The original idea for the sharing of road commission risks was born during the 1970s
and developed during the early 1980s. Several road commissions led the County Road
Association of Michigan (CRA) in efforts to address three basic difficulties: 1) Erosion
of governmental immunity; 2) Increasingly litigious society; and 3) Hard market cycles
of the insurance industry causing dramatic increases in premiums and cancellations of policies.
Enabling legislation to allow the pooling of risk was sought during the early 1980s
and P.A. 138 was passed by the Michigan legislature in 1982.
County road commissions then created the Michigan County Road Commission Self-Insurance
Pool (MCRCSIP). MCRCSIP was formed as a Trust and began operations April 1, 1984 with
thirty-seven (37) members. Over the next several years, membership grew to the present
level of seventy-eight (78) members.
MCRCSIP is governed by a Trust Agreement and Intergovernmental Agreements signed by each
member, and by an approved set of by-laws. A board of directors that is elected by the
membership is responsible for MCRCSIP administration. Day-to-day management is the
responsibility of the Administrator employed by the Board of Directors. We have a Third
Party Administrator (TPA), to assist in the areas of risk management and claims management.
The TPA is responsible to the Administrator and reports to the Board at each of its meetings.
MCRCSIP supplies the following coverage for its members: General Liability, Auto Liability,
Employment Practices/Public Officials Errors & Omissions, Employee Fidelity and Faithful
Performance, and Physical Damage Coverage for Buildings & Contents, Off-Road Equipment and
Licensed Vehicles. Performance Bonds are also available from MCRCSIP.
MCRCSIP bills each member an annual contribution for their coverage. An actuary calculates
the total funding requirement using Excess/Reinsurance Fees, Claims Reserves and the Administrative Budget.
The Board of Directors engages the
services of a consultant to apply the “Best’s Capital Adequacy Model”
to MCRCSIP’s year-end results. This study determines how much capital
is necessary to support underwriting, investment and credit risks; determines
the total MCRCSIP year-end capital available; and then compares the amount
of available capital to the necessary capital to determine if an excess
exists. The Board then determines if the excess can be returned to the
members in the form of a refund.
The founders of
MCRCSIP identified three main objectives for pooling:
- To gain control of their own destiny by:
controlling and reducing losses,
a joint effort to vigorously defend claims, and
a united effort to effect favorable legislation
- To maintain
control over funds necessary to provide needed protection; and
- To lower
Because of the dedication and
long-term commitment of each member and the board of directors they have
elected, MCRCSIP has been successful in attaining all three-goals.