The June meeting of the MCIT Board of Directors included a discussion of the merits for returning fund balance to the membership. Many factors are considered, but none is as important to the board as maintaining MCIT’s financially strong, fully funded status. In the end, the board voted to return an $11.75 million dividend.
Each year the board looks forward to the prospect of declaring a dividend when it is determined to be fiscally sound and financially prudent. The dividend discussion follows a review of the actuary’s reserve analysis, an investment report and the annual report of the independent auditor.
This year, Rick Atkinson of Actuarial Advisors, MCIT’s long-term actuary, reported that in the reality of declining investment income and multiyear trend of rate reductions, MCIT’s disciplined claims management, including a commitment to adequate claim reserving, has positioned the organization to release funds.
There was much discussion about the status of Driver’s Privacy Protection Act (DPPA) claims that have required significant financial reserving over the past four years. Those claims have largely been resolved through court dismissals or settlements, thereby releasing the funds needed going forward.
Several factors influenced the ability to release workers’ compensation funds, such as new diagnosis-related medical provider reimbursement formulas, changes in case reserves and members’ effective return to work practices.
At the conclusion of his report Atkinson opined that MCIT is in the financial position to again return fund balance to the membership. With this reassurance, the board voted unanimously to return $11.75 million of fund balance to members in good standing.
- Workers’ Compensation: $7.75 million
- Property/Casualty: $4 million
The 2018 dividend announcement marks the 28th consecutive year MCIT has returned fund balance to its membership, bringing total dividends to more than $333 million. The 2018 announcement is representative of the benefits of pooling and continued participation in the Trust.
Controlling Claims Is Key
The ability to declare a dividend is attributable to the overall financial strength of the organization. Many elements contribute to that including effective leadership and staff who are dedicated to carrying out the mission of MCIT. But as one board member pointed out, “this decision would not be possible without our members’ commitment to loss control and risk management, and their efforts to prevent claims from happening in the first place.”
Members will receive notice of their specific 2018 dividend in late July, and dividends will be distributed in November. Members are reminded that there is no guarantee of future dividends, but the MCIT Board evaluates the merits of returning fund balance on an annual basis.