HomeMy WebLinkAboutItem 07 Risk Insurance Contract Renewal AGENDA ITEM SUMMARY Meeting Date: 6/20/2016
Meeting Type: Regular Meeting
Staff Contact/Dept.: Tom Mugleston/HR Staff Phone No: 541-726-3724
Estimated Time: Consent Calendar
S P R I N G F I E L D C I T Y C O U N C I L Council Goals: Provide Financially Responsible and
Innovative Government Services
ITEM TITLE: RISK INSURANCE CONTRACT RENEWAL
ACTION
REQUESTED:
Adopt or reject the following motion:
APPROVE RENEWAL OF LIABILITY, PROPERTY AND WORKERS’
COMPENSATION COVERAGE CONTRACTS AND AUTHORIZE THE CITY MANAGER TO EXECUTE AGREEMENTS
ISSUE
STATEMENT:
According to the City’s purchasing guidelines, City Council approval is required
for contracts in excess of $100,000.
ATTACHMENTS:
1. Council Briefing Memorandum
DISCUSSION/
FINANCIAL IMPACT:
The City of Springfield contracts for liability, property and workers’ compensation coverage on an annual basis and seeks renewal bids in anticipation of the June 30
expiration.
The City’s risk insurance broker, Brown & Brown Northwest, has received
acceptable renewal proposal for all lines of coverage from City County Insurance
Services (CIS). Per our broker, CIS is the best carrier for fully-insured public entities in the market at this time. Overall premiums are anticipated to increase
from $735,605 to $837,389 a difference of $101,784 or 13.84%. We propose that the City Manager be given authority to execute the contracts.
Attachment 1 Page 1 of 2
M E M O R A N D U M City of Springfield
Date: 6/6/2016
To: Gino Grimaldi COUNCIL
From: Tom Mugleston, Human Resources BRIEFING
Subject: Risk Insurance Contract Renewal MEMORANDUM
ISSUE: The City contracts for liability, property and workers’ compensation coverage on an
annual basis and seeks renewal bids in anticipation of the June 30 expirations. The City’s risk insurance broker, Brown & Brown Northwest, has received acceptable renewal proposals for all
lines of coverage. We propose that the insurance contracts be approved.
COUNCIL GOALS/MANDATE:
Provide Financially Responsible and Innovative Government Services
BACKGROUND:
The City contracts for liability, property and workers’ compensation coverage on an annual basis. Our risk broker advises us on insurance plan design, deductibles and limits based on changes to our potential exposures and trends in the insurance market. They then pursue
insurance proposals for all lines of coverage.
Coverage Overview - Many of our coverages such as workers’ compensation are mandated by
law. An overview of our major coverages can be found in table 1.
Table 1
Coverage Limit Deductible
General Liability (GL) $10M Per Occurrence $30M Aggregate $100,000 annual
Cyber Liability $250,000 5,000
Excess Crime $1M Included in GL
Auto Liability Included in GL limits Included in GL
Auto Physical Damage Per schedule $1,000
Property Per schedule (trended value) $10,000
Excess Earthquake $5M Included in Property
Excess Flood $5M Included in Property
Workers’ Comp $3M $1.15M
Plan Marketing. Brown & Brown Northwest our risk insurance broker approached the market and sought insurance proposals, focusing specifically on property coverage. We received an
acceptable renewal proposal from the City County Insurance Services (CIS) insurance pool for all lines of coverage. CIS covers nearly 100% of all of Oregon cities that are not self-insured.
The policy forms, pricing and service level that CIS can provide is superior to what the market provides at this time. We also receive significant discounts for carrying multiple lines of
coverages, and our claim processing experience with them has been excellent. In particular, we
particularly appreciate the collaborative way that CIS have resolved risk issues over the past few years.
Attachment 1 Page 2 of 2
Market Conditions & Premiums. CIS insurance rates continued to increase this year.
Particularly in public entity and auto liability. Pool claim development was poor and we will see
a 30% increase similar to the 20% seen two years ago. This year our overall premiums will increase by 13.84%. Our premium changes can be found in table 2.
Table 2
Premium Summary 2016-2017 2015-2016 Difference % Change General Liability $575,040 $443,197 $131,843 29.75%
Excess Cyber Liability $7,840 $7,840 0 0%
Auto Liability $73,796 $56,730 $17,066 30.08%
Auto Physical Damage $55,299 $54,639 $660 1.21%
Property $169,589 $165,503 $4,086 2.47%
Excess Crime $2,368 $2,368 $0 0.00%
Workers’ Comp $164,791 $189,536 ($24,745) -13.06%
Discounts & Credits ($211,334) ($184,209) ($27,125) 14.73%
Total Premium $837,389 $735,605 $101,784 13.84%
Claim and Deductible Costs. Average, out of pocket claim and deductible costs are anticipated
to hold steady this year thanks to safety and prevention programs. One exception is in the
workers’ compensation program. Our 6-year total incurred loss averages $288,103. This is a reduction of nearly $27,776 in claim costs per year thanks to aggressive return-to-work efforts
by HR claims staff and department support. By carrying a high deductible and aggressively
managing claims, we are saving approximately $300,000 per year compared to a guaranteed cost workers’ compensation program. (i.e., WC program without the $1.07M deductible)
RECOMMENDED ACTION: Approve renewal of insurance contracts for the 2016-2017 year.