State of West Virginia - West Virginia Legislature

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STATE OF WEST VIRGINIADEPARTMENT OF ADMINISTRATIONBOARD OF RISK AND INSURANCE MANAGEMENT90 MACCORKLE AVENUE SW, Suite 203 (304) 766-2646 ADMINISTRATIONSOUTH CHARLESTON, WV 25303(304) 744-7120 FAX(800) 345-4669 TOLL FREE WVwww.state.wv.us/brimEarl Ray Tomblin Charles E. Jones, Jr. Robert Ferguson, Jr.Governor Executive Director Cabinet Secretarycharles.e.jones@wv.govAugust 22, 2011Honorable Earl Ray Tomblin, GovernorState of West VirginiaGovernor Tomblin:The Annual Report of the West Virginia Board of Risk and Insurance Management(BRIM) for the year ended June 30, 2011 is hereby respectfully submitted. This reportwas prepared by the staff of BRIM. Responsibility for both the accuracy of the presenteddata and the completeness and fairness of the presentation rests with the management ofBRIM. We believe the data, as presented, is accurate and that it is presented in a mannerdesigned to fairly set forth the results of the operations of BRIM. All informationnecessary to enable the reader to gain an understanding of BRIM’s operational activitieshas been included.The Annual Report contains discussions of the financial activities and highlights for thepast several fiscal years, and BRIM’s organization chart. The minutes of the Board ofDirectors meetings are attached as a supplement to this report.BRIM is reported as an enterprise fund operating as a single business segment, includedas a blended component unit of the primary government in the State’s ComprehensiveAnnual Financial Report (CAFR). After applying the criteria set forth in generallyaccepted accounting principles, BRIM management has determined there are noorganizations that should be considered component units of BRIM.
West Virginia Board of Risk & Insurance Management2011 Annual ReportBRIM is governed by a five-member board appointed by the governor for terms of fouryears. BRIM operates by the authority granted in Chapter 29, Article 12; Chapter 33, Article30; and Chapter 20, Article 5H of the West Virginia Code as amended, and the provisions ofExecutive Order 12-86. The day-to-day operations of BRIM are managed by the executivedirector, who is responsible for the implementation of policies and procedures established bythe Board members.BRIM is charged with providing insurance coverage to all state agencies. Additionally,BRIM provides these services to cities, counties, and non-profit organizations throughout theState under the provisions of Senate Bill #3 (SB#3). BRIM also provides a coal minesubsidence reinsurance program, which allows homeowners and businesses to obtaininsurance coverage up to $75,000 for collapses and damage caused by underground coalmines.BRIM uses various means to cover its insureds. Although BRIM is not indemnified by aninsurance company, it contracts with an insurance company that is compensated for claimshandling with a flat fee. The primary methods used by BRIM to fund claims payments resultsin a more stable and predictable funding of claims and claims related expenses, allowing forbetter cash management for the organization.Beginning in fiscal year 1996, liability claims were handled through a “Modified Paid LossRetrospective” rating program, which required an up-front deposit to an insurance company.As losses occur, payments and reserves are established and charged against the deposit.When the amount of paid losses within a twelve-month period exceeds the amount of thedeposit, a retrospective billing is produced and BRIM pays that additional amount to theinsurance company.Beginning in fiscal year 2006, BRIM deposited monies with a financial institution, as trustee,to hold advance deposits in an escrow account for BRIM liability claims with loss dates afterJune 30, 2005. The funds held in escrow, together with their earnings, will be used to fundthe payment of the claims and claims adjustment expenses related to these liability claims.Periodically, monies are transferred from the escrow account to the insurance companyadministering these claims in order to reimburse the insurance company for payments thatthey have issued on these claims and claims adjustment expenses on BRIM’s behalf.Property losses are retained by BRIM up to $1 million. Additionally, excess coverage isprovided beyond the $1 million retention up to a limit of $400 million per occurrence. Thiscoverage provides reimbursement of loss at the stated or reported value less a $2,500deductible. Under the mine subsidence program, participating insurers pay BRIM areinsurance premium, which is equal to the gross premiums collected for mine subsidence
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State of West Virginia - West Virginia Legislature

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