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Case
<br />
<br />PROPERTY & LIABILITY INSURANCE
<br />By: Sandra Ashley Helling, Finance Officer
<br />
<br />Background:
<br />
<br />The City Administrator, Personnel Coordinator, Finance Officer and the City's Insurance Agent of
<br />Record met and reviewed the quotation for properly and liability insurances received from Berkley Risk
<br />Services, Inc. for municipal coverage with the League of Minnesota Cities Insurance Trust. In addition,
<br />1993 premiums for the public employee bond (United Fire and Casualty), the boiler policy (Hartford
<br />Steam Boiler) and the inland marine insurance for the civil defense sirens (U.S.F. & G. Insurance Co.)
<br />were discussed.
<br />
<br />Ordinarily the information contained in this case would first be presented to the Council's Finance
<br />Committee for review and recommendation; however, the City does need to advise Berkley of the
<br />deductible option selected on or before February 16, 1993.
<br />
<br />Attached is a worksheet which details thc premium cost per line and compares the City's 1993 cost at
<br />current deductible levels to that of 1992 and 1991. The totals are summarized below.
<br />
<br />1991 $42,778
<br />1992 $52,818
<br />1993 $51,432
<br />
<br />Increase of $10,040 or 23.5%
<br />Decrease of $1,386 or 2.6%
<br />
<br />With increased deductibles, 1993 is offered at:
<br />
<br /> Deductible Aggregate Per Occur.* Premium
<br />Opt# per Occurrence Deductible After Agg. Amount
<br />
<br />1 $5,000 $5,000 $1,000 $51,432
<br />2 $10,000 $30,000 $1,000 $43,565
<br />3 $25,000 $50,000 $1,000 $38,648
<br />
<br />Same deductibles as 1992
<br />$7,867 Premium reduction
<br />$12,784 reduction from Opt# 1
<br />
<br />* - Per occurrence, per line, after meeting aggregate deductible
<br />Observations:
<br />
<br />The City realized a $10,000 or 23.5% increase in the property/liability insurance premiums for 1992 as
<br />compared to 1991. While a portion of this increase can be attributed to additional fixed assets, the most
<br />significant claim was the litigation involving the Adult Bookstore. Berkley's loss run sheets through
<br />November 30, 1992, show the paid expenses for this file at $88,000 and a reserve of $22,000 for a total
<br />incurred amount of $110,000.
<br />
<br />The increased deductible options present significant premium reductions; however, the aggregate
<br />deductible increases $25,000 to save $7,867 and $45,000 for a $12,784 credit. As was the case with
<br />workers' compensation, deductible options, the up-front premium savings could be nullified by two or
<br />three large claims.
<br />
<br />Staff Recommendation:
<br />
<br />It is recommended the City retain coverage with the League of Minnesota Cities Insurance Trust at the
<br />current deductible option of $5,000 per occurrence and aggregate with $1,000 per occurrence thereafter.
<br />It is further recommended the Council approve United Fire and Casualty as the provider for the public
<br />employee bond, Hartford Steam Boiler as the provider for the boiler policy and U.S.F. & G. for the
<br />inland marine insurance covering the City's civil defense sirens.
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