Comprehensive Annual Financial Report - Fiscal Year ended 6/30/2017

Note 4. Other Information A. Risk management and employees’ health benefits The City is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; natural disasters; and medical and dental claims for employees, retirees, and dependents. The City protects itself from potential loss through a combination of self-insurance programs and the purchase through the private sector of commercial insurance for various primary and excess coverages. There were no significant changes in insurance coverage from the prior year; however the City did add cyber insurance effective July 1, 2015. City insurance coverage includes workers’ compensation, general liability, automobile liability, police liability, cyber liability, automobile comprehensive, real and personal property. For workers’ compensation, the City self-insures the first $1,100,000 per occurrence with excess coverage of $10,000,000 per occurrence and employers’ liability coverage of $1,000,000 per occurrence and in the aggregate. For liability, the City self-insures the first $1,000,000 per occurrence, with excess coverage of $10,000,000 in the aggregate. For cyber liability, the City has coverage up to $5,000,000. For property, the City self-insures the first $100,000 per occurrence, with excess coverage up to the replacement value of $500,000,000 in the aggregate. The excess coverage includes $100,000,000 in the aggregate for loss due to flood and $10,000,000 annual aggregate for flood plain location losses. The City of Raleigh, in accordance with NC General Statute §159-29, maintains a Public Official Bond on The Chief Financial Officer in the amount of $500,000. In addition, the City purchases a Crime and Fidelity insurance policy for all other employees in the amount of $1,000,000. City taxes are collected by the Wake and Durham County tax collectors. Wake and Durham County tax collectors are endorsed onto the City of Raleigh’s Crime and Fidelity insurance policy for their collection of taxes on behalf of the City of Raleigh up to the $1,000,000 coverage limit. The City provides medical and dental coverage for employees and retirees. Additional premium-based dependent coverage is available at employee expense. The City, as allowed by GASB Statement No. 10 Accounting and Financial Reporting for Risk Financing and Related Insurance Issues , uses internal service funds, the risk management fund and the employees’ health benefits fund, to account for its risk financing activities. The claims liability total of $19,738,902 reported for these two internal service funds at June 30, 2017, is based upon the requirements of Statement 10, which require 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 incurred at the date of the financial statements and the amount of the loss can be reasonably estimated. Claims liabilities reported include an estimate for claims incurred but not reported. The changes in reported claims liabilities in fiscal years 2016-17 and 2015-16 are as follows: 2017 2016 Insurance claims payable, beginning of year 27,871,426 $ 24,006,300 $ Current year claims and changes in estimates 34,718,404 50,498,958 Claim payments (42,850,928) (46,633,832) Insurance claims payable, end of year 19,738,902 $ 27,871,426 $ Employees’ health benefits and risk management current portion of pending claims is $8,037,000. City of Raleigh _____________________________________________________________ Financial Section ____________________________________________________________ __________________________________________________________ 49 __________________________________________________________