FIRMS executive briefs board on how the fire‑district workers’ comp pool sets costs and handles claims

Jim Alig, executive director of the Fire Risk Management Services joint‑powers authority (FIRMS), told the Moraga‑area fire board that FIRMS provides workers’ compensation coverage and related member services for 174 participating districts and public agencies.

Alig said FIRMS carries the first layers of claims exposure — the pool takes the first $750,000 per occurrence (with the primary layer to $500,000 funded as the pool’s operating layer) and purchases additional coverage from partner JPAs and commercial reinsurance for higher layers. He said the pool’s total covered exposure across members is roughly $200 million.

Alig explained how annual member contributions are calculated: an independent actuary projects the ultimate cost of claims under $500,000; excess insurance and administrative expenses are added; the resulting payroll‑based rate for each member is then adjusted by an experience modification factor based on three years of incurred losses. The district’s most recent experience modifier, Alig said, is about 0.999 — nearly neutral compared with the pool average.

Why it matters: the pool structure and the experience modifier directly affect how much the district pays each year. Alig noted that retained earnings for the pool are about $15 million and that since 2010 the district has paid about $12.1 million into the pool; firms reports roughly $9.7 million paid in losses for the district and about $1.9 million in outstanding reserves.

Alig also described FIRMS’ emphasis on cost containment and member services: dedicated claims examiners assigned to members, nurse triage and return‑to‑work services, risk‑control visits and subsidized physicals, and new resiliency training for first responders to address long‑term mental‑health costs. He said FIRMS prioritizes early settlement where appropriate because long‑running claims are substantially more expensive.

The board asked about recent trends and the impact of COVID‑era claims; Alig said the pool’s actuarial approach aims for an 80% confidence level in collected contributions and pointed to a varied membership mix (some volunteer districts with one paid employee, and a small number of much larger districts) that drives volatility in experience modifiers.

Board members and staff followed with questions about how dividends or surplus distributions are declared (the FIRMS board must formally declare dividends), how elections to the FIRMS board are conducted, and whether the district might exit the pool. Alig said the FIRMS bylaws set the election and governance process and that exiting would require defined steps under the JPA agreement.

The presentation concluded with a breakdown of the district’s loss drivers (sprains/strains and pain, cardiovascular events, cancer, fractures/crushing) and a reminder that risk‑control programs are designed to target the largest drivers of cost.

The board did not take immediate action on the presentation; Alig said he would remain available to answer follow‑up questions.