Grundy County will be in the insurance business until at least December of 2023.
It’s only client, however, will continue to be itself.
In the future, as in the past, it is expected that the business will be a profitable one.
“Throughout the years, it’s saved the county several dollars, probably up in the millions of dollars,” said John Galloway, chairman of the board’s Finance Committee and, by extension, the Grundy County Insurance Trust.
What Galloway was referring to is a self-insurance program the county began on Jan. 1, 1988, to provide is own liability and worker’s compensation insurance, as well as several other types of coverages, instead of paying premiums to provide for coverage through an outside broker. Under the program, the county issues bonds to create a trust from which insurances claims are paid. Instead of paying premiums for coverage,the county simply repays the bonds, while at the same time realizing interest on the money in the trust fund.
A program update presented to the county March 11 of this year estimates that the county, in the 24 years since the program was conceived, has realized a savings of $3.9 million from the premiums it would have paid for standard insurance. In the last 14 years, the update indicated, the county also realized a $3.7 million return on its trust investments, bringing the total savings from the program to $7.6 million.
As of Nov. 30, 2012, however, the amount of money left for trust spending purposes was down to $2,595,389, according to the program update. Just six years earlier, at the end of fiscal 2006, the available amount was $5,261,872.
The county board, during its regular meeting on Tuesday, opted to extend the program – and the associated savings -- by issuing up to $3.75 million in new taxable general obligation bonds in order to recapitalize the programs while bond rates are still advantageous.
The bonds, which will carry an estimated interest rate of between 3.25 and 3.5 percent, will carry a repayment of $435,000 per year until Dec. 1, 2023.
The bonds, which will be made available for presale to local investors as soon as the bond rating is officially released by Standard & Poor’s, will carry an AA-minus bond rating.
“The argument is that if we don’t do that, then we have to buy the insurance,”explained Chris Balkema, who noted the estimated cost of standard insurance going forward would start at around $500,000 per year and likely increase annually.
He also noted that the savings could increase and the life of the program be extended if the county is successful in the other component of the program, which is working internally to reduce preventable claims. This loss control, according to the plan update from earlier this year, “actively promotes safety throughout all levels of the organizations.”
Past efforts in this area have included formal safety inspections of all county departments; consistent, monthly safety committee meetings; and departmental and countywide safety training. Goals in this area have also been established for the current fiscal year.