ALC-Executive Subcommittee

Thank you represent richmond with that we'll move on to. To mister cow hills with a. Per night and will get started with this week's presentation of this much presentation. Car few word for the microphone up and introduced yourself for director and you're recognized. The. Okay says I know it sounds like it okay my name is kyle hills i'm a principle consulting actually at per night i'm also the director of our restrictions and solutions area and i'm here to present the status of our actual and instructor consulting services analysis that we've been doing for the state of arkansas. In i'm assuming everyone has a copy of. Of the so i'll i'll start with page two here which is the status report so we broke this down into three sections that the first section deals with the data review and aggregation the second one is the actual services and then the third one is the restrated cheese component for each of the sections you'll see their broken down into three sections as well in terms of what's completed what's in progress in the future tasks you know we're still very early on overall in in the process here so you'll see there's there's not a lot that we're actually putting down is is one hundred percent completed there's also a caveat to that some of the items which are completed they may end up changing a little bit as we get a little further into this and then the final caveat is for stuff that is in progressive and uh potentially for future tasks that they could possibly change just depending on uh some of the conclusions that we start to make as we get further into it is we get further into the the work here. But with that we'll start with the data review and aggregation so the good news is we received the information that we requested we put together data request and we received the the data back from the different areas so so we're we're good to go on that we're still in the process a little bit of reviewing some of the reviewing some of the data we may have a couple additional questions depending on what comes of that review but for the most part where would you we be pretty good in that area then in terms of the actual world services you know at this point we we aren't not listening anything as completed we're still in the in in the in progress phase with the actual world work in to walk through this so word we've reviewed the information that we've had were also looking at external sources of data is well and so in in b letter a here we're looking at sources from the insurance uh services office which is a bureaucrat which is a reading bureau we're also looking at the bureau of labor statistics core logic in up to about ten commercial property insurers basically what we're doing is we're going to supplement the state's data with industry information and it's very relevant when we look at things like trend and cost uh estimates in in reading and and also how other carriers kind of breakdown the uh rates by by territory in in geographic location. So the next thing is were building models to estimate the ultimate losses in this case we're we're doing it for the first section is is excluding catastrophes wall i'll talk about the catastrophe peace at this point we're about eighty percent complete with the amet in the a p s IT models. The asba that data came a little bit later so that one is still in the early stages and mile will keep moving forward with that as we know as as we progress ultimately what we're looking to do is to use that historical information and we're going to estimate future claims costs of you know from an actual component for this upcoming policy period so it's july first to june first and in that actually should read june first of the following year and we're also looking at a retentions for various limits so in other words we we want to AL as a holistic approach what we're trying to do is look to see what the total cost of insurance is going to be so this will be we are looking at it in terms of what the deductibles are what the self insured pieces are as well as what the reinsurance costs but in order to get a better feel for that is what we're going to look to see and on the selfdashinsured pieces is you know when we come up with the reading we're going to look at this at various uh retentions in in various limits this will allow us to you know essentially merge that that information in with the reinsurance cost just to kind of get a better picture of what the entire costs of the whole plan are that will allow us then to go through into to make our best estimates in terms of you know kind of what the the next steps are would be so moving on among items see here which is perform trend analysis for a AM a IT and is patient so in essence what we're doing is we want to you know make sure that we consider the historical data but. You you know prior data is is great but it it needs to get trended to a common date so that we're looking more less to see what would happen on a going forward basis so we're looking at frequency trans lost trend severty in that in again this is where some of that external data will come in to play continuing and so we're going to also look to uh perform some claims diagnosed diagnosi- uh tests just to make sure that the the reserve adequacy is is appropriate for some of the uh claims that we have. This. And then an item e here were building models so this is the catastrophe component so we're we're looking at as a mentioned earlier would looking at this from an anchotastrophy in a catastrophe basis so look at the cat separately this one's a little bit we haven't made as much progress on on the catastrophe pieces of the non catastrophe were about fifty percent complete for the amatee and a p s IT and the uh asba models are still in in the very early stages there I mean ultimately what happens with catastrophes is this we go through when we try to add in an average catastrophe amount over a very long time frame to you we use the historical data the kind of see what those numbers will will likely be and we add in a catastrophe load so so this is why we look at those separately. And then one of the the the the final piece here in terms of what's what's currently in progress is were ultimately going to come up with a combined projected loss and lost adjustment expense ratio for each of the three programs in we're going to use this information again the price on an upcoming basis so this will be the upcoming july first to june thirtieth fiscal year. So one of uh in terms of future tasks we need to you know review the rating plans that we obtain from the various data sources and in other you know other information we need to compare the the results of the allocation of the claims costs compared to the l or how the industry allocates those variables so that's basically looking at stuff by peril it's also looking at it by territory and then the other key component with a lot of the stuff is is this future tasks items see here which is what we call a dislocation analysis cell what this means is we could come up with AAA a great proposal or a a wonderful suggestions in terms of what the next steps would be or how the reading ultimately should work but it's prize something though that we're going to need to look at to see how does that compare to what each of the school systems in in the different buildings are paying currently in to see how much of a difference is where they are now versus where we're proposing and we may need to come up with some type of transition plan in place to say well maybe we don't move every one day one over to the new plan we might stare steps some of the changes depending on how significant the they might be. And so the last piece here's the restrates and solutions are peace so again this in it involves a lot of research work on our end in terms of what we've completed so far there were six neighboring states that we looked into again we we started with using this looking through public sources for louisiana mississippi missouri oklahoma tennessee in texas ah texas actually had the most amount of information a in terms of what they do for for their commercial property buildings the other five states mostly say the self insurance but they don't go into very much depart detail there and i'll i'll mention this in a minute but one of the things that we're going to try to do is reach out to some of the risk managers of these states and just see how forthcoming there might be for kind of helping us in in terms of ultimately just laying out what they currently do and we could use that potentially as a model to make some suggestions to the state of arkansas. So then move it on to the in progress thing items here so we are preparing a summary of the the current public school and in public building property in insurance components. The next one here is reaching out to the risk managers is a is a mentioned before just to try to get a better information in terms of what the other states are doing and then the last couple items include reviewing and summarizing the commercial insurance contracts for the past five years and summarising the maintenance plan in risk management tools for for each building. And then the final one that we're working on right now is is preparing a side by side comparison of the program stop structures for each of the three programs and we're going to look at that relative to some potential future structures that that we could put together. So then in future tasks where preparing the summary of of the current state operations for arkansas other publicly owned steep buildings. As I mentioned before we once we have the information from the neighboring states we're going to continue to summarise that in put that together in a report where we could see aside by side comparisons a little bit better there and then an item see here we're going to present the reports of the assessor or present the results in in a report to the subcommittee that will be a you know a a century kind of spell out where we currently are in and where potentially we think we we may end up wanting to be but item d here is probably the the biggest one where we're going to use the results of our actual analysis along with the results of our rest uh services area in put together essentially AAA plan which is going to be ultimately our recommendations you know right now there there's a couple options in terms of just mean it maintaining the current structure it may include combining some of the the entities together it could mean self-ensuring more or less just a penny on and how that looks in you know it or it could be some hybrid of those and then the final two items essentially is is just a finalized report meet with the subcommittee talk about our results and then again just address any questions that that you might have. Umm and then the one final piece is a there's a project plan which it just includes some dates and times and stuff like that we put the original plan together back in in april and in terms of estimated start time and completion time there no changes are to there just the comments and status in terms of what's completed and in what's an in progress again the report itself has more of the details that just a high level but you could kind of just look through that for the estimated start time in completion time right now we we believe we're on schedule with everything. Thank you call or any questions. So you know not really appreciate the work and look forward to see in the final project is up and said you earlier it's been amazing the type of support in interest that we're seeing from the industry around so it's it's it's nice to finally be taken serious in this project so see another questions thank you for your report look forward to the next month. Okay excellent thank you think you with that members will move on to items c. Misguarantee if you would. Thank you marty gary director of the bureau of legislative research I didn't see is just a report from the chairs notifying this committee that they did take emergency action and signed the contract with cti which was the vendor that was selected by this body and it was an emergency because the other lead time to order the equipment so cti has already gone ahead and ordered the equipment and that's still weak ten weeks out so we're moving along in if you haven't if there are any questions in committee i'll tell you yesterday I got to see the new microphones in the name plates is really exciting to see what that's going to look like in our august council meetings hopefully. Oh you will have to set up straighter and look over because the name tags are a little bit taller than a current paper name tags if you like our baby representative better you can hot but really exciting I will tell you that when we started this meeting to tell you the justification the computers didn't work in here today and are wonderful I tea staff got it going so we can move forward but that's how critical this upgrade really is is it didn't even work in here and we started this meeting but seeing no other business center right we stand adjourned.