5.5. SR 11-01-2010cnr or ~ /~
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ERiver
REQUEST FOR ACTION
To Item Number
Ci CouncIl 5.5
Agenda Section Meeting Date Prepared by
Administration November 1, 2010 Tim Simon, Finance Director
Item Description Reviewed by
Annual Renewal of City's Insurance Policies with the League of Lori ohnson, Ci Administrator
Minnesota Cities Insurance Trust Reviewed by
Action Requested
The City Council is asked to consider renewal of the City's insurance policies with the League of
Minnesota Cities Insurance Trust (LMCIT).
Background/Discussion
For over twenty years the City of Elk River and Elk River Municipal Utilities (ERMU) have participated
in the LMCIT. Mary Eberley of Liberty Insurance Agency will present the July 1, 2010, LMCIT renewal,
which was just received from LMCIT. Coverage has been in binder since the official July 1 renewal date
even though the renewal documents and rates were just received. The workers' compensation insurance
renewal is included as well; that policy xene~ved on October 1, 2010. The policy has remained unchanged
fox the most part. The details of the proposal axe outlined in the attached memo from Mary Eberley.
Here axe a few highlights which axe outlined in Mary Ebexley's attached memo:
• The City continues to receive a dividend fox participating in the LMCIT program.
Builders' Association claim no longer has an impact on our renewal.
The property schedule has remained relatively the same as last renewal.
The Property, Autos, Municipal Liability, and other miscellaneous policies axe down .56% over
last year's renewal. The Workers Compensation costs have increased as our experience
modification factor has increased from .85 to .93 fox this renewal.
The City and ERMU continue to be proactive in promoting safety and safety standards through the
continued dedication of all City employees and the Safety Committee. These efforts result in a substantial
premium savings for the City.
Financial Impact
See attached Premium Summary & Comparison -2010 worksheet
Attachments
• Letter from Mary Eberley -Liberty Insurance Agency
• City of Elk River Premium Summary & Comparison-2010
N:\Public Bodies\City Council\Council RCA\Agenda Packet\11-1-2010\InsuranceRenewa110-
11 [1].doc
Action Motion by Second by Vote
Follow Up
N:\Public Bodies\City Council\Council RCA\Agenda Packet\11-1-2010\InsuranceRenewa110-
11 [1].doc
L/BERTY INSURANCE AGENCY
1560 Hart Blvd.
Monticello, MN 55362
October 27, 2010
To: Honorable Mayor & Council Persons
City of Elk River
Thank you for time on your agenda for the November 1st meeting to review the City's
2010 League of Minnesota Cities Insurance Trust proposal.
As usual, Tim, Lori, Theresa and City staff have been very good about this year's
renewal preparations, and I appreciate the opportunity to work with them. The package
results are excellent this year. I have also included the Workers Compensation costs on
the premium display this year. The Workers Comp renewed on 10/O1/10.
Although we have an increase in Workers Compensation costs for this year, there is
excellent news on the package coverages including, Property, Autos, Municipal Liability,
etc. The package is down in cost by about 'h% or about $1,880 from last year's annual
renewal premium. League rates have either decreased or stayed about the same with only
a few slight adjustments upward. Liquor Liability rates actually decreased by 15%. The
City opted for a special deductible two years ago and we were again able to renew
favorably with a lower aggregate.
Here are a few thoughts I'd like to point out to you on this year's renewal:
1) 2010 LMCIT Rates-LMCIT property rates did not change significantly, or
decreased for 2010. We added only about $123,000 in property value to the schedule
due to reduced construction cost in view of the economy. The number of vehicles to
insure also decreased this year.
2) The City received a dividend of $ 47,767 from League of Minnesota Cities Insurance
Trust in December, 2009. This more than twice the amount the City received for
2008. This is due to favorable loss results for the League program and improved
investment results.
3) The builders' associations claim dropped off the "experience period" last year, so
there is no impact to this year's renewal. The liability limit is now at the new tort
limit of $1,500,000 for any one `occurrence".
4) ERMU Equipment Breakdown coverage has again been included with this year's
renewal. In the past, the generation equipment coverage was purchased separately
from another company. We made the change in April, 2009. The current annual cost
for the ERMU generation equipment's Equipment Breakdown coverage is about
$44,500.
5) The City insures the YMCA facility and is reimbursed by the Y for costs. This year's
cost is approximately $9,500. We will again assist City staff in allocating this back to
the YMCA.
6) Workers Compensation coverage for the City renewed October 1, 2010. It too is a
good renewal, although not quite as favorable as last year. The Experience
Modification factor has increased from .85 last year to .93 for this year. This means a
7% discount from the League's base rates, but with the factor increase from last year,
it represents in increase of 8% since last year. League Workers Comp rates have also
decreased an average of about 2%, but the net result is an increase in Workers
Compensation costs. The City's Safety Committee reviews and modifies training and
equipment to help improve safety for the City's staff.
7) Municipal liability limits have increased about 3% for this year's renewal.
Although the City has opted not to purchase additional "excess" limits in the past, I
have secured a quote for an additional $I Million in limit. The additional cost to add
another million in limit would be $54,353 including Liquor Liability, and $52,191
without. If the Council is interested, this additional limit could be included with the
renewal.
Coverage has again been renewed on the basis of waiver of the per claimant limit, but
this too can be changed. Statute now provides that a payment for any one claimant
can be limited to $500,000. If the Council is interested, we can provide information
on the change in cost. It is a nominal savings of about 2% or perhaps $1,000 to
reduce the per claimant limit to $500,000.
8) The City changed to a special deductible plan two years ago - $10,000 per
`occurrence'/$50,000 aggregate/$1,000 `maintenance' after reaching the $50,000
aggregate. Results so far have been very favorable, so we are not recommending a
change. What we have been able to do last year and this, however, is to reduce the
aggregate limit to $40,000 with no change in premium cost. The City's claim history
has been very good, and with good safety practices in place, we would expect this
trend to continue. We plan to look at options again at the next renewal.
This year's renewal is a very good one and we recommend the Council approve it,
but if there are other questions, we will, of course, address them for the Council.
Liberty Insurance Agency and I appreciate the opportunity to work with the City of Elk
River, ERMU, and the fine staff. We thank you for the continued business.
Respectfully,
Mary
Mary Eberley, CPCU
Client Executive
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