8.4. SR 09-16-2013 City of
Elk Request for Action
River
To Item Number
Mayor and City Council 8.4
Agenda Section Meeting Date Prepared by
General Business September 16, 2013 Tim Simon, Finance Director
Item Description Reviewed by
Insurance Policy Renewal Cal Portner, City Administrator
Reviewed by
Action Requested
Approve by motion,the renewal of the city's insurance policies with the League of Minnesota Cities
Insurance Trust (LMCIT).
Background/Discussion
The City of Elk River has participated in the LMCIT for over 20 years. Coverage has been in binder
since the official July 1 renewal date awaiting finalization of the renewal documents and rates. The
workers' compensation insurance renewal is also included effective October 1, 2013.
The policies have remained unchanged for the most part. Following are a few highlights of this year's
insurance renewal:
• The city received two dividends last year from LMCIT; $52,210 on the liability package and
$24,339 on workers' compensation. The dividends have historically offset premium increases,
allowed for deductible increases and fund the safety budget.
• Our insurance agent,Northern Capital Insurance Group, analyzed our deductibles and feel we are
at a good level based on our size and experience. They recommend no deductible changes.
• Our property schedule remains relatively the same with a slight increase based on a recent
LMCIT/HIRONS appraisal for updated replacement cost values.
• Coverage for property, autos, municipal liability, etc.include an increase from two past land use
claims that impacted the formula. This renewal will complete the surcharge for one prior claim.
• Workers' comp costs decreased as our experience modification factor has decreased from 1.02 to
0.82. LMCIT indicated that a 1.02 is "average." This was a great improvement in just one year.
We did have some larger claims fall off the 3-year look back from the third year.
The city continues to be proactive in promoting safety and safety standards through the continued
dedication of all city employees and the Safety Committee.
Financial Impact
All insurance policy renewals are budgeted in the 2014 budget.
Attachments
■ Northern Capital Insurance Group summary letter
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August 22, 2013 NORTHERN CAPITAL PERSONAL LINES,INC.
NORTHERN UNDERWRITERS,INC.
WAYNE MANN AGENCY,INC.
BUSINESS INSURANCE BROKERS,INC.
MCGOVERN AND FISHER INSURANCE AGENCY,INC.
Tim Simon GOODARD AND IVIANN AGENCY.LLC
Lori Ziemer
City of Elk River
13065 Orono Parkway
Elk River, MN 55330
Dear Tim and Lori:
The LMCIT 2013 Insurance Renewals are enclosed. The coverage and premiums are:
Property and Casualty- Effective 7/1/2013
The renewal premium is $228,304 at your current $20,000 per occurrence/$40,000
annual aggregate deductible, except the Equipment Breakdown has a*separate $20,000
per accident deductible.
The City Hall/Utilities office building and contents coverage for both entities is included
for$3,159 building and $843 contents premium. The Utilities portion of the premium is:
Building $871 (27.6% or 12,488 sq. ft.), and Contents $184 ($380,000 coverage @
0.04841/$100).
Other Annual Aggregate Deductible options are:
Deductibles Premium (Approximate)
$10,000/$20,000/$1,000 $258,619
$10,000/$30,000/$1,000 $255,762
$10,000/$40,000/$1,000 $254,246
$20,000/$60,000/$1,000 $224,183
Our Deductible Risk Retention Analysis based on 5 years historical claims experience is
enclosed. The $20,000/$40,000 annual aggregate option is still attractive, pending the
deductible cost related to the new Land Use claim.
There are several items that impacted the renewal premium:
1. The property premium reflects the increased Replacement Cost Values based on
the 2012 LMCIT/HIRONS Appraisal and the 2013 LMCIT Renewal Inflation
Cost factors.
2. Municipal/Auto Liability Experience Factor- renewal modifier of 1.219 for the
City (13% increase), impacted by two Land Use claims.
3. The City elected this year not to waive the Minnesota Statutory Liability Limits,
resulting in a 3.5%municipal/auto liability premium savings.
4. The Annual Aggregate Deductible surcharge factor decreased slightly from 1.075
to 1.073.
5. The Annual Aggregate Deductible "Maintenance Deductible" for sewer damage
claims has been reduced from $2,500 to $1,000 effective 8/7/2013.
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PHONF (9521) 996-8818 +TOLL.-=REF (8001, 676-887,8 �:- FAx (952)829-0482
6. Removing the dam exclusion is still under review.
7. The new Public Works Building (Loc #010) is still covered as a`Builders Risk"
Exposure pending City acceptance.
Additional Property/Casualty coverage quotes include:
1. Excess Liability $1,000,000— $43,904 Premium
2. Garage Keeper Liability
Public Safety Building $30,000— $226 Premium
PW Maintenance $200,000— $1,037 Premium
3. Employee Dishonesty Option
(Currently $20,000 occurrence deductible, and includes coverage for the
Firemen's Relief Assoc. and Statutory Bonded Positions)
$1,000 Deductible— $564 Additional
4. Equipment Breakdown (Current$20,000 Deductible)
$1,000 Deductible— $4,136 Additional
$5,000 Deductible— $3,036 Additional
Worker's Compensation- Effective 10/1/2013
The renewal Net Deposit Premium is $213,087 based on:
1. Experience Modification .82
(Prior modification 1.02)
2. Medical Deductible $10,000 per claim.
A Historical 5 year claims experience WC Risk Retention Analysis at various medical
deductible choices is enclosed. The $10,000 Medical Deductible option is still very
favorable.
Accident Plan for City Volunteers Renewal Quote- Effective 10/1/2013
Basic Coverage (No Medical) $1,000 Premium.
i
Please let us know if you have any questions regarding the attached renewal quotes. The
Property/Casualty renewal will be ordered upon your decision on the various options.
The Worker's Compensation and Volunteer Accident Renewals should be requested
directly.
Sincerely,
Ronald L. ahl Carl A. Bennetsen