8.4. SR 07-21-2014 City of
Elk Request for Action
River
To Item Number
Mayor and City Council 8.4
Agenda Section Meeting Date Prepared by
General Business July 21, 2014 Tim Simon, Finance Director
Item Description Reviewed by
Annual Renewal of Property and Casualty Cal Portner, City Administrator
Insurance Reviewed by
Action Requested
Approve,by motion,the annual renewal for Property and Casualty Insurance with the League of
Minnesota Insurance Trust (LMCIT).
Background/Discussion
The city has participated in LMCIT for over 20 years. The policies are effective 7/1/14 through
6/30/15 with a deductible of$25,000 per occurrence/$75,000 annual aggregate deductible and $1,000
maintenance. Our coverage has been in binder since the official July 1 renewal date even though the
renewal documents and rates were just received.
Here are a few highlights with this year's insurance renewal:
• Received a dividend last year of$32,386 on the liability package. The city can expect the 2014
dividend in December. The dividends have historically offset premium increases, allowed for
deductible increases and funded the safety budget.
• Property premium increases with the addition of the new public works building and contents
coverage, ISO Fire Protection Class change,and LMCIT inflation cost factor adjustment of 2%.
• Municipal/Auto Liability Experience Factor decreased from 1.319 to 1.029.
• City insurance agent,Northern Capital Insurance Group,has analyzed our recent deductibles and
recommends increasing them based on size and experience. The current deductible is $20,000 per
occurrence/$40,000 annual. Equipment Breakdown has a separate $20,000 per accident
deductible.
Over the last 6 years,the only major loss was a hail damage claim in 2008 for $103,472. With a deductible
of$25,000/$75,000/$1,000 over the same period the city would have had a positive gain every year with a
total gain over premium savings of$394,662 versus $297,792 at the current deductible.
The 2014/15 premium would decrease $23,374 at the new level. In addition,the fund balance in the
Insurance Revenue fund as of June 30, 2014,is $263,610 which will provide funding if we breach our
trend.
City staff and the Safety Committee proactively promote safety and a safe work place.
P a w E A E U s r
Template Updated 4/14 INIM UREI
Financial Impact
At the current deductible level the 2014/15 renewal premium is $245,853. With the recommended new
deductible level of$25,000/$75,000/$1,000 the 2014/15 renewal premium is $222,479. The 2013/14
renewal premium was $228,304.
Attachments
• Summary from Northern Capital Insurance Group
• Premium summary from Northern Capital Insurance Group
• Deductible Risk Retention Analysis from Northern Capital Insurance Group
N:\Public Bodies\Agenda Packets\07-21-2014\Final\x8.4 sr Insurancerenewalforproperty.docx
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Tim Simon GODDARD AND MANN AGENCY,!€.0
City of Elk River
13065 Orono Parkway
Elk River, MN 55330
RE: Property/Casualty Insurance Renewal Eff. 7/1/2014
Dear Tim:
The renewal premium is $245,853 at your current$20,000 per occurrence/$40,000
annual aggregate deductible, except the Equipment Breakdown has a separate$20,000
per accident deductible and the Liquor Liability has no deductible.
Other Annual Aggregate Deductible options are:
Deductibles Premium (Approximate)
$20,000/$60,000/$1,000 $235,259
$25,000/$50,000/$1,000 $233,508
$25,000/$75,000/$1,000 $222,479
$25,000/$100,000/$1,000 $218,414
$50,000/$100,0001$1,000 $192,499
$50,0001$150,0001$1,000 $186,025
Our Risk Retention Analysis is enclosed. It is based on the above deductible options.
There are several items that impacted the renewal premium:
I. The City Hall/Utilities office building and contents coverage for both entities is
included for$4,253 building plus $1,115 contents premium. The Utilities portion
of the premium is: Building$1,174 (27.6% or 12,488 sq. ft.), and Contents $241
($380,000 coverage @ 0.0634/$100).
2. The property premium reflects the down grading of the citywide ISO Fire
Protection Class from a 3 to a 5 rating.
3. Municipal/Auto Liability Experience Factor-the renewal modifier dropped from
1,219 to 1.029 (18% decrease), impacted by one Land Use claim dropping off.
4. The Annual Aggregate Deductible factor surcharge changed from 1.073 to 1.090
this renewal.
5. Removing the Municipal Liability dam exclusion is still under LMCIT review.
P.O.Box 9396 + MINNEAPOLIS, N4N 55440-9396
PHONE(952) 996-8818 + ToI-L-FREE (800)676-8818 + FAx (952) 829-0482
Optional Property/Casualty coverage quotes for your consideration are;
1. Employee Dishonesty Option
(Currently$20,000 occurrence deductible and includes coverage for
the Firemen's Relief Assoc. and Statutory Bonded Positions)
$1,000 Deductible- $423 Additional
2. Equipment Breakdown(Currently$20,000 per accident)
$1,000 Deductible- $4,223 Additional
$5,000 Deductible- $3,102 Additional
3. Excess Liability$1,000,000 $39,948 Premium
The LMCIT Underwriter is holding off issuing the policies and invoicing the renewal
premium pending your choice of deductibles.
Please contact us if we can be of any assistance.
Sincerely,
Ronald L. o ndahl Carl A. Bennetsen
Vice Presid t Public Entity Accounts Manager
CITY OF ELK RIVER
LAL PREMIUM SUMMARY
07/01/2014 TO 07/01/2015
COVERAGES PREMIUMS
2013-2014 2014-2015
Property $ 59,800 $81,011
Mobile Property $ 7,959 $ 8,628
Equipment Breakdown $ 8,947 $ 9,136
Crime Included Included
Faithful Performance Bond $ 1,345 $ 1,377
Municipal Liability $113,056 $110,013
Auto,Liability and Physical Damage 1 $ 28,644 $28,093
Open Meeting Law Included Included
Petrofund Included Included
Fireworks Not Covered $ 225
No Fault Sewer Back Up Not Covered Not Covered
TOTAL PROPERTY/CASUALTY PACKAGE $219,751 $238,483
Liquor Liability (07/01/13&07/01/14) $ 8,553 $ 7,370
Excess Liability Not Covered Not Covered
TOTAL P/C PREMIUM $228,304 $245,853
Note:
1. Property premium increase $21,211 due to:
a. New Public Works building and contents coverage, (prior Builders
Risk) is an additional$4,766 premium.
b. Citywide ISO Fire Protection Class dropped from a 3 to a 5 rating.
c. LMCIT Inflation cost factor adjustment, approximately 2% increase.
2. Municipal Auto Liability Premiums:
a. Impacted by new LMCIT rating process emphasizing Land Use,
Police, Sewer Back-up and Employment Related exposures.
b. Experience Factor Modifier decreased from 1.319 to 1.029, (18.5%
decrease), due primarily to 2009 Land Use claim dropping off.
c. Aggregate Factor Modifier surcharge changed from 1.075 (2012) to
1.073, (2013) to 1.090 this renewal.
NORTHERN CAPITAL INSURANCE
PROPERTY/CASUALTY RISK RETENTION ANALYSIS
FOR
CITY OF ELK RIVER
Property/Casualty Insurance
Premium Basis$317,765 with $500 Minimum Deductible
Excluding Equipment Breakdown and Liquor Liability
Current Deductible$20,000/$40,000/$1,000
Approximate Premium: $229,347/Savings: $88,418
Policy Year Deductible Gain/Loss
7/1/2008-2009 $22,607 + $65,811
7/1/2009-2010 $31,361 + $57,057
7/1/2010-2011 $48,409 + $40,009
7/1/2011-2012 $2,217 + $86,201
7/1/2012-2013 $39,704 + $48,714
Total + $297,792
7/1/2013-2014 (11 months) $28,263 + $60,155
Optional Deductible $20,000/$60,000/$1,000
Approximate Premium: $218,753/Savings: $99,012
Policy Year Deductible Gain/Loss
7/1/2008-2009 $22,607 + $76,405
7/1/2009-2010 $31,361 + $67,651
7/1/2010-2011 $48,409 + $50,603
7/1/2011-2012 $2,217 + $96,795
7/1/2012-2013 $39,704 + $59,308
Total + $350,762
7/1/2013-2014 (11 months) $28,263 + $70,749
Optional Deductible $25,000/$50,000/$1,000
Approximate Premium: $217,002/Savings: $100,763
Policy Year Deductible Gain/Loss
7/1/2008-2009 $22,607 + $78,156
7/1/2009-2010 $36,361 + $64,402
7/1/2010-2011 $58,409 + $42,354
7/1/2011-2012 $2,217 + $98,546
7/1/2012-2013 $44,704 + $56,059
Total + $339,517
7/1/2013-2014 (11 months) $33,263 + $67,500
Optional Deductible $25,000/$75,000/$1,000
Renewal Premium: $205,973/Savings: $111,792
Policy Year Deductible Gain/Loss
7/1/2008-2009 $22,607 + $89,185
7/1/2009-2010 $36,361 + $75,431
7/1/2010-2011 $58,409 + $53,383
7/1/2011-2012 $2,217 + $109,575
7/1/2012-2013 $44,704 + $67,088
Total + $394,662
7/1/2013-2014 (11 months) $33,263 + $78,529
NORTHERN CAPITAL INSURANCE
PROPERTY/CASUALTY RISK RETENTION ANALYSIS
CITY OF ELK RIVER (continued)
Optional Deductible $25,000/$100,000/$1,000
Approximate Premium: $201,908/Savings: $115,857
Policy Year Deductible Gain/Loss
7/1/2008-2009 $22,607 + $93,250
7/1/2009-2010 $36,361 + $79,496
7/1/2010-2011 $58,409 + $57,448
7/1/2011-2012 $2,217 + $113,640
7/1/2012-2013 $44,704 + $71,153
Total + $414,987
7/1/2013-2014 (11 months) $33,263 + $82,594
Optional Deductible $50,000/$100,000/$1,000
Approximate Premium: $141,822/Savings: $175,943
Policy Year Deductible Gain/Loss
7/1/2008-2009 $22,607 + $153,336
7/1/2009-2010 $61,361 + $114,582
7/1/2010-2011 $92,445 + $83,498
7/1/2011-2012 $2,217 + $173,726
7/1/2012-2013 $69,704 + $106,239
Total + $631,381
7/1/2013-2014 (11 months) $51,613 + $124,330
Optional Deductible $50,000/$150,000/$1,000
Approximate Premium: $169,519/Savings: $148,246
Policy Year Deductible Gain/Loss
7/1/2008-2009 $22,607 + $125,639
7/1/2009-2010 $61,361 + $86,885
7/1/2010-2011 $92,445 + $55,801
7/1/2011-2012 $2,217 + $146,029
7/1/2012-2013 $69,704 + $78,542
Total + $492,896
7/1/2013-2014 (11 months) $51,613 + $96,633
1.This illustration is only a current indicator of future performance based on
historical claims experience.
2. Equipment Breakdown premiums and claims not included, as no aggregate
deductible for this coverage.
3. Law enforcement alleged Private Data Act violation claims not included.
4. Land use claims have both a coinsurance and deductible, but only the deductible
is included (not shown on Loss Runs).
5. Elk River Municipal Utilities claims are not included.
6. Last major loss 5/25/08 Hail damage to vehicles and property-$103,472 paid
loss.