SFHSS board approves increased IBNR and contingency reserves amid higher claims

Mike Clark, lead actuary with Aon, presented the June 30, 2025 incurred-but-not-reported (IBNR) and contingency reserve calculations for SFHSS's self-funded and flex-funded plans. Clark recommended using the 90.5 percentile confidence level for contingency reserves (policy 2-10) and reported overall IBNR increases in the range of roughly 6.6%–6.8% across plans compared with the prior year.

Clark explained the distinction between IBNR, contingency, and stabilization reserves and noted that contingency recommendations at the 90.5 percentile totaled approximately $20.7 million versus a prior-era 90.9 percentile level that would have been roughly $30.5 million. He highlighted differences for dental (where the employer liability is capped) and described audit review by MGO.

Commissioner Wilson moved to approve the IBNR and 90.5 percentile contingency reserve amounts as presented for the self-funded and flex-funded medical and prescription drug plans administered by Blue Shield and Health Net and for the self-funded dental PPO plan administered by Delta Dental. The motion was seconded, public comment was taken, and the board voted by roll call; the motion passed unanimously.

The action establishes the IBNR and contingency reserve figures that will feed into the December 31 stabilization reserve calculations presented in spring renewals.