The MEL Story: A New Jersey Solution for Our Hometown
For over three decades, Joint Insurance Funds (JIFs) have modernized risk management for New Jersey local government. It’s a record of saving tax dollars and protecting the bottom line for New Jersey’s extraordinary hometowns.
JIFs affiliation with MEL has saved taxpayers over $3 billion dollars—an unprecedented record on behalf of citizens.
Before JIFs: High Cost, Exposure, Risk
Before the formation of JIFs, local governments had two choices for their property/casualty programs — commercial insurance or individual self-insurance. Commercial insurance has proven to be an expensive way to finance risk with insurance companies adding some $75 to the cost of every $100 in claims. Overhead for self-insurance is only about $25 per $100 in claims.
The problem is that most local governments are not large enough to retain a substantial portion of the risk. Minimum size requirements effectively eliminate this choice for most local governments in New Jersey. Even government units large enough often lack the managerial resources to properly administer their programs.
A Transformative Idea: Joint Insurance Funds (JIFs)
The driving idea behind the strategy for joint insurance funds is weaving together local governments to:
- Create the critical mass needed for self-insurance.
- Jointly purchase the excess insurance needed to cover large claims.
- Create the specialized administration needed to effectively manage the program.
Introducing the MEL: Meeting an Urgent Need
On January 1, 1985, the first municipal JIF in New Jersey was established in fourteen Bergen County municipalities. It would be the first of many unprecedented examples of cooperation between communities.
Later that year, the insurance market in the United States crashed preventing local governments from securing commercial insurance. It became especially difficult to secure excess insurance to cover large claims. In 1987 the Atlantic JIF, Camden JIF, Morris JIF, Ocean JIF and Professional Municipal Management JIF established the MEL to provide excess insurance to JIFs. In short order, the JIFs were joined by the Bergen JIF, Mid-Jersey JIF, Monmouth JIF and South Bergen JIF.
Covering New Jersey With America’s Largest Casualty Pool
With an annual budget of over $200 million and a statutory surplus of almost $200 million dollars, New Jersey’s MEL system is the largest municipal property-casualty pool in the country. Since our founding, the MEL has grown to some nineteen JIFs that collectively cover over 60% of the local governments in New Jersey.
The MEL: Building Safer, Smarter Strategies for New Jersey Communities
Through The MEL Safety Institute, we continue a tradition of delivering leading-edge answers to some of New Jersey’s most complex local issues. Here are some key examples:
- Managed Care for Injured Workers | The MEL was among the first governmental entities to adopt this concept for workers compensation to improve the treatment of injured workers and to return them to work earlier.
- The MEL Safety Institute | The MEL created this program to provide PEOSHA required safety training to local government employees. Last year, the Safety Institute trained over 30,000 workers. The MEL also offers a discount to members whose elected officials complete risk management training. Last year alone, some 1,250 Mayors, Council Members, and other local officials attended the Community Safety Leadership class.
- Controlling Ongoing Risks for Municipal Workers | The MEL developed model policies and procedures so that each member can avoid the expense of writing its own manual. To date, almost 300 local governments have used this model. The MEL also provides anti-harassment training to managers and employees. The MEL now boasts one of the nation’s most comprehensive cyber security and prevention and municipal worker training programs.
Just as importantly, the MEL improves safety records. In 1991, the employee accident frequency for the local governments that were members of the MEL was 5.7 lost time accidents per 100 employees or approximately the national average for municipal government. Today, the MEL’s accident rate is over 65% lower, or about 1.8 accidents per 100 employees.
The MEL: Member Led, Member Controlled
The MEL system is successful because it has remained under the full control of its members —an approach that puts the interest of taxpayers before any competing interest or agenda.
NOTE: By law, a JIF is a local governmental entity, not an insurance company. That means that each member appoints a commissioner, and every month some 250 mayors, council members and other local officials come together at the nineteen local JIF meetings to make the decisions.
JIFs are subject to all the laws covering local government, such as the open public meetings act, the public contracts law, the fiscal affairs law and the local officials’ ethics act. Because the members have a strong sense of ownership, they apply considerable peer pressure on each other to prevent accidents and reduce costs.