit card (including immediate reporting of lost/stolen credit cards)

2. Appropriate use of the credit card in accordance with established guidelines.

3. Reconciling each monthly credit card statement

4. Emailing credit card receipts to the Finance team or designee

5. Resolving all questionable items or disputes directly with the vendor and

submitting a written explanation with payment request

6. Making arrangements in his/her absence to ensure paperwork is submitted for payment in a timely manner

Rewards: Points or rewards earned due to credit card usage are the property of PERMA, not the individual using the card. Reporting a Lost or Stolen Credit Card: It is the responsibility of the credit cardholder to maintain control and security of the credit card. Fraudulent use of the card and lost or stolen cards must be reported immediately to the PERMA Finance team or designee.

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Be prepared to provide the following information:

1. Credit cardholder’s name

2. Credit card account number

3. The date the loss or theft of the credit card occurred

4. Circumstances surrounding the loss of the credit card

5. Any purchase(s) made on the day the card was lost or stolen

6. Details of the last credit card purchase, amount and location List of PERMA Issued Credit Cards: The Finance team or designee shall keep an updated list of all issued credit cards. This list shall include the following information: cardholder’s name, date issued, credit card number, issuer, and limit of authorized credit card. PERMA will also maintain credit card related information in accordance with its Record Retention Policy.

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PUBLIC ENTITY RISK MANAGEMENT AUTHORITY Credit Cardholder Agreement

(Print Name): ___________________________________ Prior to the issuance of a PERMA credit card, the credit cardholder must read the following information and verify acceptance of the established terms and conditions:

1. I understand that this credit card may only be used for official business and will not be used for unauthorized or personal purchases.

2. This credit card will not be provided for use to any other individual unless an

authorized expenditure is purchased on behalf of the cardholder by his/her assigned clerical staff member.

3. The credit cardholder is responsible for the credit card’s safekeeping. Fraudulent

use of the assigned credit card, lost, or stolen credit cards must be reported immediately to both the Finance team (or designee) and the credit card issuer.

4. It is the responsibility of the credit cardholder to ensure all receipts are emailed to

the Finance team or designee for payment within fifteen (15) business days.

5. The cardholder will promptly notify the vendor and credit card issuer to resolve any disputed charges.

6. Acknowledgment of Liability: I understand that I will be held personally liable for

any unauthorized purchases.

7. My assigned credit card can be canceled if any terms of this agreement are violated or at PERMA’s sole discretion.

8. I agree to surrender my assigned credit card immediately upon contract

termination or upon request of PERMA or an authorized designee.

9. Failure to follow the policies and procedures is cause for disciplinary action, which may include termination of employment.

I certify that I have received a copy of the PERMA “Credit Card Procedures” and will abide by these established guidelines as an authorized credit card holder. Signature: ____________________________________ Date: ________________ Credit Card Issued: ______________________________________________ Date: ______________________________________ Card Limit Amount: _______________________________________ Treasurer or Finance team member: ______________________________________

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Subject: Market Update

Action for Consideration: Receive and consider

Background:

For the past several years, the insurance market has continued to harden (deteriorate) in multiple coverage lines. This information is being presented to enable PERMA members to prepare for the budgetary impact and understand the dynamics. Hard Market: All entities (counties, cities, special districts) have been impacted by the hard market. Carriers that are willing to continue providing coverage for California public entities are reducing coverage limits, increasing retentions, and adding significant limitations on coverage. Additionally, self-insured programs (like PERMA, PRISM, and most other pools in the state) are seeing depleted funding due to higher claim payments. Claim trends: PERMA participates in PRISM’s “GL 1 Program” for liability coverage from $1M to $50M. In the past five years, PRISM has seen the number of claims over $1M nearly double. PERMA members have experienced similar increases in claim values. Safety in numbers It is worth noting today’s marketplace is like the marketplace in the late 1970’s that led to the creation of joint powers authorities (JPA). While the cost of coverage increases are disappointing, this is the best time to be in PERMA’s risk-sharing pool. PERMA’s Board has prudently funded coverage programs and the pool has helped members with services and risk control efforts designed to minimize risk. PERMA and Member Action: PERMA is exploring alternate structures to ensure appropriate coverage yet minimize contribution/premium increases for the members. The most important key, however, to minimizing cost increases is Member loss prevention and mitigation. Now more than ever, members should take advantage of the PERMA and PRISM services offered. PERMA’s broker, Seth Cole of Alliant, will be present at the meeting to provide more detailed information about the market. Fiscal Impact: Not applicable (implications vary by Member/coverage line)

Attachments: State of the Market Report – Alliant General Liability 1 Market Overview: Hard Times PRISM Stakeholder Message to G1 Members Prepared By: Beth Lyons, General Manager

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Median Claims Values (in millions)$14.0$12.0$10.0 $8.0$6.0$4.0$2.0

$-

Top 75Claims

Top 50Claims

Top 25Claims

Top 10Claims

5 Years Ago 3 Years Ago Current

PRISM Benefits

The size and diversity of membership in our program provides much greater stability due to our spread of risk.

The GL1 Program membership remains stable and continues to grow year over year.

PRISM has always been proactive in our management and approach to making funding decisions, and this remains the same today.

Our captive insurance company, PRISM ARC, has played an important role in our ability to prudently assume this risk.

Our LPT partner for two years ago, remains a partner with us as a guaranteed reinsurance market for the next three years. This is very valuable in a hard market.

The benefits of pooling The benefits of pooling shine brightest shine brightest

during a hard during a hard market when our market when our

economies of scale, economies of scale, our leverage in our leverage in the reinsurance the reinsurance

markets, and our markets, and our sharing sharing

of best practices of best practices help manage risk.help manage risk.

SchoolsSpecial Districts

CitiesCounties

All Entities have been Affected by the Hard GL Market

GENERAL LIABILITY 1 MARKET OVERVIEW: Hard TimesThe liability industry is in a hard market cycle for California public entities. Markets that are willing to continue their participation are increasingly judicious as to where they place coverage and we are continuing to see coverage modifications either in the form of sub-limits, increased pressure to accept aggregated coverage layers, certain coverages being provided on a claims-made basis, and/or exclusions or significant limitations on coverage. Self-insured programs are seeing a depletion in funding due to higher claims payouts.

• Claims trends have affected PRISM, just as they haveaffected the industry.

• There are many factors driving up claims verdicts andsettlements, including tactics Plaintiff’s counsel areusing (such as the use of the Reptile Theory).

• The selection of appropriate defense counsel, who areexperienced in dealing with these tactics, has neverbeen more important.

• The total number of claims in the GL1 Program over$1M in the last five years has nearly doubled. This is abig indication of how jury verdicts (and settlements)are increasing!

• Industry-wide, reinsurance markets are forcingcommunicable disease exclusions due to COVID – 19on public entity renewals. So far, the GL1 Program hasbeen able to avoid this restriction only because of ourscale and long-term relationships with markets.

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February 4, 2021 To: GL1 Program Members From: Gina Dean, CEO Re: Stakeholder Message to GL1 Members As most of you are aware, the liability insurance industry is in a hard market cycle, which initially impacted California public entities, but is now affecting public entities across the country. As PRISM members begin their budgeting process, I want to take this opportunity to provide some background information on the state of the market and the status of the GL1 Program. Also attached are talking points and an information sheet that we hope you will find useful in communicating to your stakeholders. Background

The liability insurance industry continues to see significant increases in plaintiff demands, jury verdicts, and high dollar claims – a continuation of what we have seen for the last several years. Claims that used to resolve for $5M-$10M are now costing public entities and their insurers $20M-$30M+. The so called Social Inflation that has had a huge impact on these costs continue to deplete the liability market’s surplus, limiting the capacity and availability of reinsurers willing to write California public entity business. To illustrate this point, in 2015, PRISM considered 17 reinsurers for renewal of the GL1 Program, that combined had $170M in capacity to offer. Looking ahead to the 2021/22 renewal, seven of those reinsurers no longer write public entity business in California, reducing the available capacity in the market to about 1/3rd of what it was in 2015. Those that are willing to continue their participation are increasingly judicious as to where they place coverage. More and more we are seeing coverage modifications either in the form of sub-limits, aggregated coverage layers, certain coverages being provided on a claims-made basis, and/or exclusions or significant limitations on coverage. At the same time and for the same reasons, self-insured and pooled programs across the state are seeing a depletion in funding. This trend is affecting all public entities: counties, cities, schools, and special districts.

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As these issues affect the insurance industry, they also affect PRISM. We are experiencing an issue of both frequency and severity of claims. For example, the following graph depicts the frequency of claims valued over $1M incurred by PRISM over the last 10 years. The graph highlights the fact that until just three years ago, the frequency of claims is what you would expect as a “normal” trend especially considering the Program’s growth during that time; however, the significant increase in frequency of high-value claims from then until now, was certainly unforeseen by the industry.

In addition to the increase in claims frequency, the following graph highlights the increase in the median value of claims in the Program over the last 10 years. Again, the graph highlights the “normal” inflation of claims from 10 years ago, which changed significantly starting three years ago.

0

20

40

60

80

100

120

140

160

180

10 years ago 7 years ago 5 years ago 3 years ago Current

Claims $1M or more

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One final graph, this one a depiction of Social Inflation of claims, is from an Advisen study on the Median Cost of a Single-Fatality claim. The graph highlights the increasing cost of a death claim; however, does not even contemplate a life care plan expense that can be one of the most expensive components of a serious injury claim.

$-

$2,000,000

$4,000,000

$6,000,000

$8,000,000

$10,000,000

$12,000,000

$14,000,000

Median Value of Top75 Claims




Median Values

10 Years Ago 7 Years Ago 5 Years Ago 3 Years Ago Current

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Safety in Numbers

Thankfully for members of the GL1 Program, our size creates stability and offers economies of scale that could not be realized without being in a pool. We are able to leverage the volume we bring to the reinsurance markets to benefit all Program members. That being said, the Program will still see moderate rate increases again this year, which are a reflection of our own losses and of the market. The amount of increase for individual members is dependent upon your entity’s claims experience. If you are one of the lucky ones who have not yet experienced this new reality in claim trends, you can expect to see increases but to a lesser degree. The PRISM Committees and Board have dedicated time and resources to ensure premiums are equitable amongst the members, based on an allocation that takes into consideration each individual member’s potential exposure and claims experience. The Big Picture

If we have learned from history, we know that joint powers authorities (pooling) have been the answer to turbulent markets. By staying the course, we will all benefit from our economies of scale, our leverage in the reinsurance markets, and our sharing of best practices to help manage risk and hard markets. While PRISM’s premiums will increase for 2021/22, the premiums are still less costly than an entity would likely be faced with outside of PRISM. Recent membership applications have led to growth of the Program and has also allowed us to test the competitiveness of the GL1 Program. The three new members that joined GL1 in the last two years saved between 17-51% on their premiums, dependent upon the stand-alone market or the JPA that they came from. In addition to premium savings, those entities also avoided coverage restrictions and limitations that were quoted outside of PRISM. Member’s Response

There are several steps that can be taken during these turbulent times: 1. First, communicate the state of the market to all of your stakeholders, so there is

an understanding that this is an industry-wide problem. 2. The severity of claims is on the rise. If you are not yet participating in the Optional

Excess Liability (OEL) Program, consider doing so. 3. Anticipate an increase in your own SIR funding being suggested by your actuary,

and resist the temptation to increase your SIR in the face of these severity trends. 4. Defend the claims that are defensible. 5. Ensure you have selected legal counsel with the proper expertise for the type of

case to be defended (police liability, sexual assault and molestation, employment practices liability, etc.) and ability to defend claims against well known, experienced plaintiff’s counsel.

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6. In a hard market environment, the quality of loss data will undergo additional scrutiny. Make sure your data is in good condition.

7. Finally, manage your individual risk by taking advantage of the best practices programs and service partner programs we offer.

As always, if you have questions or need additional information to better understand the current environment or to communicate to your internal management and governing officials, please let us know.

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Talking points for the GL1 Program Individual Claim Examples To describe the effects of social inflation on claims, below are several summaries of recent jury verdicts and settlements, many of which involve members of PRISM’s GL1 and GL2 Programs:

• Jurors awarded $45.4 Million against a southern California county to a girl who suffered sexual abuse for two years in a home where she was left despite evidence showing that an accused molester lived in the house.

• A southern California city was sued for dangerous condition of public property after a 16-year-old was struck by a car crossing a street at a crosswalk near his school. The driver of the vehicle was looking for an item that was on the floor of the passenger seat when he struck the teenager. The teen survived, but has multiple injuries including a brain injury. A jury found there to be a dangerous condition and awarded over $23 Million against the City.

• A northern California county was sued after a family’s vehicle was struck in an intersection late at night by a law enforcement vehicle that was responding to a call without lights and sirens on. Several members of the family were injured, and one young child was left with permanent brain damage. The case was settled for approximately $27 Million.

• A southern California city agreed to pay $12.5 Million to resolve a case in which a driver struck and killed a baby and injured the father of the child. The city was sued for dangerous condition of public property as the driver claimed his view was obstructed by foliage.

• A northern California city paid $12 Million to settle a case in which a motorcyclist was struck in an intersection by a police car that was responding to a call. The injured motorcyclist lost a leg in the accident.

• A northern California county was sued for wrongful death after the decedent allegedly lunged at officers with a retractable knife and was then shot and killed by the officers. The county agreed to resolve the case for $7 Million.

• Jurors awarded $3.8 Million to a 72-year-old woman who was allegedly pushed by a city councilwoman. The plaintiff tumbled over a stack of chairs and suffered bruises and a torn rotator cuff.

Aggregate Claims Trends • PRISM tracks loss development for all the program years on a quarterly basis. In

the years 2015-2017, the GL1 Program averaged $8.6 Million of quarterly loss development. We began to see unprecedented amounts of development each quarter in 2018. During the years 2018-2020, the Program has experienced average quarterly loss development of $19 Million.

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• The natural result of this significant change in losses is that PRISM has adjusted forecasts and rates to account for new loss trends, as have our carriers. We continue to anticipate rate increases to reflect the increased claims costs.

Benefits of Being in a Pool Economies of scale benefits

• Access to insurance options. PRISM’s size provides more leverage in the insurance market. PRISM has been able to secure unique reinsurance agreements largely due to the Program’s premium volume.

• Maintaining broad coverage. Public agencies with stand-alone placements are seeing reductions in their coverage limits and/or exclusions. Although the liability program continues to face the potential for coverage restrictions, PRISM has largely been able to maintain broad coverage in the Program.

Equitability • PRISM’s members with large loss experience have better coverage and premium

options in the pool than finding coverage alone, but members with less severe loss experience also receive benefits from pooling as they recognized and rewarded through premium reductions.

• PRISM’s premium allocation includes a surcharge for members who impact pool rates with large claims. To offset increasing costs for members who are not contributing large claims, PRISM updated the allocation models in 2020 to provide those surcharges back as a credit to members with good loss experience. Over $5 Million in premium credits were provided to GL1 Program members based on their loss experience.

• PRISM’s allocations utilize an Ex Mod, which accomplishes a similar goal of shifting premium in the Pool Layer between members based on loss experience. Premium will be shifted away from members with better claims experience to members with more adverse loss experience.

General Market Information • The liability market continues to harden. We continue to see a significant increase

in Plaintiff demands and high dollar liability claims. Jury verdicts (and settlements) are much higher than they have been in years past and that is affecting the industry’s surplus.

• There are many factors causing this including tactics Plaintiff’s counsel are using (such as the use of the Reptile Theory) to drive up claims verdicts and settlements. The selection of appropriate defense counsel, who are experienced in dealing with these tactics, has never been more important.

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• Markets continue to be more judicious with how and where they deploy their capacity and/or limit their exposure. The size, stability, and premium volume of the GL1 Program have attracted markets that may not consider participation otherwise.

• Claims trends have affected PRISM, just as they have affected the industry.

• The total number of claims in the GL1 Program over $1 Million in the last five years has nearly doubled. This is a big indication of how jury verdicts (and settlements) are increasing!

• We have always been proactive in our management and approach to making funding decisions, and this remains the same today. Members can expect moderate pool rate increases for 2021/22.

• We are not unique in experiencing rate increases for liability coverage as the claims environment in California and across the nation is increasingly adverse for public entities.

• The size and diversity in membership in our program, 127 members with over $6 Billion in payroll, provides much greater stability than smaller programs or individual risks offers due to our spread of risk.

• The benefits of pooling shine brightest during a hard market when our economies of scale, our leverage in the reinsurance markets and our sharing of best practices help manage risk.

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January 2021Presented by:Alliant Insurance Services

State of the Public Entity Insurance Market & Emerging Risks

(THIS INFORMATION HAS BEEN CONSOLIDATED FROM VARIOUS INDUSTRY SOURCES) of 79

Presentation Overview

Highlights

Property/Casualty Industry Performance

The New Reality – Evolving Risks

Toward the Future

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3

HighlightsSwiss Re Institute estimates USD 83 billion global insured catastrophe losses in 2020, the fifth-costliest on record. The insurance industry covered 45% of global economic

losses in 2020, above the ten-year-average of 37%.

U.S. Wildfires, Storms, Civil Disorders and ‘Social Inflation’ have created intense pressure on insurers in North America, causing insured losses in the billions, and while COVID -

19 has of course added new types of losses to the mix, more so, it has created additional uncertainty which is adding to an already difficult insurance marketplace.

Social inflation, years of high losses, aggressive litigation trends, and adverse results are driving the higher prices and tighter capacity in the excess casualty insurance space.

Source: A.M. Best, ISO, Verisk, Property Casualty Insurers Association of America (PCI)

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4

Key Industry Metrics• Insurers’ combined ratio deteriorated to 100.2% for

2nd Qtr 2020 from 98.9% a year earlier.

• Policyholder surplus declined $22.1 billion in the first half 2020 from an all time high of $847.8 billion at year end 2019.

• Net income after taxes fell to $24.3 billion in first-half 2020 from $32.8 billion in first-half 2019.

• Signs point to a healthy, yet unsettled, insurance market, due to the unknowns of COVID-19, weather extremes, sea level rise, wildfires, catastrophic losses, social inflation and investment earnings. All remain areas of concern for insurers.

Source: A.M. Best, ISO, Verisk, Property Casualty Insurers Association of America (PCI) of 79

5

Property/Casualty Industry Performance

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6

U.S. commercial insurance prices again grew significantly in the third quarter of 2020

Prices for nearly all lines were consistent with the increases from the prior quarter survey. Excess/umbrella liability and directors and officers liability reported the largest price increases; commercial auto showed increases near or above double digits for the 12th

consecutive quarter.

The outlier continues to be workers compensation, which indicated modest price reductions, though they have tempered for the last seven quarters. Price changes differed by account sizes with small accounts more muted, mid-market accounts near double digits and large accounts well into double digits.

Source: Willis Towers Watson Commercial Lines Insurance Pricing Survey of 79

P/C Industry Net Income After Taxes, 1991–2020E* 2005 ROE= 9.6% 2006 ROE = 12.7% 2007 ROE = 10.9% 2008 ROE = 0.1% 2009 ROE = 5.0% 2010 ROE = 6.6% 2011 ROAS1 = 3.5% 2012 ROAS1 = 5.9% 2013 ROAS1 = 10.2% 2014 ROAS1 = 8.4% 2015 ROAS = 8.4% 2016 ROAS = 6.2% 2017 ROAS =5.0% 2018 ROAS = 8.0% 2019: ROAS = 7.7%

*2020 estimate based on annualized actual 1H:20 figure of $25.0B. ROE figures are GAAP; 1Return on avg. surplus. Excludes Mortgage & Financial Guaranty insurers for years (2009-2014). Sources: A.M. Best, ISO.

$14,

178

$5,8

40$1

9,31

6$1

0,87

0 $20,

598

$24,

404 $3

6,81

9$3

0,77

3$2

1,86

5

$3,0

46$3

0,02

9

$62,

496

$3,0

43

$35,

204

$19,

456 $3

3,52

2$6

3,78

4$5

5,87

0$5

6,82

6$4

2,92

4$3

6,81

3$5

9,99

4$5

0,00

0

$38,

501

$20,

559

$44,

155

$65,

777

-$6,970

$28,

672

-$10,000

$0

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

$70,000

$80,000

91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 20E

COVID impacts will likely have a negative influence on Net Income in 2020, but too

soon to determine magnitude

$ Millions

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8

Policyholder Surplus (Capacity), 2006:Q4–2020:H1

Sources: ISO, A.M .Best; Risk and Uncertainty Management Center, University of South Carolina.

($ Billions)

$487

.1$4

96.6

$512

.8$5

21.8

$478

.5$4

55.6

$437

.1$4

63.0 $490

.8$5

11.5 $540

.7$5

30.5

$544

.8$5

59.2

$559

.1$5

38.6

$550

.3

$567

.8$5

83.5

$586

.9$6

07.7

$614

.0$6

24.4 $653

.4

$671

.6$6

73.9

$675

.2$6

74.2

$673

.7$6

76.3

$700

.9$7

17.0 $7

50.7 $781

.5$7

42.1 $7

79.5

$802

.2$8

12.2 $8

47.8

$771

.9 $819

.7

$662

.0

$570

.7

$566

.5

$505

.0$5

15.6

$517

.9

$400$450$500$550$600$650$700$750$800$850$900

06:Q

407

:Q1

07:Q

207

: Q3

07:Q

4

08:Q

108

:Q2

08:Q

308

:Q4

09:Q

109

:Q2

09:Q

309

:Q4

10:Q

1

10:Q

210

:Q3

10:Q

411

:Q1

11:Q

211

:Q3

11:Q

412

:Q1

12:Q

2

12:Q

312

:Q4

13:Q

113

:Q2

13:Q

313

:Q4

14:Q

114

:Q2

14:Q

314

:Q4

15:Q

215

:Q4

16:Q

116

:Q4

17:Q

217

:Q4

18:Q

318

:Q4

19:Q

1

19:Q

219

:Q3

19:Q

420

:Q1

20:Q

2

Financial Crisis

(-16.2%)

2010:Q1 data includes $22.5B of paid-in capital from a holding company parent for one insurer’s investment in a non-insurance business.

Drop due to near-record 2011 CAT losses

(-4.9%)

Policyholder Surplus is the industry’s financial cushion against large insured events, periods of economic stress and financial market volatility. It is also a

source of capital to underwrite new risks.

The P/C insurance industry entered the COVID-19 pandemic from a

position strength and was able to withstand the 9.0% surplus decline in

Q1 2020

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Net Premium Growth (All P/C Lines): Annual Change,1971—2020:H1

-5%

0%

5%

10%

15%

20%

25%71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20

(Percent)1975-78 1984-87 2000-03

*Pre-COVID-19 forecast from A.M. Best Review & Preview (Feb. 2020). NOTE: Shaded areas denote “hard market” periodsSources: A.M. Best (1971-2013, 2020F), ISO (2014-19); Risk & Uncertainty Management Center, Univ. of South Carolina.

Net Written Premiums Fell 0.7% in 2007 (First Decline

Since 1943) by 2.0% in 2008, and 4.2% in 2009, the First 3-Year Decline Since 1930-33.

2020F: 3.8%*2020:H1: 2.9%

2019: 3.6%2018: 10.8%2017: 4.6%2016: 2.7%2015: 3.5%2014: 4.2

2013: 4.4%2012: +4.2%

2020 OutlookPre-COVID: 3.8%Through H1: 2.9%

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The Economy Drives P/C Insurance Industry Premiums:2006:Q1–2020:Q2*

Direct Premium Growth (All P/C Lines) vs. Nominal GDP: Quarterly Y-o-Y Pct. Change

Sources: SNL Financial; U.S. Commerce Dept., Bureau of Economic Analysis; ISO; I.I.I.; Risk and Uncertainty Management Center, University of South Carolina.

-6%

-4%

-2%

0%

2%

4%

6%

8%

2008:Q1

2008:Q3

2009:Q1

2009:Q3

2010:Q1

2010:Q3

2011:Q1

2011:Q3

2012:Q1

2012:Q3

2013:Q1

2013:Q3

2014:Q1

2014:Q3

2015:Q1

2015:Q3

2016:Q1

2016:Q3

2017:Q1

2017:Q3

2018:Q1

2018:Q3

2019:Q1

2019:Q3

2020:Q1

DWP y-o-y change y-o-y nominal GDP growth

Negative GDP growth in the first half of 2020, will cause DWP to decelerate sharply but with a lag and likely turn

negative in some lines. Rebates, discounts and rate decreases will amplify the deceleration.

Direct written premiums track nominal GDP fairly tightly over time, suggesting the P/C insurance industry’s growth prospects inextricably linked to economic performance.

10

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CIAB: Average Commercial Rate Change,All Lines, 2011:Q1–2020:Q2*

-0.1% 0.9

% 2.7% 4.4

%4.3

%3.9

% 5.0%

5.2%

4.3%

3.4%

2.1%

1.5%

-0.5%

0.1%

-0.7%

-2.3%

-3.3%

-3.1%

-2.8%

-3.7%

-3.9% -3.2%

-3.3% -2.

5%-2.

8% -1.3%

0.3% 1.7

% 2.4% 3.5

% 5.2% 6.2

% 7.5% 9.3

% 10.8%

-2.9%

1.6%

1.5%

-16%

-11%

-6%

-1%

4%

9%

14%

1Q11

2Q11

3Q11

4Q11

1Q12

2Q12

3Q12

4Q12

1Q13

2Q13

3Q13

4Q13

1Q14

2Q14

3Q14

4Q14

1Q15

2Q15

3Q15

4Q15

1Q16

2Q16

3Q16

4Q16

1Q17

2Q17

3Q17

4Q17

1Q18

2Q18

3Q18

4Q18

1Q19

2Q19

3Q19

4Q19

1Q20

2Q20

*Latest available.Note: CIAB data cited here are based on a survey. Rate changes earned by individual insurers can and do vary, potentially substantially.Source: Council of Insurance Agents & Brokers; Center for Risk and Uncertainty Management, Univ. of South Carolina.

Largest increase since 2003 for some accounts

(Percent)

Renewals turned positive in late 2011

in the wake of record tornado

losses and Hurricane Sandy

High CAT losses and poor underwriting results in recent years combined with COVID pressures, reduced capacity,

lower interest rates and increased uncertainty are exerting significant pressure on markets with overall

rates up by +9.3% as of Q1 2020

11 of 79

P/C Insurance Industry Combined Ratio, 2001–2020:H1*

*Excludes Mortgage & Financial Guaranty insurers 2008--2014.*First Half 2020.

Sources: A.M. Best, ISO (2014-2019).

95.7

99.3101.1

106.5

102.5

96.4 97.0 97.8100.7

99.298.9

103.7

99.2101.0

92.6

100.898.4

100.1

107.5

115.8

90

100

110

120

01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20**

As Recently as 2001, Insurers Paid Out Nearly

$1.16 for Every $1 in Earned Premiums

Relatively Low CAT Losses, Reserve Releases

Heavy Use of Reinsurance

Lowered Net Losses

Relatively Low CAT Losses, Reserve Releases

Higher CAT Losses,

Shrinking Reserve

Releases, Toll of Soft

Market

Sandy Impacts

Lower CAT

Losses

Best Combined Ratio Since 1949 (87.6)

Avg. CAT Losses, More

Reserve Releases

Cyclical Deterioration

Sharply higher CATs are

driving large underwriting

losses and pricing

pressure

Pre-COVID 2020Combined Ratio Est.

99.1 (A.M. Best)

COVID-19 has had no

discernable net impact on

pre-COVID expectations for under the

combined ratio though

Q2 2020

12

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13

Viral Outbreaks Are Not An Insurable Risk

*Sources: APCIA using published reports, including IMF, World Bank, Learnbonds.com; APCIA adjustment to 2020 USD

For Reference

2005 Katrina$58 Billion

2001 9/11$48 Billion

(insured losses)

Pandemics are frequent, severe, and widespread

(7 pandemics with multi-

billion$ economiclosses in just the

last 18 years)

Economic Losses from Pandemics

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14

Take Aways • Policyholder surplus deteriorated, but remains strong. Q2

shows the financial rebound in the investment markets, and does not reflect wildfire/hurricane season (Q3/Q4).

• COVID-19 impacts are not fully developed, but clearly adversely impact society, financial institutions and insurance markets.

• Due to market pressures and underwriting concerns, pricing continues to increase in most areas.

• California has unique challenges, underwriting scrutiny due to continued loss development.

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Impact of Natural Catastrophes

15 of 79

16

World Natural Catastrophes, 2020 1st Half

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U.S. Inflation-Adjusted Cat Losses

Sources: Property Claims Service, a Verisk Analytics business; Insurance Information Institute.

4037

79

104

53

1980s:$5 B

1990s: $15 B

2000s: $25 B2010s: $35 B

$0

$10

$20

$30

$40

$50

$60

$70

$80

$90

$100

80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18

Billi

ons,

201

8 $

Average forDecade

Hurricane Andrew WTC

Katrina, Rita, Wilma

2018 – Third worst year for U.S. Insured Catastrophe Losses. Average Insured Loss per Year for 1980-2019 is $19.8 B.

Harvey, Irma, Maria

36

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18

Hurricanes

Potential threats from hurricanes include powerful winds, heavy rainfall, storm surges, coastal and inland flooding, rip currents, tornadoes, and landslides.

Hurricane Dorian affecting Bahamas & Eastern SeaboardSeptember 2019

Hurricane Laura affecting Gulf Coast August 2020

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19

2020 Hurricane Season

Record-breaking Atlantic hurricane season draws to an endThe extremely active 2020 Atlantic hurricane season closed with a record-breaking 30 named storms and 12 landfallingstorms in the continental United States.

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20

Hurricanes

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Top 20 Most Costly Disastersin U.S. History—Katrina Still Ranks #1

21

(Insured Losses, 2017 Dollars, $ Billions)*

8 of the top 20 mostly costly insured events in US history occurred during the 2010s

17 of the 20 Most Expensive Insurance Events in US History Have Occurred Since 2004

*Estimated.Sources: PCS, RMS, Karen Clark & Co; USC Center for Risk and Uncertainty Management adjustments to 2017 dollars using the CPI.

COVID-19 insured property losses remain highly uncertain, but could easily make the top

10

$9.3 $9.7 $10.0$11.7$14.2$14.2$15.9$18.0$19.8$21.9$25.3$26.0$27.1

$51.6

$5.9 $6.0 $7.1 $7.5 $7.9 $8.3

$0

$10

$20

$30

$40

$50

$60

Jeanne(2004)

Frances(2004)

Rita (2005)

Torn./T-Storms (2011)

Torn./T-Storms (2011)

Hugo (1989)

Ivan (2004)

Charley(2004)

Michael(2018)

Wilma(2005)

Camp Fire(2018)

Ike (2008)

Harvey (2017)

Irma (2017)

Sandy(2012)

Maria (2017)

Northridge(1994)

9/11 (2001)

Andrew(1992)

Katrina(2005)

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Convective Storms

22

Commonly known as thunderstorms, intenseheating causes a parcel of moist air to risefrom the earth's surface into upper levels ofthe atmosphere, causing weather hazardssuch as lightning, heavy rain, hail, flashflooding and tornadoes.

This past August, lightning strikes (12,000)from storms like these sparked hundreds ofwildfires in California.The same month a derecho hit Iowa andfour other states, causing $7.5B+ in damage,most costly thunderstorm in U.S. History.

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23

Wildfires

The 2020 season was a record-setting one for the state of California and the United States as a whole. NIFC reported that as of Nov. 27 there were 52,113 wildfires that had burned 8,889,297 acres in 2020. This is approximately 2.3 million more acres burned than the 10-year average and almost double the acreage burned in the 2019 season.

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24

Wildfires

Record-breaking wildfires are occurring more often. Eight of the 10 largest fires in California history have burned in the past decade. On Sept. 9, the massive August Complex became the largest fire in the state's history.

Taken together, they dwarf the 10 biggest fires from the decade before.Source: Los Angeles Times of 79

25

Wildfires

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26

Earthquakes

Not to be overlooked, Earthquakes areinevitable and can happen at any time.

Economic impacts of an earthquake can bedevastating on first party property, andexpected business revenues.

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27

How Parametric Products Benefit Catastrophe-Driven Risk Transfer

Courtesy of the Alternative Risk group at AmWINS. of 79

Take Aways

28

• Are your emergency response plans in place for wildfire, earthquake and flooding?

• Does your entity have the financial means to rebuild?

• COVID-19 continues to impact all sectors, and economic impacts will continue to build.

• California’s exposure to large property losses from wildfire has upended the property market. Fires continue to increase in size and frequency.

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29

The New Normal

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30

We are in unprecedented times…..

• We are in the midst of a pandemic that turned our lives upside down;

• Public trust has eroded;

• Community trust in Law Enforcement at historic lows;

• Social Injustice has caused much angst among citizens and brought about protests pitting groups against each other;

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31

The New Normal Risk Matrix featuring 9 ways businesses could change as a result of COVID-19

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32

10 Critical Risks Shaping The Liability Landscape Today

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33

Hyper-Social Inflation

Texas - $80M – Trucking accident injuring one person.Washington - $123M – Duck Boat accident killing and injuring many.Georgia - $280M – Trucking accident killing five peopleAlabama - $152M – Auto accident injuring one personCalifornia - $2B – Pesticide product allegedly harmed two peopleNew York - $56M – Medical accident during surgery injuring one personMaryland - $230M – Medical accident during a delivery injuring one personPennsylvania - $8M – Pharmaceutical product led to unwanted side effects in many personsGeorgia - $125M Living conditions in an apartment building complex resulted in one deathNew York - $110M – Construction accident killing one person.

Source: Markel Insurance

“Social Inflation is a uniquely American phenomenon because

the United States is the only country in the world that

routinely uses jury trials for civil cases. Jurors have unconscious

biases derived from the culmination of their life

experiences.”

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34

Large Public Entity Verdicts/SettlementsLoss Year Description Total Paid

2018 Sexual Abuse (Class Action) $500,000,000 2017 Sexual Abuse (Class Action) $215,000,000 2015 Methane Gas Leak $120,000,000 2015 Bus Shelter Collapse (Single Plaintiff) $115,000,000 2014 Child Abuse/Foster Care $113,400,000 2011 Police Shooting/Wrongful Death $97,000,000 2014 Dangerous Condition/Landslide $71,500,000 2016 Vehicle Accident/Fire Ambulance $65,750,000 2016 Wrongful Death $60,000,000 2015 Strip Search (Class Action) $53,000,000 2012 Dangerous Condition/Bridge Fire $50,000,000 2017 Vehicle Accident/Motorcycle vs Auto $46,000,000 2015 Vehicle Accident/Sherriff Vehicle $42,000,000 2011 Wrongful Conviction $40,000,000 2014 Dangerous Condition/Vehicle Accident $32,500,000 2015 Sexual Abuse $31,000,000 2016 Dangerous Condition/Vehicle Accident $30,000,000

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35

The Ransomware Epidemic

Ransomware surged in recent years, and there is no foreseeable slowdown. All industry segments were impacted. Manufacturing and professional services were particularly hard hit, followed closely by healthcare, education, and government entities.

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36

Cyber Attacks on Municipalities

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Evolving: e-Crime – Fraudulent Instruction

37

Crime coverage can be extended to cover Wire Transfer Fraud, which is:

• A fraudulent transfer, not authorized by the entity

However, Fraudulent Instruction is different, it is: • Your employee, in good faith, accidently authorized a

transfer as a result of fraudulent instruction• This coverage carries a higher retention ($25k min) and

lower limit ($250,000 typically)• There is a substantial additional premium to add this

coverage, with a supplemental applicationFraudulent Instruction, to the insurance industry, is an“Internal Controls” issue, and applications will focus on safetychecks, confirmations, authority levels, etc.

• Cyber policies also cover Impersonation Fraud

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38

Evolving: Officer Involved Shootings 2020

The Washington Post is tracking this national figure best, with 999 in 2019, and 976 in 2020.

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39

Social Unrest – Critical Focus on Law Enforcement

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40

Aging Infrastructure

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41

Homelessness

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42

Take Aways

• Challenges and uncertainties resulting from the ongoing COVID-19 pandemic response.

• Is your entity prepared for further financial insecurity?

• Cyber Security: “Not if, but When” your entity will suffer a data breach. Are you prepared?

• Are law enforcement tactics evolving to meet this moment?

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43

Toward the Future

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44

Looking Ahead – The MarketLiability Market:

• Increasing reserves for Law Enforcement Liability claims.

• SAM claims continue to come forward, high values and potential coverage issues (occurrences, date of loss, coverage exclusions/caps) – insureds’ Policies and Procedures increasing focus of underwriting.

• Continued market hardening expected.

Workers Compensation Market:

• Treatment of COVID-19 claims could still impact market significantly.

• Unlike other core coverage lines, WC remains relatively stable.

Property Market:

• Increased scrutiny of client data (SOV, loss runs, COPE, etc.).

• Increased retentions and caps on certain types of exposure (wildfire/SRCC).

• Decreased limits provided by single carriers.

• Premium increases expected.

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45

Parting Thoughts2020 is behind us… what’s next?

• Expect upward pressure on Liability & Property rates.

• Public agencies with a history of or exposure to large verdicts and liability settlements will continue to see increases and the marketplace for coverage will continue to retract.

• Dramatic price increases and reductions in coverage can be expected for Sexual Abuse and Molestation.

• Social Unrest focused on Public Entity infrastructure (City Hall, Police Station, etc.) could dramatically change market if several large urban losses are recorded.

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January 2021

Thank you! Please contact us if you would like a copy of this presentation.

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Subject: Annual Contribution Estimates for 2021-22

Action for Consideration: Receive and file

Background:

The draft FY 2021-22 annual contribution estimates are being submitted for Executive Committee consideration.

The enclosed summary document includes the draft/estimated 2021-22 deposit contributions by member for the Liability and Workers’ Compensation programs and the projected 2021-22 premiums for the Crime, Cyber Liability, EPL (ERMA), Alliant Deadly Weapons Response Program (ADWRP), and Property/Auto Physical Damage programs. These amounts should be used as budgetary guidance by the membership for inclusion in the members’ budgets.

PERMA FY 2021-22 Budget PERMA’s expenditure budget is an integral part of the Liability and Workers’ Compensation deposit contributions as expenditures (program and administrative) are allocated to the two programs for inclusion in the contributions. Staff is looking at structural changes in the operations of PERMA from staffing and contractual services. These changes will be incorporated into the budget that will be presented to the Executive Committee at its May meeting for review and consideration. For budgetary purposes, conservative draft expenditures have been developed and included in the estimates.

Excess Liability Coverage As you have heard in past presentations and again in Alliant’s Insurance Market update, public entities throughout the State are experiencing adverse loss development due to social inflation and nuclear verdicts resulting in higher-than-normal increases in renewal contributions. PERMA is no exception. The estimated FY 2021-22 renewal contribution for excess liability coverage is $5.2 million which is an increase of $1.6 million or 45% over the FY 2020-21 renewal contribution of $3.6 million, which is an increase of $1.3 million or 59% over the FY 2019-20 renewal contribution of $2.3 million. In two years, the contribution for excess liability coverage is projected to increase $2.9 million or 128%.

Confidence Level Funding Prior to FY 2019-20, the Liability program was funded at a 65% confidence level. Recognizing the need to increase funding to an 80% confidence level, the Board approved funding the Liability program in FY 2019-20 at 72.5%, which is midpoint

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Annual Contribution Estimates for 2021-22 Page 2 March 4, 2021 ____________________________________________________________________________________ between 65% and 80%, with the intent to fund FY 2020-21 at an 80%. However, due to the increase in funding rates at the higher layers, the Board opted to fund FY 2020-21 at a 76.25%, the midpoint between 72.5% and 80%. For FY 2021-22, staff is proposing funding the Liability program at the 80% confidence level. The funding rates for FY 2021-22 increase from 19% to 26% from the current year rates depending on the members’ self-insured retention (SIR) selection.

The Workers’ Compensation program is funded at the 80% confidence level which it has been since FY 2015-16. Prior to FY 2015-16 it was funded at a 65% confidence level. The overall funding rates for FY 2021-22 decrease slightly by -0.6% from the current year rates.

A confidence level is the statistical certainty that an actuary believes funding will be sufficient. For example, an 80% confidence level means that the actuary believes funding will be sufficient in eight years out of ten.

FY 2021-22 Estimates by Program for Budgetary Guidance This summary provides the membership the estimated deposit contributions for the Liability and Workers’ Compensation programs and the estimated 2021-22 premiums for the Crime, Cyber Liability, EPL (ERMA), ADWRP and Property programs

• Liability and Workers’ Compensation Deposit Contributions – PERMA hasdeveloped a preliminary conservative budget and finalization should not increasedeposit contributions but could result in lower deposit contributions.

• Crime – For budgeting consideration, the broker recommends a 10% increaseover the current year premiums.

• Cyber Liability – PRISM provided an estimated premium range. For budgeting,PERMA used the high-end of the range.

• EPL (ERMA) – ERMA has not provided any contribution indications at this time.For budgeting purposes, staff recommends a 15% increase over the current yearcontributions. Once draft contribution information is received from ERMA,PERMA will disseminate it to the ERMA participants.

• ADWRP – For budgeting purposes, a 10% increase has been added to thecurrent year premiums.

• Property/APD – Rates have not been finalized. The broker is recommending a40% increase over the current year rates.

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Annual Contribution Estimates for 2021-22 Page 3 March 4, 2021 ____________________________________________________________________________________ Factors Used to Develop the Estimates

• Deposit contributions are based on current year selected self-insured retentions(SIR). If your agency would like to change its SIR for the upcoming policy year,please contact staff. Selecting a higher retention could lower your agency’scontribution, but also increases your agency’s exposure to loss payments.

• Member Payroll - Payroll is the exposure base unit in determining GeneralLiability, Workers’ Comp and EPL contributions. Actual 2020 calendar yearpayroll is the payroll base used in the 2021-22 annual contributions.

• Experience Modification Factors – General Liability, Workers’ Comp and ERMAcontributions are experience rated. Experience rating is a method of adjusting thecontributions for a risk based on past loss experience for that risk compared toloss experience for an average risk. To adjust contributions, PERMA uses anexperience modification factor (ex-mod) to modify payroll (payroll x ex-mod). Theex-mod is actuarially developed using five years of losses (capped to $50,000)and five years of payroll. Capping the losses produces an ex-mod that isfrequency sensitive, not severity sensitive. Changes from year to year arecapped to +/- 20%.

For the three Workers’ Compensation Program members with retentions less than $250,000, the actuary developed separate, stand-alone ex-mods for these members for funding the layers from $0 to $250,000.

• Funding Rates – Funding rates are per $1,000 of modified payroll. For 2021-22,the General Liability and Workers’ Compensation programs are funded using the80% confidence level rates. Prior to FY 2019-20, the General Liability programwas funded at the 65% confidence level, but due to dramatic increases inadverse loss development and the erosion of the program’s net position, theExecutive Committee and Board approved increasing the funding rates beginningin 2019-20 so that the program would be funded at the 80% confidence level by2021-22.

• Property/Vehicle Values – The values used in calculating the premiums are as ofFebruary 19, 2021. It is incumbent that members report changes to their propertyand vehicle schedules to ensure coverage and appropriate premium calculation.

Comparison of these factors are designed to assist the member in determining which factor(s) are impacting the cost of coverage. For example, if a member is experiencing a 40% increase in its Liability deposit, it could be due to a 5% increase in payroll, 10% increase in the ex-mod factor, and a 20% increase in loss funding.

The finalized FY 2021-22 Budget and Annual Premiums will be presented to the Board at its June 3, 2021 meeting for approval.

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Annual Contribution Estimates for 2021-22 Page 4 March 4, 2021 ____________________________________________________________________________________

Fiscal Impact: Following is a comparison of the estimated cost of coverage for 2021-22 to the actual cost of coverage for 2020-21:

Draft/Estimated Actual Increase / (Decrease) Program FY 2021-22 FY 2020-21 $ %

Liability $ 13,427,400 $ 9,999,956 $ 3,427,444 34.3% Workers' Compensation 14,451,200 13,503,288 947,912 7.0% Crime 49,440 44,846 4,594 10.2% Cyber Liability 71,770 42,066 29,704 70.6% EPL (ERMA) 1,664,900 1,446,921 217,979 15.1% ADWRP 11,350 10,207 1,143 11.2% Property 3,525,300 2,418,564 1,106,736 45.8% Total $ 33,201,360 $ 27,465,848 $ 5,735,512 20.9%

Attachment: FY 2021-22 Estimated Premiums by Program for Budgetary Guidance

Prepared By: Michael Caton, Financial Analyst

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PUBLIC ENTITY RISK MANAGEMENT AUTHORITY (PERMA) 2/23/2021ESTIMATED PREMIUMS BY PROGRAM FOR BUDGETARY GUIDANCEFY 2022

General EPLLiability Member Deposit / Pool / Crime Cyber (ERMA) FY 2022

Member (80% Conf) Non‐Risk Sharing Risk Sharing Total Coverage Liability (80% Conf) ADWRP Property Total

Banning 882,100$ 926,100$ 308,900$ 1,235,000$ 2,450$ 3,530$ 222,900$ 1,290$ 433,900$ 2,781,170$ Barstow 702,000 1,011,100 337,400 1,348,500 2,390 3,020 117,900 560 211,100 2,385,470 Blythe 253,600 204,100 82,400 286,500 1,300 3,020 ‐ 450 129,100 673,970 Canyon Lake 59,400 ‐ ‐ ‐ 880 1,510 3,400 120 5,800 71,110 Cathedral City 849,700 1,250,900 439,200 1,690,100 ‐ ‐ 209,900 ‐ ‐ 2,749,700 Coachella 289,000 285,900 99,800 385,700 3,160 1,510 39,600 540 145,000 864,510 Desert Hot Springs 563,900 246,900 420,200 667,100 3,440 1,510 42,700 360 106,100 1,385,110 Eastvale 180,300 ‐ ‐ ‐ 880 1,510 14,500 200 33,700 231,090 Hesperia 762,100 497,500 182,400 679,900 2,270 6,800 94,400 750 219,500 1,765,720 Holtville 98,900 67,600 27,300 94,900 880 1,510 8,100 220 52,500 257,010 ICTC 58,300 ‐ ‐ ‐ ‐ 1,510 4,700 180 143,800 208,490 IVECA 26,700 ‐ ‐ ‐ ‐ 1,510 ‐ 120 3,500 31,830 Jurupa Valley 241,300 ‐ ‐ ‐ 1,760 1,510 10,400 140 18,400 273,510 La Mesa 1,277,800 ‐ 475,300 475,300 3,560 3,020 155,900 540 174,100 2,090,220 March JPA 110,100 ‐ ‐ ‐ 880 3,020 ‐ 280 53,200 167,480 MD&MIWMA 28,200 ‐ ‐ ‐ ‐ 1,510 ‐ ‐ ‐ 29,710 Moreno Valley 964,300 ‐ ‐ ‐ 4,250 7,070 ‐ 1,310 457,600 1,434,530 Murrieta 1,326,100 2,647,100 809,600 3,456,700 4,130 4,670 138,800 510 120,700 5,051,610 Norco 308,600 ‐ 86,400 86,400 ‐ 1,510 ‐ 400 86,800 483,710 Perris 605,400 303,000 125,700 428,700 3,570 4,510 52,100 390 120,600 1,215,270 PS Tramway 227,000 ‐ ‐ ‐ 1,280 1,510 30,700 470 117,500 378,460 PVVTA 26,700 ‐ ‐ ‐ ‐ 1,510 ‐ 120 19,100 47,430 Rancho Mirage 334,800 263,900 114,300 378,200 5,150 3,020 67,300 750 218,900 1,008,120 RTC 48,100 ‐ ‐ ‐ 870 1,510 3,500 110 600 54,690 San Jacinto 324,700 103,100 109,500 212,600 970 1,510 27,500 310 105,100 672,690 SunLine Transit 799,600 1,093,800 380,900 1,474,700 2,740 1,510 194,800 670 460,200 2,934,220 Victorville 1,899,600 1,017,000 482,600 1,499,600 ‐ ‐ 216,400 ‐ ‐ 3,615,600 VVEDA 26,700 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ 26,700 VVTA 104,200 ‐ ‐ ‐ 870 4,510 9,400 260 51,000 170,240 Westmorland 48,200 14,100 32,000 46,100 880 1,510 ‐ 190 35,900 132,780 PERMA Operations ‐ ‐ ‐ ‐ 880 1,420 ‐ 110 1,600 4,010

Adelanto ‐ Withdraw ‐ ‐ 3,100 3,100 ‐ ‐ ‐ ‐ ‐ 3,100 Stanton ‐ Withdrawn ‐ ‐ 2,100 2,100 ‐ ‐ ‐ ‐ ‐ 2,100

Total Funding 13,427,400$ 9,932,100$ 4,519,100$ 14,451,200$ 49,440$ 71,770$ 1,664,900$ 11,350$ 3,525,300$ 33,201,360$

The estimates are provided for budgetary guidance.FY 2021‐22 Premiums will be presented at the June 3, 2021 Board of Directors' Meeting for approval.

Workers' Compensation (80% Conf)

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PUBLIC ENTITY RISK MANAGEMENT AUTHORITY (PERMA) 2/23/2021GENERAL LIABILITY PROGRAMFY 2022

Modified Self‐Insured SIRCY 2020 CY 2019 Exposure Retention Funding Pool Excess Admin/Program FY 2022

Member (000) (000) $ % FY 2022 FY 2021 % Unit (SIR) Rate Funding Insurance Costs Total

Banning 19,330$ 17,835$ 1,495$ 8.4% 0.817 0.756 8.1% 15,793$ $50,000 25.57 403,830$ 367,340$ 110,920$ 882,100$ Barstow 15,114 14,152 962 6.8% 1.003 1.253 ‐20.0% 15,159 $125,000 19.77 299,700 287,210 115,050 702,000 Blythe 4,585 4,636 (51) ‐1.1% 0.876 1.028 ‐14.8% 4,016 $50,000 25.57 102,690 87,130 63,710 253,600 Canyon Lake 741 544 197 36.2% 0.967 0.979 ‐1.2% 716 $0 34.31 24,570 14,080 20,700 59,400 Cathedral City 23,977 23,657 320 1.4% 0.798 0.762 4.7% 19,134 $250,000 14.35 274,580 457,640 117,410 849,700 Coachella 6,400 6,336 64 1.0% 0.759 0.785 ‐3.3% 4,858 $125,000 19.77 96,050 121,620 71,290 289,000 Desert Hot Springs 7,901 6,820 1,081 15.9% 1.305 1.505 ‐13.3% 10,311 $10,000 31.26 322,330 150,150 91,380 563,900 Eastvale 2,650 2,314 336 14.5% 1.004 0.966 3.9% 2,660 $0 34.31 91,270 50,360 38,600 180,300 Hesperia 12,054 12,657 (603) ‐4.8% 1.400 1.338 4.6% 16,876 $50,000 25.57 431,520 229,080 101,430 762,100 Holtville 1,402 1,293 109 8.4% 0.951 0.958 ‐0.7% 1,334 $0 34.31 45,770 26,650 26,470 98,900 ICTC 706 738 (32) ‐4.3% 0.957 0.967 ‐1.0% 675 $0 34.31 23,160 13,420 21,650 58,300 IVECA 200 200 ‐ 0.0% 0.995 1.006 ‐1.1% 199 $0 34.31 6,830 3,800 15,990 26,700 Jurupa Valley 2,343 1,658 685 41.3% 2.001 2.259 ‐11.4% 4,688 $0 34.31 160,850 44,520 35,920 241,300 La Mesa 27,193 24,950 2,243 9.0% 0.922 0.769 19.9% 25,072 $50,000 25.57 641,100 516,750 119,930 1,277,800 March JPA 1,642 1,434 209 14.6% 0.892 0.890 0.2% 1,465 $0 34.31 50,270 31,210 28,560 110,100 MD&MIWMA 200 200 ‐ 0.0% 0.995 1.006 ‐1.1% 199 $0 34.31 6,830 3,800 17,490 28,200 Moreno Valley 25,594 26,836 (1,242) ‐4.6% 1.025 1.016 0.9% 26,234 $250,000 14.35 376,460 486,370 101,430 964,300 Murrieta 30,415 29,620 795 2.7% 1.057 1.107 ‐4.5% 32,148 $125,000 19.77 635,570 577,980 112,510 1,326,100 Norco 4,943 4,702 241 5.1% 1.609 1.867 ‐13.8% 7,954 $125,000 19.77 157,260 93,940 57,340 308,600 Perris 9,144 8,334 811 9.7% 1.063 1.215 ‐12.5% 9,721 $0 34.31 333,530 174,780 97,080 605,400 PS Tramway 3,958 4,909 (951) ‐19.4% 0.832 0.820 1.5% 3,293 $10,000 31.26 102,940 75,220 48,750 227,000 PVVTA 200 200 ‐ 0.0% 0.995 1.006 ‐1.1% 199 $0 34.31 6,830 3,800 15,990 26,700 Rancho Mirage 7,682 8,067 (384) ‐4.8% 0.693 0.700 ‐1.0% 5,324 $125,000 19.77 105,260 146,990 82,470 334,800 RTC 559 546 13 2.4% 0.956 0.963 ‐0.7% 535 $0 34.31 18,360 10,620 19,120 48,100 San Jacinto 5,194 4,386 808 18.4% 1.239 1.110 11.6% 6,435 $50,000 25.57 164,550 98,700 61,450 324,700 SunLine Transit 18,629 17,409 1,220 7.0% 0.931 0.954 ‐2.4% 17,344 $125,000 19.77 342,900 354,020 102,680 799,600 Victorville 39,239 34,627 4,613 13.3% 1.034 0.923 12.0% 40,574 $50,000 25.57 1,037,480 745,670 116,410 1,899,600 VVEDA 200 200 ‐ 0.0% 0.995 1.006 ‐1.1% 199 $0 34.31 6,830 3,800 15,990 26,700 VVTA 1,451 1,489 (38) ‐2.6% 0.942 0.922 2.2% 1,367 $0 34.31 46,910 27,570 29,640 104,200 Westmorland 562 652 (91) (0.14) 0.947 0.950 ‐0.3% 532 $0 34.31 18,260 10,680 19,240 48,200

Total 274,209$ 261,401$ 12,810$ 4.9% 275,014$ 6,334,490$ 5,214,900$ 1,876,600$ 13,427,400$ 47.2% 38.8% 14.0%

Pool Funding Excess Ins Admin/Program Costs

Self‐InsuredRetention FY 22 FY 21 $ %

$0 34.31 28.95 5.36 18.5%$5,000 32.44 27.14 5.30 19.5%$10,000 31.26 26.02 5.24 20.1%$25,000 28.64 23.47 5.17 22.0%$50,000 25.57 20.68 4.89 23.6%$75,000 23.19 18.68 4.51 24.1%$100,000 21.28 17.12 4.16 24.3%$125,000 19.77 15.92 3.85 24.2%$250,000 14.35 11.41 2.94 25.8%$500,000 7.70 6.21 1.49 24.0%

Comparison

Payroll ‐ Base UnitExperience Modification

Factors (Ex‐Mods) General Liability Deposit Premium ‐ ESTIMATED

Variance

Fuding Rates @ 80% Confidence Level

Pool Funding 47%

Excess Ins 39%

Admin/Program Costs 14%

GENERAL LIABILITY PROGRAM

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PUBLIC ENTITY RISK MANAGEMENT AUTHORITY (PERMA) 2/23/2021WORKERS' COMPENSATION PROGRAMFY 2022

$0 toModified Self‐Insured SIR Pool

CY 2020 CY 2019 Exposure Retention Funding Funding Member Deposit Pool Funding Excess Program Admin FY 2022Member (000) (000) $ % FY 2022 FY 2021 % Unit (SIR) Rate Rate $0 to SIR SIR to $500K Insurance Costs Costs Total

Banning 19,330$ 17,835$ 1,495$ 8.4% 0.989 0.756 8.1% 19,118$ $250,000 48.44 4.22 926,100$ 80,680$ 164,240$ 57,410$ 6,560$ 1,235,000$ Barstow 15,114 14,152 962 6.8% 1.381 1.253 ‐20.0% 20,872 $250,000 48.44 4.22 1,011,100 88,080 148,540 94,190 6,560 1,348,500 Blythe 4,585 4,636 (51) ‐1.1% 0.919 1.028 ‐14.8% 4,213 $250,000 48.44 4.22 204,100 17,780 44,100 16,940 3,550 286,500 Cathedral City 23,977 23,657 320 1.4% 1.077 0.762 4.7% 25,823 $250,000 48.44 4.22 1,250,900 108,980 247,110 76,510 6,560 1,690,100 Coachella 6,400 6,336 64 1.0% 0.922 0.785 ‐3.3% 5,901 $250,000 48.44 4.22 285,900 24,910 47,230 23,100 4,560 385,700 Desert Hot Springs 7,901 6,820 1,081 15.9% 1.251 1.505 ‐13.3% 9,885 $50,000 24.37 28.29 246,900 285,520 76,920 52,370 5,390 667,100 $0 to $200K Layers 1.282 1.291 ‐0.7% 10,129 ‐ ‐ Hesperia 12,054 12,657 (603) ‐4.8% 0.852 1.338 4.6% 10,270 $250,000 48.44 4.22 497,500 43,340 88,950 43,470 6,560 679,900 Holtville 1,402 1,293 109 8.4% 0.994 0.958 ‐0.7% 1,394 $250,000 48.44 4.22 67,600 5,890 11,710 7,850 1,780 94,900 La Mesa 27,193 24,950 2,243 9.0% 1.027 0.769 19.9% 27,927 $250,000 ‐ 4.22 ‐ 117,860 275,110 75,730 6,560 475,300 Murrieta 41,335 39,597 1,739 4.4% 1.322 1.107 ‐4.5% 54,645 $250,000 48.44 4.22 2,647,100 230,610 425,180 147,230 6,560 3,456,700 Norco 4,943 4,702 241 5.1% 0.950 1.867 ‐13.8% 4,696 $250,000 ‐ 4.22 ‐ 19,820 37,030 25,760 3,750 86,400 Perris 9,144 8,334 811 9.7% 0.684 1.215 ‐12.5% 6,255 $250,000 48.44 4.22 303,000 26,400 67,480 25,720 6,080 428,700 Rancho Mirage 7,682 8,067 (384) ‐4.8% 0.709 0.700 ‐1.0% 5,447 $250,000 48.44 4.22 263,900 22,990 56,690 29,290 5,270 378,200 San Jacinto 5,194 4,386 808 18.4% 0.868 1.110 11.6% 4,508 $100,000 36.00 16.66 103,100 54,630 38,330 12,580 3,890 212,600 $0 to $200K Layers 0.551 0.552 ‐0.2% 2,862 SunLine Transit 18,629 17,409 1,220 7.0% 1.212 0.954 ‐2.4% 22,579 $250,000 48.44 4.22 1,093,800 95,290 137,460 141,580 6,560 1,474,700 Victorville 39,239 34,627 4,613 13.3% 0.535 0.923 12.0% 20,993 $250,000 48.44 4.22 1,017,000 88,590 328,610 58,820 6,560 1,499,600 Westmorland 562 652 (91) ‐14.0% 1.023 0.950 ‐0.3% 575 $50,000 24.37 28.29 14,100 16,320 5,390 8,930 1,320 46,100 $0 to $200K Layers 1.027 1.039 ‐1.2% 577

Adelanto ‐ Withdrawn ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ 2,032 1,000 3,100 Stanton ‐ Withdrawn ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ 1,016 1,000 2,100

Total 244,687$ 230,110$ 14,577$ 6.3% 258,669$ 9,932,100$ 1,327,690$ 2,200,080$ 900,528$ 90,070$ 14,451,200$ 68.7% 9.2% 15.2% 6.2% 0.6%

Member Deposit Pool Funding Excess Ins Program Costs Admin Costs

Self‐InsuredRetention FY 22 FY 21 $ %

`$0 to $500,000 52.66 52.96 ‐0.30 ‐0.6%

$0 to $50,000 24.37 24.15 0.22 0.9%$50,000 to $100,000 11.63 11.82 ‐0.19 ‐1.6%$100,000 to $150,000 6.34 6.50 ‐0.16 ‐2.5%$150,000 to $200,000 3.69 3.79 ‐0.10 ‐2.6%$200,000 to $250,000 2.41 2.32 0.09 3.9%$250,000 to $500,000 4.22 4.38 ‐0.16 ‐3.7%

Comparison

Fuding Rates @ 80% Confidence Level

Payroll ‐ Base Unit Workers' Compensation Deposit Premium ‐ ESTIMATED Experience Modification

Factors (Ex‐Mods)Variance

Member Deposits 69%

Pool Funding 9%

Excess Ins 15%

Program Costs 6%

Admin Costs 1%

WORKERS' COMPENSATION PROGRAM

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