HomeMy WebLinkAbout11.13.2000• •
COUNCIL WORK SESSION
November 13, 2000
4:30 p.m.
Council Chambers
Members present: Mayor Rooff, Anders, Jordan, Krizek, Murphy, Gronen, Getty, Berry.
Moved by Krizek, seconded by Gronen that the Agenda, as proposed, be approved. Ayes:
Seven. Motion carried.
Renewal of the general and auto liability, law enforcement, public officials errors and omissions
and umbrella insurance with St. Paul Fire & Marine and property insurance with Meadowbrook
was reviewed. The premium for the general and auto liability, law enforcement, public officials
errors and omission and umbrella insurance is $414,979.00 for one year. PDCM solicited quotes
from St. Paul, Meadowbrook, Genesis, Coregis, Penco and Alternative Market Specialists and
recommends renewal with St. Paul Fire & Marine. The renewal includes a $25,000.00 deductible,
$6 million limit and a stop loss of $250,000.00 for the general and auto liability, law enforcement,
public officials errors and omission insurance.
PDCM is recommending that the city approve property insurance coverage with Meadowbrook
(National Specialty) with a premium of $79,024.00 per year. PDCM solicited property insurance
quotes from 12 insurance companies and received quotes from four companies that met the
specifications. The coverage has a $25,000.00 deductible with full replacement cost on a blanket
of $149,093,410.00 on our buildings and contents. The total premium cost for property, general
and auto liability, law enforcement and public officials and errors insurance is $494,003.00 for one
year. Last year's total premium was $460,360.00, which is an increase of $33,643.00. The
current insurance coverage is renewed on October 1 each year, and the city has asked that the
insurance policy provide coverage on a fiscal year, so this year the policy coverage will be from
October 1, 2000 through June 30, 2001, with a total premium amount of $369,515.00.
Frank Dowie, PDCM agent, stated that he was selected as the city's insurance agent in September
2000 as part of the Request for Proposal process. PDCM started working with the major
markets, such as Meadowbrook, St. Paul, Kemper, Coregis, Genesis, Penco-Hartford, Alternative
Market Specialists, Travelers, CAN, Firemans Fund, AIG and Employers. Of the 12 markets,
premium quotations were received from Meadowbrook, Genesis, Coregis and AMS. Once the
quotes were received, the quotes were reviewed with the City Clerk and the Insurance
Committee. We compared premiums, claims expense, stop loss features, expected SIR losses,
limit summary, expected total loss and total maximum costs. The Insurance Committee
recommended that the city accept the quote from St. Paul Fire & Marine for the general and auto
liability, law enforcement, public officials errors and omissions and umbrella insurance. The
policy has $6 million per incident or total aggregate in one year. We have included the Airport's
public officials errors and omission coverage. The city will review with our bonding attorneys
regarding bond covenants and recommendations for the possibility of a Self Insured Retention
(SIR) program and building a loss fund of $750,000.00 to $1 million. We are going to create a
formula for allocating insurance premiums to various departments for general fund
reimbursement. If the city decides to go with a SIR, we would have to select a Third Party
Administrator, which could cost $78,000.00 per year.
Jim Walsh, City Attorney, stated that the city looked at a Self Insured Retention (SIR) Program
four or five years ago, but the insurance market was so soft we were able to obtain lower
premiums without going to the SIR.
Mac McCausland, PDCM agent, reviewed the property insurance renewal process. Mr.
McCausland stated that in the past six months, there has been a hard insurance market. The
insurance companies use the premiums to invest in the stock market, and this past year the stock
market was not too good. When the insurance companies' investments drop, the rates increase.
The last nine years we have seen an extended soft market. The insurance companies have hit on
hard times, with high loss ratios, and they are starting to lose money. Mr. McCausland stated that
he sent the city's property specifications to the following markets: Meadowbrook, St. Paul,
Kemper, Coregis, Genesis, Penco-Hartford, Alternative Market Specialists, Travelers, CAN,
Council Work Session
November 13, 2000
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Firemans Fund, MG and Employers. Of the 12 markets, quotes were received from
Meadowbrook (National Specialty), Genesis, Coregis and AMS, with Meadowbrook submitting
the most favorable rate at $79,024.00 per year. Premiums ranged from $79,024.00 to
$208,827.00 per year. The property insurance has a $25,000.00 deductible. The claim
experience did not impact the premiums, but the reinsurance cost and claims over the entire
country, with lots of catastrophic claims. In addition, the city's total property value has increased,
especially with the building at the Water Pollution/Flood Control facilities.
Councilperson Gronen stated that the Insurance Committee met frequently on the insurance
renewals. The city sent out Request for Qualifications for an insurance agency, with PDCM
selected as the city's insurance agency.
With no further business before the council, it was moved by Getty, seconded by Jordan that the
meeting be adjourned at 5:02 p.m. Ayes: Seven. Motion carried.
Nancy Eckert
City Clerk