Chapter 2.05
RISK MANAGEMENT
Sections:
2.05.010 Risk management division established – Administrator.
2.05.020 Objectives.
2.05.030 Risk manager – Authority and duties.
2.05.040 Risk retention.
2.05.050 Procurement of insurance and services.
2.05.060 Safety program – Effect on other municipal departments.
2.05.070 Self-insurance program.
2.05.080 Self-insurance fund.
2.05.090 Administration of self-insurance fund.
2.05.100 Long-term award fund.
2.05.110 Self-insurance funds – Receipts – Disbursements.
2.05.120 Adjustment and payment of self-insured losses.
2.05.190 Municipal officer and employee bond.
2.05.200 School district included.
2.05.010 Risk management division established – Administrator.
There is in the department of human resources the division of risk management. The division of risk management shall be administered by the risk manager. (Ord. 2002-10 § 2, 2002; Ord. 86-017 § 4, 1986; Ord. 78-32 § 2, 1978)
2.05.020 Objectives.
The borough’s policy with respect to the management of all risk of accidental loss shall have as its objectives:
A. The protection of the borough against the financial consequences of accidental loss which are catastrophic in nature;
B. The preservation of borough assets and public service capabilities from loss, destruction or depletion;
C. The minimization of the long-term cost to the borough of all activities related to identification, prevention and control of accidental losses and their consequences;
D. The creation of a system of internal procedures providing a constant reassessment of fluctuating exposure to loss, loss-bearing capacity and available financial resources, including insurance;
E. The establishment, to the extent possible, of an exposure-free work and service environment in which borough personnel, as well as members of the public, can enjoy safety and security in the course of their daily pursuits. (Ord. 78-32 § 2, 1978)
2.05.030 Risk manager – Authority and duties.
The risk manager shall have authority, responsibility and duties for:
A. Identification and measurement of all risk of accidental loss;
B. Selection of the appropriate risk management techniques for resolving exposures to loss, including:
1. Risk assumption,
2. Risk reduction,
3. Risk retention,
4. Risk transfer,
5. Other systems, as appropriate, including the purchase of insurance;
C. Developing and maintaining an information system, in coordination with existing systems, for timely and accurate recording of losses, claims, insurance premiums and other risk-related costs and information;
D. Allocation of insurance premiums, uninsured losses and other risk costs to budgetary units;
E. The development and administration of a safety program for the entire borough to reduce accidental losses. (Ord. 78-32 § 2, 1978)
2.05.040 Risk retention.
A. With regard to risk of accidental loss, it shall be the borough’s policy to self-insure all losses:
1. Which occur with predictable frequency;
2. Which will not have a significant impact on the borough’s fiscal position.
B. As a general guideline, the borough will self-insure progressively upward to a per occurrence level as our internal claims handling and risk management capabilities are more fully developed and demonstrated. Assembly approval will be obtained for increases in self-insurance as soon as program studies justify their merit. Exceptions to this guideline may be allowed:
1. Whenever certain necessary services can be obtained only by the purchase of insurance;
2. When the borough is obligated by law or contract to purchase insurance and no alternative method is acceptable;
3. When a higher level of risk retention proves both prudent and fiscally sound;
4. When deductibles or noninsurance do not result in long-term economies. (Amended during 1993 republication; Ord. 78-32 § 2, 1978)
2.05.050 Procurement of insurance and services.
A. The procurement of all insurance and insurance-related contracts for the borough shall be coordinated through the risk manager.
B. Insurance with limits equal to the maximum foreseeable loss shall be purchased:
1. When the potential loss exposure exceeds the retention level previously stated; and
2. When such insurance is available on a fiscally sound basis.
C. Insurance shall be purchased from any source determined to be in the best interests of the borough.
D. The objective will be to obtain any required insurance or service at the lowest cost to the borough consistent with the most desirable required level of service, in companies of adequate financial status, expertise and service potential.
E. The method utilized to procure insurance or insurance-related contracts shall be at the discretion of the risk manager, and shall include, but not be limited to, open competitive bidding, request for proposals, negotiation with brokers or companies, or designation of a broker-of-record to purchase coverage or service.
F. The maximum term of insurance policies shall be:
1. Three years for property and casualty insurance;
2. Continuous for fidelity bonds;
3. Continuous for employee benefit plans, subject to the normal right of the insured to cancel at any time with 30-day written notice. (Ord. 78-32 § 2, 1978)
2.05.060 Safety program – Effect on other municipal departments.
It is the duty of the risk manager to develop and administer a safety program. All borough departments are responsible for implementation and enforcement of the program. (Ord. 78-32 § 2, 1978)
2.05.070 Self-insurance program.
The risk manager shall establish a self-insurance program, in accordance with FNSBC 2.05.040. (Ord. 78-32 § 2, 1978)
2.05.080 Self-insurance fund.
A. The self-insurance fund is established.
B. The borough shall use money in the self-insurance fund only for the following purposes:
1. Premiums for excess or primary insurance of the type for which the self-insurance program was established to cover;
2. Uninsured liability losses up to the stated limit of retention, except punitive damages;
3. Loss adjustment service;
4. Legal expense of defending loss claims;
5. Premiums on bonds required by the state as a prerequisite for self-insurance;
6. Loss-control costs of an extraordinary nature not previously budgeted;
7. Advance payments for insured liability losses. (Ord. 78-32 § 2, 1978)
2.05.090 Administration of self-insurance fund.
A. The director of finance shall administer the self-insurance fund.
B. The fund shall be invested in such manner as to yield a maximum medium to short-term return.
C. Earnings on investments of the self-insurance fund shall be retained in the fund and be used for fund purposes.
D. The risk manager shall determine the amount of money the borough requires to meet present known losses, and shall estimate the amount the borough requires to fund incurred but unreported losses. The borough shall retain no less than the sum of these amounts in the self-insurance fund.
E. The director of finance shall provide the risk manager with a summary of the fund activity, investment returns and balances as of June 30th and December 31st of each year. (Ord. 78-32 § 2, 1978)
2.05.100 Long-term award fund.
The director of finance may establish when required a fund for the payment of long-term awards. The director of finance may delegate the management of the fund to a financial institution authorized to act as a trustee. (Ord. 78-32 § 2, 1978)
2.05.110 Self-insurance funds – Receipts – Disbursements.
A. The director of finance shall deposit in the self-insurance fund all money appropriated by the assembly, and receipts from the following sources:
1. Recoveries on claims by the borough for insured or uninsured losses covered by the self-insurance fund;
2. Return premiums, interest and other returns upon investments of the fund.
B. No money shall be disbursed from the self-insurance fund, except for the purposes described in FNSBC 2.05.080.
C. Any money remaining in the self-insurance fund at the end of a fiscal year is reappropriated to the self-insurance fund for the succeeding fiscal year. (Ord. 78-32 § 2, 1978)
2.05.120 Adjustment and payment of self-insured losses.
A. The risk manager has the authority to approve the settlement of any self-insured loss up to $25,000, and may delegate, by contract to an adjustment firm, this authority up to $10,000.
B. Claim settlements in excess of $25,000 require the concurrence of the risk manager and the mayor. (Ord. 78-32 § 2, 1978)
2.05.190 Municipal officer and employee bond.
A. The risk manager shall be responsible for maintaining a blanket faithful performance bond on all borough employees. Such bond shall be in an amount not less than $1,000,000 for the benefit of the borough.
B. The persons appointed to the positions listed below shall procure and maintain, for the benefit of the borough, a public official bond, in an amount not less than $1,000,000. The premium for this bond shall be paid by the municipality:
1. Borough mayor;
2. Chief financial officer.
C. Any contractor authorized by resolution to draw against borough bank accounts shall procure and maintain in force a fidelity bond which includes coverage for compensated and noncompensated officers in an amount to be determined by the risk manager. (Ord. 2002-10 § 3, 2002; Ord. 98-025 § 3, 1998; Ord. 86-017 § 5, 1986; Ord. 78-32 § 2, 1978)
2.05.200 School district included.
Within this chapter, unless the context or other provisions of law indicate the contrary, the words “borough” and “employee” include the Fairbanks North Star Borough school district and its employees. (Ord. 78-32 § 2, 1978)