LARIMER COUNTY, COLORADO
NOTES TO FINANCIAL STATEMENTS
Year Ended December 31, 1997

NOTE 7 - SELF-INSURANCE:

The County has established self­insurance funds (internal service funds) for dental, unemployment, workers' compensation, general liability, automobile liability and physical damage, law enforcement liability, professional liability and a self­insured reserve. Fees collected from other County funds are recognized as revenues in the period in which the insurance coverage is provided. Insurance claims are recognized as expenses as they are incurred. There have been no significant reductions in insurance coverage from coverage in the prior year. Insurance settlements have not exceeded insurance coverage for each of the past three fiscal years.

  1. Dental insurance: County departments are charged a monthly fee per employee and employees are charged a monthly fee for any dependent coverage they request. Actual claims are processed and paid by a third party administrator for a fee based on the number of eligible employees participating during the month, plus any expenses for identifiable printing and postage. The third party administrator is reimbursed monthly from the Self­Insured Dental Fund.

  2. Property and casualty: County departments are charged a fee for direct costs of property and casualty based on individual departments' exposures. Liability claims are processed by a third party administrator for a fee per each claim processed. The third party administrator is reimbursed weekly from the Self­Insured Property and Casualty Fund. Personal injury limit is $150,000 per person, $600,000 per occurrence as stated in the Colorado Governmental Immunity Act. Property insurance is provided by a commercial insurance company with a $10,000 deductible and a limit of liability per occurrence of $50,000,000. In 1997, excess liability insurance was purchased with Self-Insured retention of $1,000,000, to be paid by the County, with additional coverage of $2,000,000 limit of liability to be paid by a commercial insurance company.

  3. Unemployment insurance: County departments are charged 0.15% of gross wages for unemployment coverage. Actual claims are processed and paid by the State of Colorado. The State is reimbursed quarterly from the Self­Insured Unemployment Fund.

  4. Workers' compensation: County departments are charged a fee per $100 of gross wages based on the relative risk of each employee's position. Actual claims are processed and paid by a third party administrator for a fee per each claim processed. The third party administrator is reimbursed weekly from the Self­Insured Workers' Compensation Fund. The maximum self-insured liability per person is $300,000. Any excess is covered by a commercial insurance company.

  5. Reserve: The Reserve is funded by annually appropriated transfers from the insurance funds. In the event that an insurance fund has a deficit, funds are transferred back to it from the Reserve. The Self-Insured Reserve's fund equity detail by type of insurance is as follows:

Property
Workers'
December 31, 1997
Other
Dental
and Casualty
Unemployment
Compensation
Total
Prior years activity:
Initial contribution $ 70,893 $ -$ - $ 407 $ 605,610$ 676,910
Interest 38,451 41,714 274,328 29,654 294,106 678,253
Transfers-in 136,380 153,844 1,204,843 202,789 2,409,372 4,107,228
Transfers-out (137,975) (7,657) - (86,514) (1,031,666) (1,263,812)
Miscellaneous revenue 1,578 - - - 8,613 10,191
Current year activity:
Interest 4,992 10,837 60,977 7,876 141,507 226,189
Transfers-in - - 50,665 7,515 133,789 191,969
Transfers-out - (5,938) (180,000) - - (185,938)
Miscellaneous revenue 19,289                -               -                -                - 19,289
Total Fund Equity$ 133,608 $ 192,800$ 1,410,813 $ 161,727$ 2,561,331 $ 4,460,279

Changes in the balances of claims liabilities during 1996 and 1997 are listed on the following page:

Current Year
Claims and
Balances
Changes in
Claim
Balances
1/1/96
Estimates
Payments
12/31/96
Dental$ 38,001 $ 358,910 $ (361,335) $ 35,576
Property and Casualty 132,653 95,130 (102,171) 125,612
Unemployment 58,830 23,822 (52,702) 29,950
Workers' Compensation 871,607 617,214 (713,653) 775,168
Current Year
Claims and
Balances
Changes in
Claim
Balances
1/1/97
Estimates
Payments
12/31/97
Dental:
1996$ 35,576 $ 3,566 $ (39,142) $ -
1997               - 371,764 (328,112) 43,652
$ 35,576 $ 375,330 $ (367,254) $ 43,652
Property and Casualty:
1989 - 1992$ 202 $ 12,278 $ (9,756) $ 2,724
1993 12,247 1,100 (2,424) 10,923
1994 22,408 2,314 (5,424) 19,298
1995 38,371 (35,557) (1,877) 937
1996 52,384 146,761 (199,145) -
1997               - 54,057 (7,614) 46,443
$ 125,612 $ 180,953 $ (226,240) $ 80,325
Unemployment:
1994$ 320 $ 19 $ (339) $ -
1995 10,108 (6,516) (3,592) -
1996 19,522 28,988 (32,741) 15,769
1997               - 32,211 (8,354) 23,857
$ 29,950 $ 54,702 $ (45,026) $ 39,626
Workers' Compensation:
1987 - 1992$ 275,612 $ (44,476) $ (92,812) $ 138,324
1993 208,727 (10,460) (58,179) 140,088
1994 26,769 258,447 (143,689) 141,527
1995 25,603 133,643 (44,765) 114,481
1996 238,457 9,481 (184,421) 63,517
1997               - 241,270 (83,701) 157,569
$ 775,168 $ 587,905 $ (607,567) $ 755,506

The claims liability reported in each fund is based on the requirements of GASB Statement No. 10, which requires that a liability for claims be reported if information prior to the issuance of the financial statements indicates that it is probable that a liability has been incurrred at the date of the financial statements and the amount of the loss can be reasonably estimated. Estimated liabilities, including claims incurred but not reported and/or paid as of December 31, 1997, are listed on the following page:

Property
Workers'
December 31, 1997
Dental
and Casualty
Unemployment
Compensation
Total
Current Claims Payable:
1987 - 1992$ - $ 2,578 $ -$ 48,542 $ 51,120
1993 - 3,341 - 56,438 59,779
1994 - 2,327 - 72,151 74,478
1995 - 466 - 47,285 47,751
1996 - - 15,580 22,175 37,755
1997 43,652 41,080 20,353 62,884 167,969
Total Current 43,652 49,792 35,933 309,475 438,852
Long-term Claims Payable:
1987 - 1992 - 146 - 89,782 89,928
1993 - 7,582 - 83,650 91,232
1994 - 16,971 - 69,376 86,347
1995 - - - 67,196 67,196
1996 - 471 189 41,342 42,002
1997                - 5,363 3,504 94,685 103,552
Total Long-term                - 30,533 3,693 446,031 480,257
Total Claims Payable $ 43,652$ 80,325 $ 39,626 $ 755,506$ 919,109

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