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Home My WebLink About06-233 Resolution No. 06-233 RESOLUTION ACCEPTING THE PROPOSAL OF LUNDSTROM INSURANCE FOR LIMITED SELF-INSURANCE PROGRAM BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF ELGIN,ILLINOIS,that Olufemi Folarin, City Manager,be and is hereby authorized and directed to accept the proposal on behalf of the City of Elgin of Lundstrom Insurance for the city's limited self-insurance program for the period October 1, 2006 through September 30, 2007 as follows: a. To award Safety National a$500,000 SIR worker's compensation proposal for a total excess premium cost of$81,331 . b. To accept St. Paul's renewal for a premium cost of$881,537 and a claims administration fee of$62,525. c. To accept American International Specialty Lines' renewal pollution liability policy for a premium cost of$49,895. s/Ed Schock Ed Schock, Mayor Presented: September 27, 2006 Adopted: September 27, 2006 Vote: Yeas: 7 Nays: 0 Attest: s/Dolonna Mecum Dolonna Mecum, City Clerk + `� OFEt6,, ;J City of Elgin Agenda Item No. G ► 411 E„,\11 Ii � ' . i G .fll September 22, 2006 to!! I KO" L( .. N TO: Mayor and Members of the City Council FINANCIALLY STABLE CITY GOVERNMENT EFFICIENT SERVICES. AND QUALITY INFRASTRUCTURE FROM: Olufemi Folarin, City Manager Gail Cohen, Human Resources d Purchasing Director SUBJECT: Insurance Policies for 2006 - 2007 PURPOSE The purpose of this memorandum is to provide the Mayor and members of the City Council with information to award a contract for the City's limited self-insurance program for the period October 1, 2006, through September 30, 2007. RECOMMENDATION It is recommended that the City Council accept the following limited self-insurance coverages for the period October 1, 2006, through September 30, 2007 as follows: A. To award Safety National a$500,000 SIR worker's compensation proposal for a total excess premium cost of$81,331. B. To accept St. Paul's renewal for a premium cost of$881,537 and a claims administration fee of$62,525. C. To accept American International Specialty Lines' renewal pollution liability policy for a premium cost of$49,895. BACKGROUND The City's current limited self-insurance program, which expires September 30, 2006, includes worker's compensation claims administration by Custard Claims Management Services, an excess worker's liability policy with Safety National with a self insured retention of$500,000, a $3,000,000 pollution insurance policy through AIG, and liability/property insurance through St. Paul. These policies give the City total coverage limits of $2,000,000/occurrence and $17,000,000 of aggregate liability for most types of losses. The City's per occurrence, self- insured retention is $250,000 with a $1,500,000 maximum out of pocket cost for claims in the policy year. This year's quote from St. Paul is essentially the same premium rate as last year's premium; the increase in the cost reflects an increase in our exposures. The cost of the program for October 1, 2006 through September 30, 2007 is $857,743.00. e.. Insurance Policies 2006-2007 September 22, 2006 Page 2 The City's one year contract for excess worker's compensation insurance with Safety National expires September 30, 2006. Safety National has proposed a premium of$81,331 with a self insured retention of$500,000. Last year, we paid $71,665 (subject to increase after a payroll audit)with a self insured retention of$500,000. The increase in premium reflects a higher estimated payroll and increase in the insurance rate per $100/payroll from $.155 to $.1575. St. Paul has provided administration of our retained claims (those under the self-insured retention) while they have been our insurance company. St. Paul has proposed continuing claims administration services at a slight increase from last year's fee of $61,000; they have proposed $62,525 for 2006-2007. Our pollution insurance, provided by American International Specialty Lines for $3,000,000 for specialized pollution coverage, will cost $49,895, a slight increase from last year's premium of $46,101. Our current contract with the Custard Claims Management, the City's worker's compensation third party administrator expires on September 30, 2006. We have renewed the contract through September 20, 2008 as we have been satisfied with their performance. GROUPS/INTERESTED PERSONS CONTACTED None. y., FINANCIAL IMPACT The total cost of the new program is $881,537 for casualty/property coverage, $62,525 for administrative services, $49,895 for pollution and $81,331 for worker's comp excess. There are sufficient funds in the Risk Management Fund, account numbers (630-0000-796.50 series)to pay for the 2006 portion of the program, or $414,135. Sufficient funds will need to be included within the 2007 Risk Management Fund budget for next year's expenses. WEGAL IMPACT None. Insurance Policies 2006-2007 September 22, 2006 Page 3 ALTERNATIVES, 1. Accept the recommendations detailed above. 2. Reject the recommendations and solicit alternative sources for insurance, leaving the City without coverage during the process. Respectfully submitted for Council consideration. GAC Attachment ti I rw um m Premium Summary Insured: City Of Elgin Policy Term: 10/01/06to 10/01/07 Coverage Expiring Premium Renewal Premium Workers Compensation $ 71,665 $ 81,331 Total $ 71,665 $ 81,331 Disclaimer: The abbreviated outlines of coverages used throughout this proposal are not intended to express any legal opinion as to the nature of coverage. They are only visuals to a basic understanding of coverages. Please read your policy for specific details of coverages. J J ii :t Lu dstrom1 i INsuRA;NCE pew This proposal reflects a summary of coverages only;the actialPolicy will supply all terms and conditions. 7 (4.1‘ Premium Summary Insured: City Of Elgin Policy Term: 10/01/06 to 10/01/07 Coverage Expiring Premium Renewal Premium Contractors Pollution $ 9,569 $ 8,376 Terrorism $ 83 $ 81 Commercial Pollution $ 33,922 $ 37,591 Terrorism $ 2,500 $ 3,847 Total $ 46,101 $ 49,895 Disclaimer: The abbreviated outlines of coverages used throughout this proposal are not intended to express any legal opinion as to the nature of coverage. They are only visuals to a basic understanding of coverages. Please read your policy for specific details of coverages. Lindstrom INS RANcE This proposal reflects a summary of coverages only; e�ct46olicy will supply all terms and conditions. 8 1. 1r' 1 Premium Comparison 1 Renewal Expiring Premium Premium l Property Insurance: Building and Contents $ 161,373 $ 177,437 1 Equipment Breakdown $ 23,892 $ 20,899 Flood $ 10,604 $ 10,282 1 Earthquake $ 10,669 $ 10,341 Inland Marine: $ 25,556 $ 25,556 ] Crime $ 6,775 $ 6,780 Automobile: Liability $ 34,286 $ 30,157 "` Physical Damage $ 42,072 $ 39,909 1 General Liability $ 166,753 $ 165,038 lEmployee Benefits $ 139 $ 186 EMT/Nurses Professional Included Included Law Enforcement Liability $ 134,415 $ 120,916 I Public Entity Management Liability $ 16,999 $ 13,574 Employment Practices Liability $ 88,368 $ 84,422 Umbrella Liability $15,000,000 Limit $ 147,541 $ 143,034 Terrorism $ 12,106 $ 11,565 TOTAL $ 881,540 $ 860,096 1 Luridgtrami IN�fiCJR410t ',` l 9YcS r This proposal reflects a summary of coverages only;the actual policy will supply all terms and conditions. 28 I