Minutes - SAIF Corporation

SAIF CORPORATION
BOARD OF DIRECTORS
Wednesday
SAIF Corporation
January 25, 2012
400 High St SE
10:00 a.m. Salem, Oregon
After determining a quorum was present, the meeting was called to order at 10:01 a.m.
Roll call:
Catherine Travis, Chair
Robb Van Cleave, Vice Chair (via phone)
John Endicott
Jim Ford
Ralph Martinez
SAIF Corporation personnel present:
Brenda JP Rocklin, President and CEO
Casey Baumert, Corporate Internal Auditor
Ken Collins, Interim Vice President of Information Services
Renae Coombs, Safety, Risk, and Wellness Coordinator
Chris Davie, Vice President of Corporate Policy and External Affairs
Jerry Dykes, Chief Financial Officer
Ryan Fleming, Director of Human Resources
Kathy Gehring, Vice President of Claims
John Gilkey, Sr. Vice President of Policyholder Services and Programs
Michelle Graham, Vice President of Policyholder Services
Rick Hanson, Strategy and Brand Director
Michael Hartman, Vice President of Policyholder Programs
Bruce Hoffman, Vice President of Underwriting Services
Nadia Ivashentsev, Senior Executive Assistant
Kim Kuhl, Corporate Space Planner
Theresa McHugh, Vice President of Financial Services
Dave Miller, Communications Coordinator
Mike Mueller, Sr. Vice President of Claims
Dave Palmer, Facilities Manager
Fred Payton, Senior Account Representative
Cathy Pollino, Chief Internal Auditor
Colleen Sealock, Vice President of Operations and Human Resources
Lisa Taaffe, Graphic Design Coordinator
Paul Weddle, Assistant Counsel
Pam Woods, Vice President of Claims
Shawn Wright, Chief Actuarial Officer
Ruth Lord, Assistant to the Board
SAIF Corporation | 400 High St | Salem, OR 97312 | P: 800.285.8525

SAIF Board of Directors Minutes
January 25, 2012
Page 2
EXECUTIVE SESSION
Pending Litigation
At 10:02 a.m., the Chair declared this portion of the meeting to be in Executive
Session, pursuant to ORS 192.660(2)(f) and ORS 192.660(2)(h), to allow the
board to discuss pending litigation.
End of Executive Session
At 10:37 a.m., the Chair announced the conclusion of Executive Session.
Approval of board minutes
Motion Mr. Ford, second Mr. Martinez, to approve the minutes of the meeting of
December 14, 2011. The vote was unanimous, and the motion was carried.
Financial reports
Year-end budget report
Theresa McHugh reported that the actual direct operating expenses at the end of 2011
were approximately $300,000 over budget. Most operations of the company came in
under budget, with an overage in agent commissions as the major item contributing to
the budget variance. Commissions paid to outside agents exceeded the budget by $1.9
million because premium exceeded expectations.
Ms. McHugh also noted that the audit expense line came in over budget due to an
unanticipated DCBS financial examination. She added that the final DCBS examination
results had been received the day before the board meeting, and there were no findings
or recommendations.
The employee (FTE) count at year-end 2011 was 3.7 percent lower than the approved
FTE amount, which was a slight change from what was reported at the December board
meeting. Ms. McHugh noted that the variance was because of adjustments in hours for
some part-time positions.
CEO’s leave and expenses
The board was provided with a year-end report of the CEO’s leave time and expense
reimbursements. There were no questions.
Key loss reserve assumptions
Shawn Wright recommended that SAIF’s current key loss reserve assumptions be
maintained, including:
• Maintaining the PTD frequency rate at .075 percent.
• Maintaining the loss adjustment expense salary and benefit future growth rate at
4.5 percent.
• Maintaining the current medical cost escalation rate at 8.5 percent.
SAIF Corporation | 400 High St | Salem, Oregon | P: 800.285.8525

SAIF Board of Directors Minutes
January 25, 2012
Page 3
Mr. Wright advised the board that the medical cost escalation rate for disabling claims
dropped significantly in 2011. He is looking into what may have caused that drop to see
if it will continue or if it is a one-time occurrence.
There were no questions.
Motion Mr. Ford, second Mr. Martinez, to approve the recommendations made by Mr.
Wright. The vote was unanimous, and the motion was carried.
Sales, marketing, and claims update
Sales and retention
John Gilkey reported $28 million in new sales for 2011, which is 40 percent over 2009
and 60 percent over 2010. The premium retention rate for 2011 was 99.2 percent,
which exceeded SAIF’s goal of 97 percent and translates to nearly $7.5 million in
premium income in excess of the goal.
Targets for 2012 are $20 million in new sales, and a premium retention rate of 97.5
percent. To date, SAIF is at nearly $2 million in new sales, with a target of $4 million
for the first quarter. Retention is at 99.7 percent.
Other States Coverage program
At the end of 2011, this program finished at over $4 million in written premium. The
target for 2011 was $0.5 million. The contractual commitment to our business partners
is $2 million annually. About $150,000 has been added to the program to date in 2012,
and it continues to perform well.
Mr. Gilkey also announced that the California State Compensation Insurance Fund of
California has joined this program, which will hopefully result in additional program
enhancements for current members, which include the Kentucky, Maryland, Colorado,
Montana, and Oregon funds.
Top 25 property and casualty insurers
The board was provided with a list that was published in the Portland Business Journal
in late December in which property and casualty insurance companies were ranked.
There were several factors considered: direct premiums written, Oregon market share,
direct premiums earned, direct losses incurred, and loss ratio. Mr. Gilkey reviewed the
list with the board and explained the criteria and results. SAIF was ranked at number
three in premium volume.
Total incoming claims
Mike Mueller reported that 2011 showed a 2.9 percent increase in incoming claims over
2010. The last quarter of 2011 showed a 6.9 percent increase over the last quarter of
2010. He noted that, despite the recent increases, incoming claims are still down nearly
27 percent from 2007.
SAIF Corporation | 400 High St | Salem, Oregon | P: 800.285.8525

SAIF Board of Directors Minutes
January 25, 2012
Page 4
In response to Mr. Ford’s inquiry as to why the number of incoming claims increased
last year, Mr. Mueller stated that it is most likely due to more people finding a job or
returning to work. A recent article in the Business Insurance Report noted that it is
difficult to know whether this recent uptick in claims is a long-term trend. The article
also said that, historically, once a recession ends or is close to ending, employees are
less reluctant to file a claim.
Mr. Gilkey pointed out that employers report payroll in arrears, so the fourth quarter is
not yet final. However, the third quarter of 2011 showed that payrolls were up about
7.6 percent, compared to the prior year. Mr. Mueller added that the payroll increases
have mainly been in the Portland and Eugene areas.
Mr. Ford added that the Federal Open Market Committee recently reported that interest
rates will stay low until the end of 2014.
Fatality claims
Mr. Mueller reported a substantial increase in fatality claims filed with SAIF, increasing
from 11 in 2010 to 31 in 2011. He reminded the board that 2010 had the lowest
number of work-related fatality claims in the state since DCBS began tracking this
statistic. Mr. Mueller added that work-related fatality claims overall are considerably
lower than in previous decades. It is likely due to an increased awareness by employers
of workplace safety risks and the fact that SAIF and other insurers are providing loss
control services to policyholders aimed at improving workplace safety.
Mr. Endicott inquired as to whether the death of someone who suffers a fatal heart
attack at work would be considered an on-the-job fatality. Mr. Mueller answered that
acceptance or denial of a heart attack claim is typically determined by the medical
evidence. All of the facts are carefully considered, such as whether there is an
underlying history of heart problems or related conditions, and the type of activity the
worker was performing when the heart attack occurred.
Mr. Endicott also noted that it appears that OSHA has recently been performing more
frequent inspections of jobsites, which may help to decrease on-the-job injuries and
fatalities.
Legislative update
Chris Davie reported that the first even-year legislative session is scheduled to begin in
February and could run through March 5, 2012, but the goal is to end by February 29,
2012.
Mr. Davie gave a brief update of the composition of the legislature for this session and
noted resignations that have occurred and new members that have joined since last
session.
The focus of this session will be on the budget. Proposals for implementing health
insurance reform and the delivery of health care will be reviewed. The legislature will be
asked to approve plans to implement the Oregon Health Insurance Exchange and
Coordinated Care Organizations.
SAIF Corporation | 400 High St | Salem, Oregon | P: 800.285.8525

SAIF Board of Directors Minutes
January 25, 2012
Page 5
Mr. Davie reported that, out of approximately 200 bills, there are six that may have
some potential impact on SAIF. He outlined three of the six bills, which will address the
following topics:
1. A requirement for commercial contractors to obtain workers’ compensation
insurance if they do not have employees.
2. Obtaining damages for people who feel that an insurance company has violated
the Unfair Claims Settlement Practices Act.
3. Deliberations of public bodies. The statute currently states that a quorum of the
board members cannot deliberate outside a public meeting about a matter that
would come before the body. This bill redefines what qualifies as a
“deliberation.”
Mr. Davie will continue to keep the board informed about the progress of any key bills
that will impact SAIF.
CSP tactic team reports
Regional Service tactic
Ken Collins and Fred Payton provided the board with a summary of the tactic team’s
findings. The regional service tactic was launched in the first quarter of 2010. The team
was charged with looking at SAIF’s regional office deployment and evaluating whether
employees and offices are in the right locations around the state to best serve SAIF’s
customers.
Mr. Collins and Mr. Payton gave a brief overview of the research that was conducted to
produce final recommendations. The key findings and recommendations are as follows:
• Office locations: Overall, SAIF’s offices and staff are in the correct locations.
However, there are some geographic areas where SAIF could expand its local
presence to provide even better customer service. The team recommended
closing the Pendleton office and recommended that employees who are working
in Hermiston or Pendleton use less expensive work locations or work from a
home office. That recommendation has been implemented. The team also
recommended that a similar evaluation of the Baker City office should be
conducted in mid-2013 when that office lease expires. The addition of field staff
in Klamath Falls and the North Coast area is also recommended for review as
new positions are created or as vacancies occur.
• Customer service/office utilization: SAIF’s field offices are primarily employee
work locations and receive only occasional visits from customers. Regional
customers expect and receive service at their own facilities.
• Collaboration: Collaboration with team members is important to providing quality
customer service. However, collaboration does not always require face-to-face
interaction and is currently done remotely by a significant portion of SAIF staff.
• Flexible work location/environments: Flexibility in work location, office structure,
and technology is needed and is possible to achieve. The team recommended
that maximum flexibility should be considered when hiring and deploying
employees in more remote areas.
SAIF Corporation | 400 High St | Salem, Oregon | P: 800.285.8525

SAIF Board of Directors Minutes
January 25, 2012
Page 6
• Marketing SAIF’s presence: SAIF currently advertises as if an office building
constitutes local presence. The team recommended that SAIF should maximize
the impact of its expanded staff presence by advertising local phone numbers for
employee locations. Specific addresses should not be advertised in order to
minimize the potential for customer service failures at a non-staffed location.
Brand tactic team
Rick Hanson, Dave Miller, and Lisa Taaffe attended today’s meeting to introduce an
updated and redesigned brand book. Mr. Hanson reminded the board that the SAIF
brand was refreshed in 2006 when SAIF committed to a more sophisticated brand
management program. At that time, a series of books was created to introduce the
changes to employees, and the brand was put into action. The brand tactic team was
recently charged with determining whether or not the books needed to be redesigned
and updated; after many discussions, it became clear that an update was due. This was
determined not only because there are now 200 people working at SAIF who were not
employed there in 2006, but because of changes to tone and style that have occurred
since 2006.
Mr. Hanson distributed the books and noted that, although SAIF is going paperless in
many aspects of its business, the tactic team wanted to emphasize the brand’s
importance by providing a paper copy to all employees. Mr. Miller and Ms. Taaffe
outlined some of the key changes in the book from the 2006 series.
Board members and Brenda commended the team on their great work in producing the
new book.
President’s report
Forward-looking calendar
Ms. Rocklin reminded the board that year-end financial reports will be provided at the
March board meeting.
Contracts list
The board was provided with the pending contracts list. There were no questions.
Miscellaneous
Ms. Rocklin announced that Mr. Endicott is retiring from his organization but will
continue to serve on the SAIF board. She congratulated him on his retirement.
Colleen Sealock will also retire at the end of February. Ms. Rocklin thanked her for her
years of service and emphasized the important role Ms. Sealock has played in SAIF’s
success.
SAIF Corporation | 400 High St | Salem, Oregon | P: 800.285.8525

SAIF Board of Directors Minutes
January 25, 2012
Page 7
Other business
Overview of flood damage
On January 19, 2012, SAIF’s Parkway and Church Street buildings sustained damage as
a result of rising flood waters. Ms. Sealock discussed the events surrounding the flood
and gave an update on the status of SAIF’s facilities. Dave Palmer, Kim Kuhl, and Renae
Coombs attended the board meeting to answer questions. A slideshow was played to
show the extent of the damage.
Mr. Palmer stated that there was about 4.5 feet of flood water in the Church Street
building. The Health Clinic, which was located in the Church Street building, sustained
the most damage. Mr. Palmer noted that because this was a flash flood there was not
much time to prepare, but employees did a great job of getting sandbags in place to
minimize the amount of water entering the Parkway building.
Ms. Sealock added that extensive measures are being taken to clean up the two
buildings, especially the Health Clinic, including a complete decontamination process.
ServiceMaster’s environmental crew was on site the day after the flood, and they have
been working around the clock to clean up the buildings. The air was tested, and other
measures were taken to ensure that it was safe for employees to return to work on the
Salem campus. Ms. Coombs is working with the insurance company on filing our flood
damage claim.
The group thanked Mr. Palmer, Ms. Kuhl, Ms. Coombs, and Mr. Fleming for their hard
work that contributed to the safety of employees and salvaging a significant amount of
SAIF property during the flood.
Electronic board packets
Mr. Collins reported that SAIF has been reviewing options for distributing the board
packets to board members electronically. Eric Riehl demonstrated to the board the
proposed method, which will be to use an iPad during board meetings. Board members
will access documents from a secure SharePoint site. Mr. Riehl and Ms. Rocklin
answered questions relating to the security of confidential information, the ability to
make electronic notes, and the archiving of documents.
The board members approved the plan and stated that they are eager to move in that
direction.
Year-end report from the Board Audit Committee
The board was provided with the report on SAIF’s audit activity. Mr. Endicott
commended Cathy Pollino and Casey Baumert for their work.
There were no questions.
SAIF Corporation | 400 High St | Salem, Oregon | P: 800.285.8525

SAIF Board of Directors Minutes
January 25, 2012
Page 8
Cathy Pollino announced that a new IS Auditor, Robert Johnson, has been hired. Mr.
Johnson has a Master’s degree from the University of Oregon in Information Systems
Management, and he is a Certified Information Systems Auditor, Certified Public
Accountant, and Certified Derivatives and Investment Auditor. He has also been an IT
auditor for several years. He will start Monday, January 30, 2012.
Report from the Board Compensation Committee
Mr. Van Cleave outlined the process that is being used to complete the performance
evaluation for the President and CEO. Chair Travis and Mr. Van Cleave met with each
member of the Executive Council to gather input on Ms. Rocklin’s performance for 2011.
They will consider that input as they develop a performance evaluation that will be
provided at the March meeting.
Mr. Fleming distributed a copy of the President and CEO’s performance evaluation for
completion by each member of the board. After all responses are received, the board
Compensation Committee will meet to make a recommendation on Ms. Rocklin’s
performance rating and compensation. That recommendation will be presented at the
board meeting on March 14, 2012.
Adjournment
Motion Mr. Ford, second Mr. Endicott, to adjourn the meeting. The vote was unanimous,
and the motion was carried.
There being no further business, the meeting was adjourned at 12:30 p.m.
_______________________________________
Ruth Lord, Assistant to the Board
SAIF Corporation | 400 High St | Salem, Oregon | P: 800.285.8525