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CCP 06202022
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CCP 06202022
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8/11/2022 12:08:27 PM
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Roseville City Council
Document Type
Council Agenda/Packets
Meeting Date
6/20/2022
Meeting Type
Regular
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CITY OF ROSEVILLE, MINNESOTA <br />NOTES TO FINANCIAL STATEMENTS <br />December 31, 2021 <br />Note4OTHER INFORMATION <br />A.Risk management <br />The City is exposed to various risks of loss related to torts; theft of damage to, and the destruction of <br />assets; errors and omissions; injuries to employees and natural disasters. During the fiscal years of <br />1980 and 1987, the City established a Workers' Compensation Fund and a Risk Management Fund, <br />respectively (internal service funds) to account for and finance its uninsured risks of loss. For the year <br />2021um of $470,000for each <br />occurrence. The City purchases excess loss coverage from the Workers' Compensation Reinsurance <br />Association, a nonprofit organization established by Minnesota State Statutes. <br />The Risk Management Fund provides comprehensive general liability and comprehensive automotive <br />liability up to the statutory maximum of $1,500,000. The City retains the risk of the first $100,000 of <br />each occurrence with an annual maximum exposure of $200,000. Liabilities of the fund are reported it <br />is probable that a loss has occurred,and amount of the loss can be reasonably estimated. <br />Liabilities include an amount for claims that have been incurred but not reported (IBNRs). The result <br />of the process to estimate the claims liability is not an exact amount as itdepends on many complex <br />factors, such as inflation, changes in legal doctrines, and damage awards. Accordingly, claims are <br />reevaluated periodically to consider the effects of inflation, recent claim settlement trends (including <br />frequency and amount of pay-outs), and other economic and social factors. The estimate of the <br />claims liability also includes amounts for incremental claim adjustment expenses related to specific <br />claims and other claim adjustment expenses regardless of whether allocated to specific claims. <br />Estimated recoveries, for example from salvage or subrogation, are another component of the <br />liability estimate. The City purchased commercial insurance for claims in excess of coverage provided <br />by the Risk Management Fund and for all other risks of loss. Settled claims have not exceeded this <br />coverage in any of the past three fiscal years. There were no significant reductions in the City's <br />insurance coverage in 2021. Enterprise fund charges and the property tax levy are based on a <br />management estimate of claims history and the amount necessary to maintain catastrophic reserves. <br />The reserves as of December 31, 2020, were $944,188and $669,341for the Workers' Compensation <br />Fund and Risk Management Fund, respectively. The claims liability of $103,542and $218,639, <br />respectively, reported in both funds at December 31, 2021are based on the requirements of <br />Governmental Accounting Standards Board Statement No. 10. This statement requires that a liability <br />for claims be reported if information prior to the issuance of the financial statements indicates it is <br />probable that a liability has been incurred at the date of the financial statements and the amount of <br />the loss can be reasonably estimated (IBNR). Changes in the funds' claims liability amount in fiscal <br />2020and 2021were: <br />62 <br /> <br />
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