The SMART technology system for the Surplus Lines Stamping Office of Texas took on another $2.6 million commitment for 2021, bringing the total expected project costs over $10.1 million before the system is fully implemented and SLTX staff fully prepared to take over operations of the enhanced electronic filing and data management system. The additional costs were reviewed during the Dec. 10 virtual meeting of the SLTX board.
The newest statement of work (SOW) authorized by the board for work to be done next year includes a monthly payable to Headspring, LLC, of $27,500 for program management along with development to be billed at an additional $195 per hour. Not included in this estimate are training, system modifications or additional features that may result from legislative changes, other external stakeholder requirements or significant bug fixes, all of which may also result in additional costs to SLTX. All board members present voted in favor of the proposed SOW.
Under a separate SOW for 2021, knowledge transfer and training were capped at $100,000 and expected to be completed in six months. This is in addition to the $40,000 approved for training in 2020.
The SMART project expense recap report to the board included Headspring billables of $123,830 in October and $198,269 in November, leaving $258,225 available under the previously approved 2020 SOW and amendment. The itemized SMART project expense report that SLTX prepared for the board included $58,451 for policy audits, all of which were worked and billed in October and November.
Donna Aug, SLTX’s director of finance, provided the board a year-to-date report on the budget, as of the end of October. During the first 10 months of 2020, stamping fee revenue exceeded the amount budgeted for fee revenue by 22 percent. Budgeted at $8.1 million, the actual collections were $9.9 million. Total expenses for the same time period came in at $3.6 million, $1.3 million less than the budgeted amount of $4.9 million, or below budget by 26 percent. Collections generated $3.1 million more excess revenue than SLTX had budgeted. SLTX had budgeted $3.6 million excess revenue for the first 10 months of 2020 and collected $6.7 million in excess revenue. The increase in excess revenue is 86 percent more than budgeted, leading to a restricted fund balance that is more than $18.9 million over the amount allowed by SLTX’s Plan of Operation.
Executive Director Greg Brandon recapped the premium reported and item count to the board, with premium setting a year-to-date record by Nov. 30 of $7.2 billion. Item count, which Brandon said is a measure of staff workload, was down slightly from last year. Stamping fee collections exceeded $10.8 million by the end of November. Brandon noted that the higher premium volume also reflects a higher tax collection for the state of Texas.
Following a review of options quoted by PLUS for SLTX’s cyber liability insurance, the board voted to authorize Brandon to negotiate for 10 months of coverage, so all of SLTX’s property and casualty policies will renew in October in the future. The board authorized Brandon to purchase $5 million in cyber liability cover, with a $5,000 retention for a cost up to $10,000. The current policy, which carries a $1 million limit and $5,000 retention, expires in January; it was offered for a renewal premium of $4,588. Other options were offered by HSB and Lloyd’s.
Board members Buddy Gillenwater and Penni Nelson, both risk managers, recommended that SLTX buy higher limits than the association currently carries.
Brandon told the board that TDI has named Patty Otto to replace Moya McKenna as TDI’s staff contact for the stamping office. He recapped the 2020 accomplishments of staff and identified operational goals for 2021.
In other actions, the board adopted three committee charters that have been approved by the Texas Department of Insurance, all of which require that the meetings of the committees be subject to notice requirements of the Texas Open Meetings Act and the Texas Public Information Act. The charters require the keeping of minutes of the committee meetings. The board chairman is an ex-officio member of all committees.
Board chairperson Rosemarie Marshall appointed members to each of the committees, requesting that each elect a committee chairman. Teri Brinson, LP Risk; Randy Myers, AXA XL/XL Reinsurance; and Kori Johanson, IFG Companies, were appointed to the Plan of Operation Committee. If the committee has recommended changes to the current Plan of Operation, any amendments must be presented during the annual meeting of the board, which is the first that will occur next year. Each member will serve a one year term.
Named to the Board of Director Training and Orientation Committee were Lorrie Cheshier, Worldwide Facilities, MHI-MGA Division; Peter Harrison, Department of Homeland Security, and Nelson, Hillwood Development Group. Cheshier and Harrison were appointed for one-year terms and Nelson for a two-year term.
The Bidding and Procurement Committee is one that serves ad hoc and shall be appointed as needed. Members shall serve until the completion of a specific goal, but no longer than one year. Initially, the committee will oversee the development of a procurement policy for the stamping office. Afterward, members will oversee the procurement process for vendor services and products and, when required, a competitive bidding process. Marshall appointed Leslie Milvo, risk manager, City of Austin, and Gillenwater, risk manager, City of Mesquite, to this committee.