By Dave Boffi, CLEA President
Late last year, CLEA began the process of conducting an actuarial review following the passage of AB 1072 (Daly), which required that Police Officer Benefit Relief Associations such as CLEA submit a report to the California Department of Insurance by July 1, 2016 showing that they are financially sound enough to provide the benefits they have promised to Plan Members.
I am very pleased to tell you that the recently completed CLEA LTD actuarial report confirmed what we already knew: Our Plan is financially strong and our members can count on it being there for them when they need it.
Immediately after AB 1072 passed, the CLEA Executive Board initiated a nationwide Request for Proposal and interview process in order to select a firm that we believed to be the most qualified to conduct the actuarial review we were seeking. As a result of this interview process, United Health Actuarial Services (UHAS) was selected to conduct the review. UHAS is one of the most respected actuarial firms in the nation, and the California Department of Insurance welcomed our selection because it knew of UHAS' outstanding reputation and competency.
CLEA supported the intent behind AB 1072, which was to ensure that members of the law enforcement community in California could make an informed and confident choice when choosing long-term disability coverage. We worked with the author of the bill, Assembly Member Tom Daly, to craft the bill with language that best achieved that purpose. Once the actuarial review process began, members of our Executive Board, our Plan Administrators and our Plan Counsel worked diligently with the actuary to provide the data needed to conduct their valuation and answer questions that arose.
The soundness of our Plan has now been verified not only by providing 30 years of benefits amounting to over $100 million, but also by top-notch actuaries. Among the findings in the report by UHAS, which was also professionally peer-reviewed by another qualified actuary, are:
- Due to the 2013 rate increase, "premiums are now more than adequate to pay for current losses and expenses."
- Not only are current premiums "more than sufficient" to pay current claims and expenses, they "are also expected to contribute to a modest increase in surplus in 2016."
While the actuarial process has been long, complex and expensive, I believe it has been invaluable to ensuring that our members and potential members can be confident in the strength of our Plan. CLEA appreciates the effort Assembly Member Daly made to work with us, often in the face of opposition from our competitors, to develop reporting requirements that were fair and led to our support for his bill.
Since we were founded in 1985, CLEA has repeatedly proven that it is possible to provide the best value in LTD coverage while maintaining our business model of operating as a financially sound association exclusively serving, and managed by, members of the law enforcement community. I want to personally thank everyone who worked so hard to bring the actuarial process to a successful completion. We filed our report with the California Department of Insurance prior to the July 1 deadline. CLEA now serves over 20,000 members and is the overwhelmingly leading choice among law enforcement in California for LTD coverage.