3.9. SR 05-22-2000Zity of
iver
Item #3.9.
TO:
FROM:
DATE:
SUBJECT:
Mayor & City Council
Lori Johnson, Finance Director
May 22, 2000
Consider Renewal with League of Minnesota Cities
Insurance Trust for Property and Liability Insurance
The city's property and liability coverage was up for renewal on April 1.
Typically, the insurance renewal information is presented to the council prior
to the actual renewal date. However, this year the city received the renewal
information in mid-May for the April 1, 2000 - April 1, 2001 contract. The
city has had coverage with the League of Minnesota Cities Insurance Trust
(LMCIT) for around twenty years and staff recommends renewal with the
LMCIT so I don't believe the timing of this information will be an issue.
There are several reasons the city has had coverage with the LMCIT for so
many years. First, there are only a few other companies who cover
municipalities and those companies will not cover all city operations such as
the dam and the beach. Second, these companies cannot match the LMCIT's
broad coverage. Third, the LMCIT premiums have typically been 35 to 40
percent lower than other bids, plus the League has a dividend program. This
year the League returned $7 million in dividends to its member cities.
Finally, it is hard to match the good working relationship we have with the
LMCIT. We often request and receive advice on how to avoid liability in
certain areas and take part in the LMCIT's loss control seminars.
This year our agent Dan Green requested quotes from four companies,
LMCIT, Pennco, Marinco, and Lymon Corporation. After reviewing all of the
quotes, it is clear the LMCIT has the best coverage and rates for the city. The
renewal premium is $177,106, a decrease of $8,293 from last year's premium.
Elk River Municipal Utilities is a participant in the city's insurance coverage
and $54,540 of the premium will be paid by the Utilities for their coverage.
You may recall that last year the city purchased Y2K insurance to cover any
unanticipated problems or claims arising out of the Y2K issue. This was
originally intended to be a two-year contract; however, because the League
13065 Orono Parkway · P.O. Box 490 · Elk River, MN 55330 · TDD & Phone: (612) 441-7420 · Fax: (612) 441-7425
did not experience any claims relating to Y2K, the second year premium has
been canceled.
As you may recall, the liquor store is no longer covered by the LMCIT. In
1999 American States Insurance started writing liquor coverage in
Minnesota at rates lower than the LMCIT's. After a thorough review of
American States Insurance, it was recommended and the Council approved
moving the liquor store coverage to American States Insurance. That policy
was also renewed for April 1, 2000 to April 1, 2001 at a cost of $3,446.
Please contact me if you have specific questions regarding this renewal. If the
council would like a presentation from Dan Greene prior to approving the
renewal, you may remove this from the consent agenda, and I will schedule a
presentation for June 12.
Action Requested
The City Council is asked to approve the city's insurance renewal with the
League of Minnesota Cities Insurance Trust for the coverage period of April
1, 2000 to April 1, 2001 for property, liability, open meeting law, petro fund,
bond, and miscellaneous other insurance coverage.