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CITY OF EUGENE, OREGON
<br />Notes to Basic Financial Statements
<br />(5) Other Information
<br /> (A) Risk Management
<br />The City has established an internal service fund to account for and finance its risks of loss. The City has a
<br />self-insured liability program which covers personal injury, public officials errors and omissions, automobile, and
<br />employer’s liability, with a maximum self-insured retention of $500,000 per occurrence. In addition, the City has
<br />a self-insured workers’ compensation program which covers employees’ work related illnesses and injuries,
<br />including employer’s liability, with a maximum self-insured retention of $500,000 per occurrence.
<br />All regular full and part-time City employees are eligible for medical, dental, and vision insurance coverage.
<br />Employees may choose between two self-insured plans: the City Health Plan, a Preferred Provider
<br />Organization (PPO) plan or the City Managed Care Plan, a Point of Service (POS) plan. The City has
<br />established a self-insurance fund to pay medical, dental, and vision claims of employees and their dependents
<br />on the City Health Plan, up to the self-insurance retention limit of $100,000 per employee.
<br />Coverage for workers’ compensation, general liability, and employees’ health claims in excess of the self-
<br />insurance retention limit is purchased from commercial insurers. The City also purchases all-risk property
<br />insurance coverage from a commercial insurer. The property insurance policy has a basic $25,000 deductible,
<br />with earthquake and flood insurance coverages subject to $250,000 deductible per occurrence. During the
<br />previous three fiscal years, there were two general liability claims that exceeded the insurance coverage levels.
<br />Claims liabilities reported by the City are based on an actuarial estimate of the ultimate cost of settling claims
<br />incurred, including incurred but not reported (IBNR) claims as of June 30, 2007. Claims liabilities include all
<br />incremental costs incurred directly as a result of a claim, and consider estimated recoveries on both settled and
<br />unsettled claims. Claims expense has been reduced by amounts recovered, or expected to be recovered
<br />through excess insurance.
<br />At June 30, 2007, a total claims liability of $9,878,134 is reported in the Risk and Benefits Internal Service
<br />Fund. All prior and current year claims are fully reserved and have not been discounted. The City does not
<br />utilize annuity contracts from commercial insurers. Therefore, during this reporting period, all known liabilities
<br />have been disclosed.
<br />The following changes occurred in the claims liability in the current and previous fiscal year:
<br />FiscalLiabilityCurrent-year
<br />year balance atclaims andLiability
<br />endedbeginningchanges inClaimbalance at
<br />June 30of yearestimatespaymentsend of year
<br />$
<br />20069,837,66216,527,043(16,584,653)9,780,052
<br />20079,780,05216,351,025(16,252,943)9,878,134
<br />continued
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