Manchester, Connecticut

Risk Management


On July 1, 1983, the Town established the Manchester Self-Insurance Program (MSIP) and the Town of Manchester Medical Insurance Fund (TOMMIF) to account for and finance its uninsured risk of loss. TOMMIF provides the payment of administrative costs and claims. MSIP provides for the purchase of insurance and services, and the payment of costs and claims associated with workers' compensation, automobile liability, and general liability. These funds are accounted for as internal service funds.

The Town's self-insurance medical insurance plan is administered by CIGNA. The fund is obligated to pay medical claims for participants. An aggregate stop loss provision is included in the administrative agreement which limits the Town's liability to 120% of claims payments projected by CIGNA. The Town has not exceeded the stop loss provision in any of the past three fiscal years.

The Town's self-insured program is administered by a third party administrator, and has a self-insured retention (SIR) of $500,000 per occurrence for general liability, auto liability, and workers' compensation. The Town purchases excess insurance from commercial carriers to provide coverage in excess of the SIR, and for other risks of loss that are not self-insured risks. The Town has not exceeded the SIR for self-insured risks nor have they exceeded commercial coverage for insured risks, in any of the past three fiscal years. All funds of the Town participate in the program and make payments to the Risk Management Fund based on estimates of the amount needed to pay prior and current year claims.

There were no significant reductions in insurance coverage from coverage in the prior year for medical insurance, workers' compensation or liability insurance.

Changes in the balances of claims liabilities during the fiscal years ended June 30, 2013 and 2012 for the TOMMIF and MSIP funds are as follows (in thousands):


Unpaid claims, July 1
$ 1,708
$ 2,589
$ 8,971
$ 7,845
Incurred claims (including IBNR)
Claim payments
Unpaid Claims, June 30
$ 2,589
$ 1,717
$ 7,677


The claim reserves reported in both the TOMMIF and MSIP funds are based on the requirements of Governmental Accounting Standards Board Statement No. 10, Accounting and Financial Reporting for Risk Financing and Related Insurance Issues, which requires 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. Claim liabilities are calculated considering the effects of inflation, recent claim settlement trends including frequency and amount of pay-outs and other economic and social factors.