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HomeMy WebLinkAboutResolution - 2673 - Interlocal Agreement - TMLJSI - Liability Claims Adjustment Services - 10/22/1987Resolution #2673 October 22, 1987 Agenda Item #30 DGV:da RESOLUTION BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF LUBBOCK: THAT the Mayor of the City of Lubbock BE and is hereby authorized and directed to execute for and on behalf of the City of Lubbock an Interlocal Agreement by and between the City of Lubbock and Texas Municipal League Joint Self -Insurance Fund for liability administrative services, attached herewith, which shall be spread upon the minutes of the Council and as spread upon the minutes of this Council shall constitute and be a part of this Resolution as if fully copied herein in detail. Passed by the City Council this 22nd day of October , 1987. ATTEST :. Ranett&-Boyd, City Secretary APPROVED -AS TO CONTENT: K. Robert Massengale, ssistant City Manager for Financial Services APPROVED AS TO FORM: Ddrfald G. Vandiver, First Assistan City Attorney' G .C..McMINN, MAYOR Texas Municipal League Joint Self -Insurance Fund 211 East Seventh Street, Suite 1020, Austin, Texas 78701-3283 INTERLOCAL AGREEMENT — AMENDMENT I 16. The Fund Member may elect to participate in the Fund only to the extent of obtaining administrative services, and, if desired and available, reinsurance. In that event, the Fund Member shall not make contributions as provided in Paragraph 5 nor receive the coverages provided for in the TML Self -Insurance Plan, nor shall the TML Joint Self -Insurance Fund be liable for the payment of claims against the Fund Member. The Fund shall only handle and service claims for the Member and pay same out of funds to be deposited by the Fund Member in a separate account administered by the Fund for the payment of claims and judgments only against that Fund Member as hereinafter provided. Notwithstanding the provisions of any other section of this Interlocal Agreement, a Fund Member who elects to receive Administrative Services Only as specified in the attached Declarations (hereinafter referred to as the "ASO Fund Member") shall be subject to the following requirements and conditions: A. Although the ASO Fund Member will receive coverage documents setting forth the coverages, provisions, terms, conditions, exclusions and limitations provided for in the TML Self -Insurance Plans, these documents are not intended to and shall not create an insured -insurer relationship between the Fund or any of its other Members and the ASO Fund Member, but rather are provided solely for the purposes of (1) defining the scope of claims the Fund will handle on behalf of the ASO Fund Member, and (2) defining the nature and scope of claims and conditions applicable thereto that will be covered by reinsurance, if available and obtained by the ASO Fund Member, beyond the ASO Fund Member's self-insured retention. The Fund shall not itself be liable for the payment of claims or judgments against the electing Member, nor to provide the electing Member with a defense of any such claims or suits at the expense of the Fund. The Fund will only make payments on behalf of the ASO Fund Member out of the Member's claims account. B. In connection with claims within the scope of the coverage documents, the Fund shall provide the following services for or on behalf of the ASO Fund Member as confirmed specifically in the attached Declarations: L Overall contract and claims administration; 2. , Loss control services through its contractor to the ASO Fund Member to assist it in developing a plan of loss control to attempt to control or reduce the frequency and severity of claims againt it; 3. Claims servicing including investigation and recommendation by the Fund's contractor; periodic meetings with the ASO Fund Member's claims official or claims committee attended by representatives of the contractor; 4. Claims administration including coordination and recommendation of defense; reserve recommendations; claims handling and defense recommendations by the Fund claims manager and assistants, as well as review of all files to monitor the ASO Fund Members self-insured exposure; participation by TML staff Member(s) in the periodic meetings to review claims with the ASO Fund Member's claims official or claims committee. 5. Storage and retention of claims records; periodic MIS reports detailing claims and loss information and history. The Fund shall charge the ASO Fund Member its usual and customary charges for the aforesaid services based on actual services provided. Allocated claim expenses, including defense attorney's fees, discovery expenses, expert and witness fees and court costs Shall be paid by the Fund on behalf of the ASO Fund Member out of the ASO Fund Member's claims account as part of the administrative services provided by the Fund, but shall never be an expense or liability of the Fund but rather is solely that of the ASO Fund Member. The Fund shall handle all liability and automobile physical damage claims and oversee, coordinate and make recommendations in connection with the defense of any and all liability lawsuits covered under this agreement after prompt notice has been given. The ASO Fund Member hereby appoints the TML staff and the contractor as its agents to act in all matters pertaining to processing and handling of claims covered under this agreement and shall cooperate fully in supplying any information needed or helpful in settlement or defense of such claims. As respects liability claims, the TML staff and the contractor shall carry on all negotiations with the claimant or his attorney, but no settlement shall be made without express prior approval of the ASO Fund Member. All claims will be discussed with the ASO Fund Member's claims official or claims committee on a periodic basis. As information on each claim develops, the TML staff and the contractor shall make recommendations concerning claim reserves, settlement and whether or not a case should be tried or settled or a judgment should be appealed, but all decisions on individual cases shall be made by the ASO Fund Member. In the event of litigation, the TML staff and the contractor will retain on behalf of the ASO Fund Member legal counsel approved by the ASO Fund Member to represent it and will supervise the defense of the litigation, including any appeals. Revised 1/87 The ASO Fund Member shall establish in its name a "claims account" at a bank designated by the Fund, out of which the Fund,, through its agents, shall pay on behalf of the ASO Member qualified claims or losses and allocated claims expense including court costs, fees and expenses of attorneys, independent investigators, experts and witnesses and all other costs, charges or expenses properly chargeable to a qualified claim or loss. Funds shall be provided at the inception of the ASO Member's self-insurance program and promptly from time -to time under the following formula based on estimates furnished by the Fund of the anticipated or actual level and volume of qualified claims or losses and allocated expenses: The ASO Fund Member shall deposit into the account intially an amount equal to one-fourth (1/4) of the estimated volume of qualified claims or losses and allocated claim expenses during the first twelve (12) months of its self-insurance program and each month thereafter, or sooner if necessary, shall deposit into the account an amount sufficient to restore, maintain or increase the account balance to an amount equal to one-fourth (1 /4) of the estimated volume of qualified claims or losses and allocated claim expenses during the next twelve (12) months. The Fund shall account to the ASO Fund Member monthly for all expenditures from the claims account. If at any time the claims account balance drops to below fifty (50%) percent of the balance currently called for under the above formula, the ASO Fund Member shall promptly deposit additional funds to restore the full balance. During any period of time that the claims account balance is fifty (50%) percent or less of that currently called for under the formula, only allocated claim expenses shall be paid out of the account in order to continue uninterrupted claims handling, investigation and defense of claims against the ASO Fund Member and the ASO Fund Member shall directly pay qualified claims or losses out of other funds until it deposits into the claims account the amount necessary to restore the account to its full balance. In the event payment of a qualified claim or loss would reduce the claims account balance to less than fifty (50%) percent of that called for under the formula, the ASO Fund Member shall be promptly notified and shall either pay the qualifed claim or loss directly out of other funds or deposit into the claims account sufficient funds for its payment. It is expressly understood that the Fund shall not be required to advance its own funds or those of the joint Self -Insurance Fund to pay claims or losses or allocated expenses hereunder, or continue to perform any services hereunder if the ASO Fund Member fails to provide necessary and adequate funds as herein set forth. It shall be the sole responsibility of the ASO Fund Member to establish and maintain adequate reserves in addition to the limited funds in the claims account for payment of all claims, including catastrophic claims. The Fund will provide reserve recommendations and estimates of liability exposures, but both parries realize that judges and juries have wide discretion in assessing damages awards and the award in any particular case may be greatly in excess of or greatly less than a recommended reserve. Either party to this agreement may at any time terminate it upon sixty (60) days written notice for any reason as to either all pending and future claims, alternatively, only as to future claims. In the event cancellation is with respect to both pending and future claims, the Fund will no longer be obligated to perform the services outlined in this agreement and shall promptly and in an orderly manner forward to the ASO Fund Member or its designee all pending claim files. In the event termination is only as to future claims, this agreement shall continue in full force and effect with respect to all pending claims and claims occurring but not reported prior to cancellation until concluded. In either event, the ASO Fund Member shall be entitled, if it so requests and at its own expense, to have the closed claim files retrieved from storage and delivered to it. In the event the ASO Fund Member does not request closed files in the notice of cancellation, however, they will be retained or destroyed at the Fund's option and the ASO Fund Member shall have no recourse against the Fund for failure to retain them. Revised 1/87 SUMMARY OF DOCUMENT CHANGES 1986 FUND YEAR LIABILITY COVERAGE DOCUMENT INCIDENTAL MEDICAL MALPRACTICE: This coverage is now provided under its own coverage part on a "claims -made" basis. In the past, this coverage was included in the General Liability coverage part on an "occurrence" basis. Under the new form, covered claims will be paid when the activities resulting in the claim occur during the Agreement Period and the claim is first made during the Agreement Period. Please review this coverage carefully, as it fully describes the provisions of the coverage. (p.21) CHILD MOLESTATION EXCLUSION: Exclusing Y or Part X, Exclusions Applicable To All Coverages, states that there is no coverage for members, employees or volunteers for claims or defense costs arising from suits of this nature. (p.31) "UNSAFE" DAM EXCLUSION: Exclusion Z of Part X excludes coverage for claims or suits arising out of the failure of any dam or reservoir classified as unsafe by the Army Corps of Engineers or other agency. (p.32) FIRE LEGAL LIABILITY AND CARE, CUSTODY AND CONTROL: Coverage for damage to non -owned real and/or personal property in your care, custody or control (e.g., rental or leased property) is no longer provided by the Liability Coverage Document. If you are contractually responsible for the insurance on any property that falls into this category, that property should be added onto your property insurance policy. The Care, Custody and Control exclusion can be found in its entirety in Part X, G. on page 29 of the coverage document. PROPERTY COVERAGE DOCUMENT REAL AND PERSONAL PROPERTY EXCLUDED. Coverage is excluded for damage to electrical transmission and distribution lines including poles and pole -mounted transformers. (p.16) AMENDMENT TO INTERLOCAL The Interlocal Agreement has been amended to include the option of an Administrative Services Only (ASO) arrangement where applicable. SPECIAL NOTE: This summarizes the major changes to the documents. It is intended to be an overview only and not a substitute for careful review of the documents themselves. TEXAS MUNICIPAL LEAGUE JOINT SELF-INSURANCE FUND DECLARATIONS OF SERVICES AND CONTRIBUTIONS CITY OF LUBBOCK I. Liability Administrative Services Only (ASO) Provided CO263 Effective Date: 10/1/87 Service Estimated Annual Fee Claims Administration $ 11,500.00__ Contract Administration $ 4,000.00 Claims Servicing*: $ 77,619.00 Auto Liability - $272.80/claim General Liability - $277.20/claim Auto Physical Damage - $143.00/claim Law Enforcement/ Public Officials - TIME & EXPENSE Medical Cost Containment - 25% savings/$25.00 minimum MIS Reports($10.00/claim)* $ 2,380.00 nat=]'=�S.111.1 �Pr�l�j� N���D.f-ls'asall�► i�l�aLa. �-7 �' .' TOTAL ANNUAL ESTIMATED SERVICE FEES* ESCROW DEPOSIT** $tel -,836. CO- yS, y99, o 0 $ 60,000.00 *Indicates deposit fees subject to year-end audit to reflect actual charges incurred based on usage. These estimates are based on 238 claims. **Escrow deposit is subject to review and adjustment as necessary, with replenishment at the 50% level or when any one claim would absorb 509 or more. The following are considered Allocated Expenses and are in addition to all other charges: Court reporter & transcript fees Witness fees & witness travel expense Extraordinary travel expense incurred by GAB at request of city Cost of obtaining public records Extraordinary expenses for photos, photocopies, telephone calls Such other porfessional expenses & expert fees as are necessary to property handle such matters assigned to GAB 10/6/87LD ATTACHMENT 2 Texas Municipal League Joint Self. -Insurance Fund 211 East Seventh Street, Suite 1020, Austin, Texas 78701-3283 INTERLOCAL AGREEMENT This contract and Interlocal Agreement is entered into by and between political subdivisions of this state (hereinafter referred to s "Fund Members'l to form a joint self-insurance pool to be named the Texas Municipal League Joint Self -Insurance Fund (hereinaftear referred to as the "Fund") for the purpose of providing coverages against risks which are inherent in operating a political subdivision. WITNESSETH: The undersigned Fund Member, in accordance with the Interlocal Cooperation Act, Article 4413 (32c), T.R.C.S. and the interpreta- tion thereof by the Attorney General of the State of Texas (Opinion #MW -347, May 29, 1981), and in consideration of other Fund Members executing like agreements, does hereby agree to become one of the Fund Members of this self-insured pool. The conditions of membership agreed upon by and between the parties are as follows: 1. Definition of terms used in this Interlocal Agreement. a. Board. Refers to the Board of Trustees of the Texas Municipal League Workers' Compensation Joint Insurance Fund and the Texas Municipal League Joint Self -Insurance Fund. b. I Fund Year. October 1 through September 30. c. Manual Rates. Basic rates applicable to each liability classification promulgated by the State Board of Insurance or the Board of Trustees. d. TML Municipal Liability Self -Insurance Plan. The liability coverage documents that set forth in exact detail the coverages provided as part of the overall plan. e. Adjustments. Refers to any offsets to manual premium that may result from the Member's election of deductibles, loss ex- perience, or Fund Modifier which reflects the savings to the Fund Member by entering into this Agreement. f. TML Municipal Property Self -Insurance Plan. The property coverage documents that set forth in exact detail the coverages provided as part of the overall plan. g. Premium and Contribution. Used interchangeably in some parts of this Interlocal Agreement. Any reference at any time in this Interlocal Agreement to an insurance term not ordinarily a part of self-insurance shall be deemed for convenience only and is not construed as being contrary to the self-insurance concept except where the context clearly indicates no other possible interpretation such as but not limited to the reference to "reinsurance." h. Reimbursable Deductible. As respects the TML Municipal Liability Self -Insurance Plan, the amount paid by the Fund that was chosen by this Fund Member to be applicable to the first monies paid by the Fund to effect judgment or settlement of any claim or suit. The Fund Member, upon notification of the action taken, shall promptly reimburse the Fund for all or such part of the deductible amount as has been paid by the Fund. Further, however, the Fund's obligation to pay damages shall be subject to the Limits of Liability stated in the Declarations of Coverage or Endorsements to this Interlocal Agree- ment less the stated deductible amount. i. Fund Modifier. A percentage figure that is applied to the standard rates by the Fund to reflect the savings to the Fund Member by entering into the Interlocal Agreement. j. Agreement Period. The continuous period since the Fund Member first became a member of this Fund excluding, however, any period or periods of time therein that the member did not participate as a member of the Fund. k. Declarations of Coverage. The specific indication of the coverages, limits, deductibles, contributions and special provi- sion elected by each individual Fund Member. The Declarations of Coverage may be modified by Endorsement. 2. The Board of Trustees, acting through its agents and TML staff, is responsible for the administration of all Fund business on behalf of the Fund Members. 3. In consideration of the execution of this Agreement by and between the Member and the Fund and of the contributions of the Member, the insurance elected by the Member is afforded according to the terms of the TML Municipal Liability Self -Insurance Plan and the TML Municipal Property Self -Insurance Plan. The affirmative declaration of contributions and limits of liability in the Declarations of Coverage and Endorsements determines the applicability of the Self -Insurance Plans. Revised 1/87 Each Fund Member agrees to adopt and accept the coverages, provisions, terms, conditions, exclusions and limitations as further provided for in the TML Self -Insurance Plans or as specifically modified by the Fund Member's Declarations of Coverage. This Interlocal Agreement shall be construed to incorporate the TML Municipal Liability Self -Insurance Plan and/or the TML Municipal Property Self -Insurance Plan, Declarations of Coverage, and Endorsements and addenda whether or not physically attached hereto. 4. It is understood that by participating in this self-insurance pool to cover liability exposures, the Fund Member does not intend to waive any of the immunities that its officers or its employees now possess. The Fund Member recognizes the Texas Tort Claims Act and its limitations to certain governmental functions as well as it monetary limitations and that by executing this Agreement does not agree to expand those limitations. The Fund Member, upon the execution of this agreement, shall supply the Fund with a current copy of its charter provisions or ordinance that sets out its requirement as to the number of days in which a third party liability claim must be made against it. If the Fund Member does not have such an ordinance provision that establishes a set number of days or if it has an ordinance provision which provides for less than sixty (60) days notice and for, good cause shown up to six (6) months notice the Fund Member agrees to adopt an ordinance providing for such notice reasonably describing the damage or injury claimed and the time, manner and place of the incident from which it arose. The notice requirement shall not be changed by the Fund Member without first giving the Fund thirty (30) days written notice. Violation of this provision may, at the Fund's discretion, void this Interlocal Agreement. 5. The term of this Agreement and the self-insurance provided to the Fund Member shall be continuous commencing 12:01 A.M. on the date designated in this Agreement until terminated as provided below. Although the self-insurance provided for in this Agreement shall be continuous until terminated, the limit of liability of the Fund under the coverages that the Fund Member elects shall be limited during any Fund Year to the amount stated in the Declarations of Coverage for that Fund Year. This Agreement may be terminated by either party giving to the other sixty (60) days prior written notice of intent to terminate except the Fund Member may terminate this Agreement and its coverages thereunder without giving the sixty (60) days notice if the reason is because of a change by the Fund in the Fund Member's contribution, coverage, or other change in the limits of liability, terms, conditions, exclusions and limitations provided for in the Texas Municipal League Self -Insurance Plans provided that no termination by the Member shall be effective prior to the date that written notice of termination is actually received in the offices of the Texas Municipal League Joint Self -Insurance Fund and provided further that the Fund Member agrees to and shall pay the applicable premium and contribution for those coverages it is terminating until the date the notice of termination is actually received by the Fund. The Fund shall provide the Member with Declarations of Coverage and any Endorsements that determine the applicability of the Texas Municipal League Self -Insurance Plans annually by December 1. Such Declarations of Coverage shall include, but not be limited to, the coverage period which shall be the applicable Fund Year, limits, deductibles, contributions, special provisions and limitations. Changes made during the Fund Year, whether requested by the Member or required by the Fund, will be handled by Endorsement. It is the intention of the parties that the Member's insurance coverages under this Agreement shall remain in full force and effect from Fund Year to Fund Year, subject to the limits of liability that the Fund can provide each Fund Year and the terms, condi- tions and limitations that the Fund may require to protect its solvency and to comply with reinsurance requirements, until notice of termination is given as herein provided. Realizing that the Fund Member needs the earliest possible information concerning the Fund coverages, limits, and exclusions and the Member's contribution that will be required for any new Fund Year, the Fund will endeavor to provide this information as soon as possible before the beginning of each new Fund Year. The parties recognize, however, that conditions in the reinsurance industry are such that the Fund may not be able to provide this infor- mation to the Member before the beginning of a Fund Year for various reasons including the failure of the Member to timely submit the appropriate exposure summary or delays on the part of reinsurers in getting information to the Fund, and so, to protect the Member from gaps in its coverage and to protect the solvency of the Fund, the parties agree as follows: If for any reason the Fund has not been able to provide the Member with information concerning available coverages for a new Fund Year or advise the Member of the amount of its contribution for the new Fund Year by the beginning of the Fund Year, the Fund shall nevertheless continue the Member's coverages at the same limits of liability (if still available and if not then at the highest limit of liability available for the new Fund Year) so that the Member shall at all times remain insured as herein provided and the Member's initial contributions for the new Fund Year shall be determined by a "tentative contribution" as determined by the Board with the Member's actual annual contribution to be credited by the amount paid in accordance with the tentative contribution and adjusted during the Fund Year. In the event the Member's annual contribution has not been determined at the beginning of a Fund Year due to the Member not having timely provided the exposure summary required, then the tentative contribution shall be calculated as follows: The Member's prior Fund Year's exposure base shall be increased by twenty-five percent (25%) and the resulting exposure base shall be applied to the rates applicable to the new Fund Year and the Member shall make its contribution payments based upon this rate with its annual contributions adjusted thereafter to reflect the cor- Tect annual contribution. In the event the Member does not wish to have its coverages extended or renewed at the end of any Fund Year, the burden shall be upon the Member to give written notice to the Fund as provided hereinabove and the Member agrees to pay as hereinabove stated all contributions or prorata contributions until the date such written notice is received in the offices of the Fund or the date of termina- tion of this Agreement, whichever is later. Revised 1/87 6. * Comrriensurate with the execution of this Agreement and annually thereafter, the Fund Member shall complete the appropriate exposure summary and deliver it or cause it to be delivered to the Fund, or, if so instructed, to a designated contractor, no later ;than September 1 of each year and new annual contributions shall be calculated using manual rates times exposure, less any ad- justments. Intentional or reckless misstatements on the exposure summary shall be grounds for cancellation. The Fund Member agrees to pay the annual contribution to the Fund in equal monthly installments, in advance, commencing cat the beginning of this Agreement with subsequent installments due the first of each month thereafter. If the payable annual bontribution shall be less than $5,000, it shall be payable in equal quarterly installments, in advance, commencing at the qeginning of this Agreement or at the beginning of each new Fund Year, with subsequent installments due the first of each uarter thereafter. Members who elect a deductible in excess of $25,000 shall comply with the payment schedule outlined to them in advance of assuming such large deductible. In the event this Agreement is terminated as herein provided, the Fund shall promptly repay to the Fund Member any unearned annual contribution prorated as of the date of termination and the 1~und Member agrees to promptly pay the Fund any unpaid annual contribution prorated as of the date of actual termination. In addition, the Fund Member agrees during the term of this Agreement to promptly pay all reimbursable deductibles upon receipt of statement. At the end of each and every Fund Year, the Fund may require the Fund Member to submit the actual data requested on the ex- posure summary as reflected by the books and records of the Fund Member. The Fund reserves the right to audit the records of any Fund Member and adjust contributions accordingly. In the event that the Fund Member fails or refuses to make the payments, including reserves the right to terminate such Fund Member by giving them ten (10) days written notice and to collectlany rnd interest, as ovidalll amounts that are earned pro rata for the period preceding contract termination. If the amounts owed, including reimbursable deductibles, hi ave to be collected by suit, the Fund Member agrees to pay attorneys' fees and costs incurred in such suit. 7. Tlhe Fund shall maintain adequate protection from catastrophic losses to protect its financial integrity. Aggregate protection shall also be maintained to ensure that the Member shall at no time be assessed. The Member's contributions shall be limited to that amount as calculated under this agreement. 8. Notwithstanding the provisions of the foregoing paragraph, it is agreed the Board shall have the right to adjust the financial pro-. tection outlined above and/or amend coverages as it finds available or deems necessary to maintain the fiscal soundness of the FYnd at the beginning of or during any Fund Year. 9. T�e Fund has contracted to supply loss control services to the Fund Members to assist at them in following a plan of loss control thmay result in reduced losses. The Contractor shall provide all of the services as provided in the service contract entered into bit and between the Contractor and the Fund on behalf of the Fund Member. The Fund Member agrees that it will cooperate in C,)instituting any and all reasonable loss control recommendations. In the event that the recommendations submitted by the ntractor on behalf of the Fund seem unreasonable, the Fund Member has a right to appeal to the Boardof Trustees. The bindBoard shall hear the objections of the Fund Member at its next regularly scheduled meeting and its decisions will be final and Fiing on all parties. Any Fund Member who does not agree to follow the decision of the Board shall be withdrawn from the nd immediately. 10. The Fund Member agrees that it will appoint a coordinator of department head rank, and that the Fund shall not be required to contact any other individual except this one person. Any notice to or any agreements with the coordinator shall be binding upon the Fund Member. The Fund Member reserves the right to change the coordinator from time to time by giving written notice to the Fund. 11. The Fund agrees to handle all liability and property claims, and provide a defense for any and all liability claims covered under this agreement after prompt notice has been given. The Fund Member hereby appoints the TML Staff and the Contractor as its agents to act in all matters pertaining to processing and handling of claims covered under this agreement and shall coo in supplying any information needed or helpful in settlement or defense of such claims. As res Aerate fully and the Contractor shall ca pests liability claims, the TML Staff carry on all negotiations with the claimant and his attorney and negotiate within authority previously granted by the Fund. If a personal appearance by the Fund Member or an employee is necessary, the expense of this appearance will not be the responsibility of the Fund. With the advice and consent of the Fund, the TML Staff and the Contractor will retain and supervise legal counsel for the prosecution and defense of any litigation. All decisions on individual cases shall be made by the Fund through the TML Staff and the Contractor, which includes the decision to appeal or not to appeal. anFund Member shall have the right in any case to consult with the Fund on any decision made by the TML Staff or the Contractor. The Boaird shall hear the objections of the Fund Member at its next regularly scheduled meeting and its decision will be final and binding on all parties. Any suit brought or defended by the Fund shall be brought or defended only in the name of the Fund Member and/or its officers or employees. There shall be supplied periodically to each Fund Member a computer printout in- volving a statement of claims. As respects the TML Municipal Liability Self -Insurance Plan, the Fund shall have priority in en- forcing its subrogaton claims as against claims of Fund Members except as to claims of the Texas Municipal League Workers' Compensation Joint Insurance Fund, which shall take preference. Revised 1/87 TO BE 'CON ,jPLVTED BY MEMBER: EMPLOYER MEMBERS' FUND COORDINATOR (See Section 10): Title Name Mailing Address Street Address (if different from above) Zip Phone City lipCFLAHO�RIZED n CITY OFFICIAL Mayor Title October 22, 1987 Date TO BE COMPLETED BY FUND: (OFFICE USE ONLY) Revised 1/87 12. The Fund Member acknowledges that it has received a copy of the Bylaws of the Fund and agrees to abide by the Bylaws and any amendments thereto. The Fund Member specifically acknowledges that it is a member in good standing of the TML Workers' Compensation Joint Insurance Fund and will remain a participant in that Fund during the term of this Interlocal Agreement. 13. The Fund agrees that all Fund transactions will be annually audited by a nationally recognized certified public accounting firm. 14. If legally required, the Fund shall cause to be filed the necessary tax forms with the Internal Revenue Service. 15. As the administrators of the Self -Insurance Fund, the Board shall primarily and constantly keep foremost in their deliberations and decisions in operating the Fund that each of the participating Fund Members is a "self-insured." At least annually, the Board shall carefully review, study and consider the actual claims or loss experience (including reserves for future claims payments) of each of the Fund Members, the pro rata saving to the Fund resulting from overall loss experience attributed to each Fund Member, and the pro rata portion of the cost of all catastrophic loss protection and aggregate stop loss protection allocated to each Fund Member as well as the pro rata allocation, as determined by the Board of the other and necessary administrative ex- penses of the Fund, in order to reasonably determine the actual pro rata cost, expense and loss experience of each Fund Member in order to maintain as nearly as possible an equitable and reasonable self-insurance administration of the Fund as applied to each Fund Member. The Fund shall maintain case reserves and supplemental reserves computed in accordance with standard actuarial principles, taking into account historical and other data, designed to measure claims development and claims incurred but not yet reported, so that funds will be available to meet these claims as they become due. The Fund shall also establish and maintain a reserve for Return of Contributions to further ensure the fiscal integrity of the Fund in the event of a potential adverse loss development. 16. The Fund Member may elect to participate in the Fund only to the extent of obtaining administrative services, and, if desired and available, reinsurance. In that event, the Fund Member shall not make contributions as provided in Paragraph 5 nor receive the coverages provided for in the TML Self -Insurance Plan, nor shall the TML Joint Self -Insurance Fund be liable for the payment of claims against the Fund Member. The Fund shall only handle and service claims for the Member and pay same out of funds to be deposited by the Fund Member in a separate account administered by the Fund for the payment of claims and judgments only against that Fund Member as hereinafter provided. Notwithstanding the provisions of any other section of this Interlocal Agreement, a Fund Member who elects to receive Ad- ministrative Services Only as specified in the attached Declarations (hereinafter referred to as the "ASO Fund Member") shall .. be subject to the following requirements and conditions: A. Although the ASO Fund Member will receive coverage documents setting forth the coverages, provisions, terms, condi= tions, exclusions and limitations provided for in the TML Self -Insurance Plans, these documents are not intended to and shall not create an insured -insurer relationship between the Fund or any of its other Members and the ASO Fund Member, but rather are provided solely for the purposes of. (1) defining the scope of claims the Fund will handle on behalf of the ASO Fund Member, and (2) defining the nature and scope of claims and conditions applicable thereto that will be covered by reinsurance, if available and obtained by the ASO Fund Member, beyond the ASO Fund Member's self- insured retention. The Fund shall not itself be liable for the payment of claims or judgments against the electing Member, nor to provide the electing Member with a defense of any such claims or suits at the expense of the Fund. The Fund will only make payments on behalf of the ASO Fund member out of the Member's claims account. B. In connection with claims within the scope of the coverage documents, the Fund shall provide the following services for or on behalf of the ASO Fund Member as confirmed specifically in the attached Declarations: I. Overall contract and claims administration; 2. Loss control services through its contractor to the ASO Fund Member to assist it in developing a plan of loss control to attempt to control or reduce the frequency and severity of claims against it; 3. Claims servicing including investigation and recommendation by the Fund's contractor; periodic meetings with the ASO Fund Member's claims official or claims committee attended by representatives of the contractor; 4. Claims administration including coordination and recommendation of defense; reserve recommendations; claims handling and defense recommendations by the Fund claims manager and assistants, as well as review of all files to monitor the ASO Fund members self-insured exposure; participation by TML staff Member(s) in the periodic meetings to review claims with the ASO Fund Member's claims official or claims committee. 5. Storage and retention of claims records; periodic MIS reports detailing claims and loss information and history. Revised 1/87 Res. #2673 The, Fund shall charge the ASO Fund Member its usual and customary charges for the aforesaid services based on actual services provided. Allocated claim expenses, including defense attorney's fees, discovery expenses, expert and witness fees and court costs shall be paid by the Fund on behalf of the ASO Fund Member out of the ASO Fund Member's claims account as part of the ad- ministrative services provided by the Fund, but shall never be an expense or liability of the Fund but rather is solely that of the ASO Fund Member. The Fund shall handle all liability and automobile physical damage claims and oversee, coordinate and make recommendations in connection with the defense of any and all liability lawsuits covered under this agreement after prompt notice has been given. The ASO Fund Member hereby appoints the TML staff and the contractor as its agents to act in all matters pertaining to processing and handling of claims covered under this agreement and shall cooperate fully in supplying any information needed or helpful in settle- ment or defense of such claims. As respects liability claims, the TML staff and the contractor shall carry on all negotiations with the claimant or his attorney, but no settlement shall be made without express prior approval of the ASO Fund Member. All claims will be discussed with the ASO Fund Member's claims official or claims committee on a periodic basis. As information on each claim develops, the TML staff and the contractor shall make recommendations concerning claim reserves, settlement and whether or not a case should be tried or settled or a judgment should be appealed, but all decisions on individual cases shall be made by the ASO Fund Member. In the event of litigation, the TML staff and the contractor will retain on behalf of the ASO Fund Member legal counsel approved by the ASO Fund Member to represent it and will supervise the defense of the litigation, including any appeals. The ASO Fund Member shall establish in its name a "claims account" at a bank designated by the Fund, out of which the Fund, through its agents, shall pay on behalf of the ASO Member qualified claims or losses and allocated claims expense including court costs, fees and expenses of attorneys, independent investigators, experts and witnesses and all other costs, charges or expense proper- ly chargeable to a qualified claim or loss. Funds shall be provided at the inception of the ASO Member's self-insurance program and promptly from time to time under the following formula based on estimates furnished by the Fund of the anticipated or actual level and volume of qualified claims or losses and allocated expenses: The ASO Fund Member shall deposit into the account initially an amount equal to one-fourth (1/4) of the estimated volume of qualified claims or losses and allocated claim expenses during the first twelve (12) months of its self-insurance program and each month thereafter, or sooner if necessary, shall deposit into the account an amount sufficient to restore, maintain or increase the account balance to an amount equal to one-fourth (1/4) of the estimated volume of qualified claims or losses and allocated claim expenses during the next twelve (12) months. The Fund shall account to the ASO Fund Member monthly for all expenditures from the claims account. If at any time the claims account balance drops to below fifty (50%) percent of the balance currently called for under the above formula, the ASO Fund Member shall promptly deposit additional funds to restore the full balance. During any period of time that the claims account balance is fifty (50%) percent or less of that currently called for under the formula, only allocated claim expenses shall be paid out of the account in order to continue uninterrupted claims handling, investigation and defense of claims against the ASO Fund Member and the ASO Fund Member shall directly pay qualified claims or losses out of other funds until it deposits into the claims account the amount necessary to restore the account to its full balance. In the event payment of a qualified claim or loss would reduce the claims account balance to less than fifty (50%) percent of that called for under the formula, the ASO Fund Member shall be prompt- ly notified and shall either pay the qualified claim or loss directly out of other funds or deposit into the claims account sufficient funds for its payment. It is expressly understood that the Fund shall not be required to advance its own funds or those of the Joint Self -Insurance Fund to pay claims or losses or allocated expenses hereunder, or continue to perform any services hereunder if the ASO Fund Member fails to provide necessary and adequate funds as herein set forth. It shall be the sole responsibility of the ASO Fund Member to establish and maintain adequate reserves in addition to the limited funds in the claims account for payment of all claims, including catastrophic claims. The Fund will provide reserve recommenda- tions and estimates of liability exposures, but both parties realize that judges and juries have wide discretion in assessing damages awards and the award in any particular case may be greatly in excess of or greatly less than a recommended reserve. Either party to this agreement may at any time terminate it upon sixty (60) days written notice for any reason as to either all pending and future claims, alternatively, only as to future claims. In the event cancellation is with respect to both pending and future claims, the Fund will no longer be obligated to perform the services outlined in this agreement and shall promptly and in an orderly manner forward to the ASO Fund Member or its designee all pending claim files. In the event termination is only as to future claims, this agreement shall continue in full force and effect with respect to all pending claims and claims occurring but not reported prior to cancellation until concluded. In either event, the ASO Fund Member shall be entitled, if it so requests and at its own expense, to have the closed claim files retrieved from storage and delivered to it. In the event the ASO Fund Member does not request closed files in the notice of cancellation, however, they will be retained or destroyed at the Fund's option and the ASO Fund Member shall have no recourse against the Fund for failure to retain them. Revised 1/87