Kentucky FAIR Plan Governing Committee Annual Meeting June 4, 2020 - PowerPoint PPT Presentation

Kentucky FAIR Plan Governing Committee Annual Meeting June 4, 2020

Meeting Etiquette & Expectations Keys to a successful meeting Please keep your phone on mute to keep background noise to a minimum.  If you need to step away from the phone, please do not place us on hold,  as your hold music would disrupt the presenter. Participation Role Call: During role call please unmute your phone. We will call you by  name and company. We ask that you verbally confirm you are in attendance. Voting: During voting we ask that you unmute your phone. We will ask for  verbal affirmation as we do in our in-person meetings. Questions: You may ask your question(s) throughout the presentation by  unmuting your phone or by typing in the chat box. You may also raise your hand, using the hand icon next to your name in the chat room. Motions: We ask those whom motion and second to identify themselves by  name. 2

Annual and Governing Committee Meeting Agenda 1. Roll Call 2. Anti-Trust Preamble 3. Approval of Minutes 4. Election of Members of Governing Committee 5. Election of Officers 6. Auditor’s Report and Financial Statement 7. Review of Investment Portfolio 8. Executive Director’s Report 9. Other Business 10. Adjournment 3

Approval of the Minutes Approval of minutes of prior meetings:  October 24, 2019 Governing Committee (PAGE 3)  April 13, 2020 Products and Forms Committee (PAGE 10)  April 13, 2020 Audit Committee (PAGE 12)  April 13, 2020 Finance and Investment Committee (PAGE 14) Need: A motion to approve minutes, please. 4

Election of Governing Committee Members New member since last annual meeting:  John Minor – Kentucky National Insurance Company (PAGE 16)  Approved by the Department of Insurance.  Motion – Election of new member 5

Election of Officers Nominations: Lisa Pierce Name Kristen Mellinger Chair Rudy Schlich Vice Chair Mark Hillis Secretary Treasurer 6

Report of Financial Audit Deming, Malone, Livesay & Ostroff Sarah Antle, CPA  Audited Financials – PAGE 19  Letter to Management – PAGE 38 7

Review of Investment Portfolio Merrill Lynch Steven L. Holley, CRPC, CFM 8

Executive Director’s Report 9

Written Premium $7,000,000 $6,000,000 $5,000,000 $4,000,000 $3,000,000 $2,000,000 $1,000,000 $0 2016 2017 2018 2019 Written Premium $6,480,263 $5,714,365 $5,039,864 $4,330,252 10

New Business Applications 5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 # Appl. 2,702 2,959 4,132 5,000 4,258 3,153 2,416 1,920 1,442 1,390 11

Number of Inforce Policies 12000 10000 8000 6000 4000 2000 0 2013 2014 2015 2016 2017 2018 2019 # Policies 10057 10194 9456 8443 7522 7277 6605 12

Operating Expense Ratio 30.00% 25.00% 20.00% 15.00% 10.00% 5.00% 2016 2017 2018 2019 Exp. Ratio 18.66% 22.76% 25.61% 28.45% 13

Number of Reported Claims 450 400 350 300 250 200 150 100 50 0 2016 2017 2018 2019 # of Claims 420 336 307 318 14

Loss and LAE Ratio 70.0% 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% 2015 2016 2017 2018 2019 Loss Ratio 40.21% 47.26% 47.89% 30.51% 37.17% LAE 12.16% 13.74% 14.76% 14.95% 17.84% 15

Combined Ratio 100.00% 94.57% 95.00% 92.65% 90.00% 88.78% 85.00% 80.21% 80.00% 75.00% 70.00% 16 2016 2017 2018 2019

Balance Sheet 25,000,000 20,000,000 15,000,000 10,000,000 5,000,000 0 2016 2017 2018 2019 Assets $21,063,692 21,941,623 $22,315,335 $18,477,797 Liabilities $3,851,454 $3,612,158 $2,781,288 $2,643,216 Equity $17,212,239 $18,329,465 $19,534,047 $15,834,581 17

Budget 18

2020 1 st Quarter 19

Written Premium $2,000,000 $1,228,386 -16.4% $1,026,544 $1,000,000 $0 2019 1st Quarter 2020 1st Quarter 20

New Applications 500 393 329 -16.3% 0 2019 1st Quarter 2020 1st Quarter 21

Policies in Force 8,000 7,152 7,000 -10.6% 6,390 6,000 2019 1st Quarter 2020 1st Quarter 22

Policies in Force CO FF 3% 2% HO8 10% HO4 0% HO6 HO2 5% DP2 8% DP1 72% 23

Claims Reported All Other 7% Fire Lightning 10% Smoke 1% Theft 3% Vandalism Malicious Mischief 4% Windstorm Hail 75% 24

Reinsurance  Contract runs 10/1 to 9/30  Multi-year deal with Guy Carpenter as Broker  Renewal data provided in July  Reinsurance and Equity meeting is scheduled in Sept 2020. 25

Other Business 26

Updates  Member’s Equity Update  Outstanding Balance: $578K  Follow up letters sent April 2020  Building Sale – Plan Relocation  Closed on the building April 22 nd  Actively looking for a new location  COVID-19  KFP Staff  Policyholders  Market Impacts

FAIR Plan Cost Sharing Alliance Mission Statement  The shared services mission of the FAIR Plan Cost Sharing Alliance is to implement and manage high quality services for FAIR Plans at the lowest possible cost. We will seek to eliminate duplicated FAIR Plan insurance operating costs in an efficient and cost-effective manner. Acting as a service manager for various FAIR Plans, we will strive to reduce operating expenses by combining services or group purchasing for Plans where size and activity level may require the improved efficiencies to be achieved by centralized operations. We will ensure that cost-effective quality services of optimum value are provided to each Plan, while working to keep the costs of the consolidated services and operations as low as possible. We will continue to streamline and monitor the consolidated services we manage on behalf of the FAIR Plans. We will continuously evaluate the shared services to ensure we meet the needs of our insureds and the standards of our individual boards, member companies and Departments of Insurance. We understand that each FAIR Plan is ultimately responsible for its own operations and data and as a result we will apply the appropriate oversight, guidance and data integrity standards to all centralized operations. Letter shared with the Illinois FAIR Plan Governing Committee.  28

Team Building and Community Service • We raised money internally and purchased gifts for Maryhurst around the holiday season. • Our team worked onsite with Active Hero’s to provide organization and general clean up around their property. • The Plan, working with locally owned restaurants in downtown Louisville provided over 1,200 lunches for front line healthcare workers and first responders during the onset of COVID-19. 29

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Other Business  1 st Quarter PIPSO Report – (PAGE 44)  2020-2021 Committee Assignments (PAGE 45)  Comments from the Department of Insurance  Next Meeting: 10/22/2020 31

Thanks for your support Adjournment 32