PUBLIC ENTITY RISK POOLING — A LONG-TERM SOLUTION

In 1973, the Illinois General Assembly passed legislation that enabled public entities to combine together to meet their risk management and insurance needs. This type of organization became known as a public entity pool. The first Illinois pool was organized in 1979.

The legislation proved to be visionary. In the mid-to-late 1980's, the "insurance crisis" hit Illinois. Public entities found themselves being canceled by commercial insurers. From 1984 to 1988, park and recreation agencies saw insurance limits decrease over 700% while the cost increased 850% or more. Everyone said, "There must be a better way!"

In 1984, the Park District Risk Management Agency (PDRMA) was created by park and recreation agencies as an alternative to commercial insurance. The organization's purpose was to combine resources to pay losses, purchase insurance, develop risk management and loss control programs, and defend lawsuits brought against the members.

Again in 2000, the hard insurance market returned with the fall of the stock market followed by the events of 9/11 and a further hardening of the market drove up costs significantly. However, through financial planning, effective risk management, and litigation success, PDRMA members have seen their insurance rates remain stable: a true testimony that pooling is a long-term solution.

What makes PDRMA different? It anticipates and responds to member needs through innovative programs and services. Some of these include: health risk management and wellness programs, pollution liability coverage, a fixed asset appraisal program to help members comply with GASB Statement No. 34, a member employment practices liability certification training program, and much more!

FROM PIONEER TO PROVEN LEADER

The Park District Risk Management Agency was one of the first public entity pools in Illinois. Today, PDRMA is a membership organization comprised of over 150 park districts, forest preserve districts and special recreation associations located throughout the state.

Illinois park and recreation agencies have long earned national recognition for excellence in their field, and over the years PDRMA has also earned distinction for its financial reporting and pool management. In 1990, it was first awarded the distinguished Certificate of Achievement for Excellence in Financial Reporting by the Government Finance Officers Association, an award which it has continued to receive in each consecutive year. Since 1995, PDRMA has been recognized by the Public Risk Management Association and currently the Association of Governmental Risk Pools (AGRIP) for its achievement in complying with national standards for the operation of public entity pools. These are the only nationally recognized standards which exist for pools. PDRMA is 1 of only 29 pools from across the nation to achieve this distinctive recognition.

As a continuation of this commitment to excellence, PDRMA and its members are always working to expand and improve products and services to provide the best risk management programs for park and recreation agencies. PDRMA was a leader in the formation of Governmental Entities Mutual (GEM) created and owned by PDRMA and 16 other Pools. PDRMA has been recognized as a leader across the country with staff leaders in the pooling profession, award-winning articles, and recognized national experts in parks and recreation risk management making presentations across the country.

OUR SERVICE SETS US APART

As a member service organization, PDRMA is committed to providing the highest quality of services in the industry. In fact, a recent member survey found that member satisfaction with PDRMA services rated an average 4.7 on a scale of 5!

Another measure of member satisfaction is reflected in PDRMA's ability to retain members. In fact, PDRMA has retained 99% of its membership since its inception in 1984.

Some of PDRMA's services include:

• Broad customized insurance coverage for park and recreation property, general liability, pollution liability, auto liability, public officials' liability, employment practices liability, worker's compensation, health/dental/vision/life and unemployment compensation.
• Special insurance programs for volunteer medical accidents, underground storage tanks, community groups, liquor liability, accidental death and dismemberment, and special event coverage.
• Expert in-house legal services and consultation.
• In-house claims administration with claims adjusted by PDRMA staff.
• In-house risk management services staff to provide loss control and risk management consultation to members.
• Education and training that includes semi-annual risk management institutes, an employment practices liability certification program and many other training opportunities related to park and recreation operations.
• A video library and extensive loss control resource files.
• A web-based resource service to obtain a wide range of risk management information such as model policies, fact sheets, training opportunities, etc.
• Risk management awards and corresponding cash incentive programs.

A UNIQUE PARTNERSHIP

Selective membership makes PDRMA unique among pools. Though any park district, forest or conservation district or special recreation agency in Illinois may apply for membership, only those meeting selective criteria are recommended for membership.

These criteria are extremely important to both existing and future members. In order for a partnership to prosper, each partner should be committed to the same risk management principles. At PDRMA, these principles mean well-managed, high quality park and recreation agencies working together to reduce losses and support each other in the implementation of risk management programs.

PDRMA, not an insurance broker or agent, controls the membership process. The application process includes a complete review of the applicant's loss history, an on-site visit to review facilities and operations, and most importantly, determination that the applicant's governing body and management has a commitment to developing and maintaining a comprehensive loss prevention program.

In addition, each member makes a contractual commitment to the pool to do its part to prevent losses. This commitment is one of the most important reasons for PDRMA's long-term success. After many years, this unique partnership continues to thrive, making PDRMA one of the largest and most prosperous public entity pools in Illinois.

In the words of PDRMA members: "The PDRMA formula requires member agencies to take part in the decision making, rather than just hiring an 'insurance group' and sitting back and letting someone else call the shots."

OWNERSHIP MEANS CONTROL AND CHOICE

PDRMA's unique structure as an umbrella organization enables members to choose the programs in which they want to participate: property/casualty, health, and unemployment compensation. PDRMA's governance structure provides the opportunity for all members to be involved and is comprised of three bodies:

Membership Assembly
Each member has one representative and one vote per program in which it participates. The Membership Assembly adopts/amends PDRMA's bylaws, provides guidance to the Board of Directors, elects the Board of Directors, and authorizes the issuance of bonds.

Board of Directors
Seven individuals are elected by the Membership Assembly to the PDRMA Board. The Board is responsible for providing the vision for the organization, strategic planning, and adopting PDRMA policies.

Program Councils
Each member has one representative for each program in which they participate for the property/liability/workers compensation, health, and unemployment compensation programs. The Program Councils are responsible for approving coverage structure and limits, plan design, the program budget and member contributions.

Member representatives and staff can also provide further input by serving on PDRMA's operational committees including risk management, education and training, claims, finance, and health benefits.

PERFORMANCE SPELLS SAVINGS

In the past, park and recreation agencies saw risk management costs and coverage fluctuate greatly. However, PDRMA's liability rates have decreased 75% since 1989 and its combined workers compensation rate has decreased 13% since 1990, although medical inflation has often averaged more than 10% per year. The PDRMA Health Program has consistently had lower rate increases than the national average since its inception in 1990. PDRMA's Unemployment Program has collectively saved its members millions of dollars since its inception in 2001.

The very nature of PDRMA's non-profit method of operation allows it to generate savings unlike any other program. The majority of dollars contributed by members pay claims and when claims are less than expected, the dollars remaining are owned by the members! This has been one of the major successes of the pool. PDRMA has been able to guarantee costs and stabilize rates well into the future.

The independent nature of PDRMA's operations is also critical. The pool is not affiliated with a specific insurance broker or insurance company: coverage and services are competitively marketed to ensure the best program at the lowest cost. In fact, new members joining PDRMA since 1994 have realized an average 35% savings compared to the commercial market or other Illinois risk pools. PDRMA provides higher limits of coverage and comprehensive member services.

Another important factor in developing savings is each member's commitment to risk management. Since 1985, the number of claims per member and lawsuits per member has continued to decrease. Very simply, fewer claims and fewer lawsuits mean more dollars for PDRMA members to use for their park and recreation programs. Fiscal restraints and today's tax caps make this extremely important for all public entities.

COMMITMENT YIELDS LONG-TERM SUCCESS

PDRMA members understand that for pooling to be successful, a long-term commitment is necessary. From just 25 members in 1984, pool membership has grown to over 150 agencies. Members include park districts, forest preserve districts and special recreation associations ranging in size from the very small to the very large.

In addition, each member is committed to do its part to prevent losses. Excellence in risk management programs continues to be the key focus for PDRMA members. A significant factor in PDRMA's success has been the proper identification of park and recreation risks and the design and implementation of programs to minimize or eliminate those risks. PDRMA's goal is to provide the necessary information resources and training to assist members in making well-informed decisions in managing their risk.

PDRMA members who excel in managing their risks through the Loss Control Review process are rewarded with monetary awards and recognition plaques presented at their public board meetings.

This approach has been the long-term solution to the risk management needs of park and recreation agencies: "PDRMA has created a sense of achievement and pride for all its members - leadership and vision have brought both national and statewide notoriety, and saved Illinois taxpayers millions of dollars."

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