During its Sept. 26 caucus, the Town Council agreed to ask for a one-year contract extension with the Suburban-Essex Joint Insurance Fund, despite recommendations by Councilman John Bueckner for a three-year contract. The town of Secaucus has been member of the JIF since the mid-1990s to reduce the cost of insurance. Joint Insurance Funds, or JIFs, are nonprofit organizations of municipalities who share insurance. The insurance arrangements, made possible by enabling legislation passed in the early 1980s, seem most advantageous to small and medium-sized governmental units. Most larger cities and counties are self-insured. The first JIF was established by the New Jersey School Boards Association in 1983 and the first local government JIF was started in Bergen County in 1985.
By collaborating in JIFs for their worker’s compensation, liability and property insurance, New Jersey counties, municipalities and school boards have received $25 million in refunds in the past two years, as well as having saved millions more in insurance costs.
“The Joint Insurance Funds,” according to Gov. Christie Whitman in a speech earlier this year, “were a creative response to the skyrocketing insurance premiums of the ’80s. Small and medium-sized municipalities were at the mercy of the market, and then they put their money together and brought down the costs.”
Through the 46 JIFs, governments, school boards and government-like bodies such as utility authorities can save as much as 25 percent in premiums for property, liability, health and worker’s compensation JIFs.
“This saving comes through the pooling of assets and losses and the sharing of services,” NJ Banking and Insurance Commissioner Elizabeth Randall said during a hearing earlier this year in support of JIFs. “And because the cities, towns and school boards own the funds, they carefully monitor safety in order to reduce claims.”
JIF members are represented on a board that manages the fund, paying claims and investing its assets. The fund hires an administrator, and the members share a safety director and qualified claims attorneys.
The Department of Banking and Insurance has oversight over the management and adequacy of the funds. The Department of Community Affairs oversees the local government JIFs from the municipal side, reviewing budgeting and procedures. South Orange and Nutley are two towns involved with Secaucus, though Garfield voted to join the JIF earlier this year. The council has been looking to see if it could save money by joining another JIF.
“Even if we could find another JIF that was cheaper,” Iacono said, recommending the one-year contract. “We probably couldn’t get into it by January.”
Bueckner, however, said that the town should not fear signing a longer contract with the existing JIF because the town has a clause in its contract that would allow it to leave the JIF with 90 days’ notice.
Bueckner also said that the variations of savings from JIF to another might not be significant enough to make a change to a new JIF, since all JIFs are under a larger umbrella called a Municipal Insurance Fund.
According to state officials, costs to municipalities are supposed to be uniform throughout the state.
“The idea is not to create competition between the JIFs,” Bueckner said. “The state wants similar communities to get together.”
Bueckner said the size of the community determines which JIF the town can join.
Iacono noted that Secaucus does not fit in the current makeup of Hudson County communities, which was part of the reason the town sought out the towns like Nutley and Cedar Grove years ago when it first joined the JIF.
Costs to the town also vary, depending on the town’s records for claims. Garfield pays about $468,000 this year, where as Secaucus is slightly over $500,000
But because of overall good experience within its JIF this year, Secaucus can expect a refund – called a dividend – from the JIF of about $140,000.
Bueckner said the town is unlikely to find another JIF to join. But Iacono disagreed, saying perhaps the existing JIF will offer a better deal. Iacono noted that Secaucus has had a relatively good record this year and the other towns in the JIF would be unlikely to want to lose Secaucus as a member.
Mayor Dennis Elwell said the town can possibly push to get better rates in the JIF by only signing a one-year contract, the way former Councilman Robert Campanella did during negotiations for the town’s health care provider several years ago. Bueckner, however, said the offer for one year will have to be accepted by each of other communities in the JIF – which is not a certainty.