Thurston County officials review risk fund structure, say reserves are actuarially set

Thurston County officials reviewed the structure and recent activity of the county’s risk fund at the Jan. 22 Board of County Commissioners work session, explaining how reserves and internal department rates are calculated.

County risk and finance staff told the board the fund balance is actuarially determined using a five‑year history of claim payments, anticipated claim estimates and current reserve levels. "We try to keep it at about a 90% confidence rate," a risk/finance presenter said, describing the target confidence the actuarial work uses to set the required balance.

The board was shown a one‑page summary and a three‑year chart of claims and beginning fund balances. Commissioners asked why beginning balances remained roughly consistent (about $4.3–$4.5 million) while annual claim payments varied. Staff replied the actuarial calculation, mandatory reserve requirements for the county’s quasi‑self‑insured status, and charges from the risk pool all affect the balance and department assessments.

Staff clarified how costs flow when large claims occur: the county generally pays a deductible (discussed in the meeting as $250,000 per claim), the county’s pooled insurance program covers amounts above that deductible until an excess carrier attachment point, and the county’s excess coverage begins at $7,000,000. Staff said that in the event of a catastrophic loss large enough to exhaust the fund, the county could need additional funding and the event would be averaged into future five‑year claim calculations, which would raise department rates.

Commissioners asked for additional detail and trends. Staff said the claims figures presented were the actual checks cut by the county (the county’s payments), and that the presentation did not include the amount the risk pool or excess carriers contributed; staff offered to provide an expanded report showing total claim amounts versus county expenditures and the pool/excess contributions. Commissioners also requested a longer historical trend — a 10‑year series showing annual expenditures (the county share) and counts by claim type — and asked for documentation on how the risk pool and the county rebase internal department rates.

Risk staff said there are approximately 30 pending tort claims and about eight open lawsuits, but clarified those counts include a wide range of claim sizes (from small claims, e.g., mailbox or pothole damages, to larger claims). Commissioners emphasized that many tort claims are small and that the total number should not be assumed to mean a large number of multimillion‑dollar cases.

The board directed staff to return with the additional data requested — including county‑paid totals versus full claim amounts, a multi‑year trend, and documentation that explains how the pool and internal rates are calculated — before the next budget cycle presentation.