05-284 Resolution No. 05-284
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, 2005 through October 1, 2006 as follows:
a. To award Safety National a $500,000 SIR worker's compensation proposal for a
total excess premium cost of$71,665 .
b. To accept St. Paul's renewal for a premium cost of$857,743.00 and a claims
administration fee of$61,000.
c. To accept American International Specialty Lines' renewal pollution liability policy
for a premium cost of$46,101.
s/Ed Schock
Ed Schock, Mayor
Presented: September 28, 2005
Adopted: September 28, 2005
Vote: Yeas: 6 Nays: 0
Attest:
s/Dolonna Mecum
Dolonna Mecum, City Clerk
Premium Comparison
Renewal Expiring
Premium Premium
Property Insurance:
Building and Contents $ 175.084 $ 174,884
Equipment Breakdown $ 20,899 $ 20,192
DIC, Flood and Earthquake $ 20,479 $ 20,194
Inland Marine: $ 25,700 $ 25,348
Crime $ 6,780 $ 7,263
Automobile:
Liability $ 30,157 $ 34,739
Physical Damage $ 39,909 $ 52,766
General Liability $ 165,038 $ 134,949
Employee Benefits $ 186 $ 238
EMT:Nurses Professional Included Included
Law Enforcement Liability $ 120,916 $ 122,378
Public Entity Management Liability $ 13,574 $ 14,953
EmploTuent Practices Liability $ 84,422 $ 107,132
Umbrella Liability $15,000,000 Limit $ 143,043 $ 131,500
Terrorism $ 11.565 $ 14,611
TOTAL $ 857,743 $ 861,147
29
Premium Summary
Insured: City Of Elgin
Policy Term: 10/01/05 to 10/01/06
Coverage Expiring Premium Renewal Premium
Workers Compensation $ 68,538 $ 71,665
Total $ 68,538 $ 71,665
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.
.This proposal reflects a summary of coverages only:the actual policy will supply all terms and conditions 7
Premium Summary
Insured: City Of Elgin
Policy Term: 10/01/05 to 10/01/06
Coverage Expiring Premium Renewal Premium
Contractors Pollution $ 9,661 $ 9,596
Terrorism $ 93 $ 83
Commercial Pollution $ 33,733 $ 33,922
Terrorism $ 1,896 $ 2,500
Total $ 45,383 $ 46,101
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.
.This proposal reflects a summary of coverages only;the actual policy will supply all terms and conditions 8
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<0 O F F4 C
"°"""�'\"'' Agenda Item No.
City of Elgin 9 ( '‘
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September 23, 2005 i
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TO: Mayor and Members of the City Council FINANCIALLY STABLE CITY GOVERNMENT
EFFICIENT SERVICES,
AND OUAUTY INFRASTRUCTURE
FROM: Olufemi Folarin, City Manager
Gail Cohen,Human Resources and Purchasing Director
SUBJECT: Insurance Policies for 2005 - 2006
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, 2005,through September 30, 2006.
RECOMMENDATION
P
It is recommended that the City Council accept the following limited self-insurance coverages
for the period October 1, 2005,through September 30, 2006 as follows:
A. To award Safety National a$500,000 SIR worker's compensation proposal for a total
excess premium cost of$71,665.
B. To accept St. Paul's renewal for a premium cost of$857,743.00 and a claims
administration fee of$61,000.
C. To accept American International Specialty Lines' renewal pollution liability policy for a
premium cost of$46,101.
BACKGROUND
The City's current limited self-insurance program, which expires September 30, 2005, 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 lower than last year's premium despite an
increase in our exposures. According to our broker, Lundstrom's Insurance, the insurance
fl' marketplace for governmental entities has either softened or remained flat. St. Paul has provided
insurance proposals with two deductible levels for our property (Buildings and Contents
Coverage), Crime Coverage, the Boiler coverage and the Inland Marine Coverage. If the City
,
Insurance Policies 2005-2006
' September 23, 2005
Page 2
keeps the lower deductibles (ranging from $1,000 for inland marine to $50,000 for property), our
premiums are lower than last year's by $3,404. If the City raises the all deductible levels to
$100,000, our premium is $19,190 lower. Risk Resources, our insurance consultant, has
analyzed the $100,000 deductible alternatives and recommends that we keep the lower
deductible levels. The cost of the program is $857,743.00.
The City's one year contract for excess worker's compensation insurance with Safety National
expires September 30, 2005. Safety National has proposed a premium of $71,665 with a self
insured retention of $500,000. Last year, we paid $68,538 (subject to increase after a payroll
audit)with a self insured retention of$500,000.
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 the same cost as last year; $61,000.
Our pollution insurance, provided by American International Specialty Lines for $3,000,000 for
specialized pollution coverage, will cost $46,101, a slight increase from last year's premium of
$41,463.
e Our current contract with the Custard Claims Management, the City's worker's compensation
third party administrator expires on September 30, 2006.
GROUPS/INTERESTED PERSONS CONTACTED
None.
9.1k,/FINANCIAL IMPACT
The total cost of the new program is $964,844; $857,743.00 for casualty/property coverage,
$61,000 for administrative services, $46,101 for pollution. There are sufficient funds in the Risk
Management Fund, account numbers (630-0000-796.50 series) to pay for the 2005 portion of the
program, or $321,536.75.
Sufficient funds will need to be included within the 2006 Risk Management Fund budget for
next year's expenses.
EGAL IMPACT
None.
Insurance Policies 2005-2006
,A"' September 23, 2005
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
Premium Comparison ......_.._......_.
Renewal Expiring
Premium Premium
Property Insurance:
Building and Contents $ 175,084 $ 174,884
Equipment BrealdoW71 $ 20,899 $ 20,192
DIC, Flood and Earthquake $ 20,479 $ 20,194
Inland Marine: $ 25,700 $ 25,348
Crime $ 6,780 $ 7,263
Automobile:
Liability $ 30.17 $ 34,739
Physical Damage $ 39,909 $ 52,766
General Liability $ 165,038 $ 134,949
Employee Benefits $ 186 $ 238
EMT/Nurses Professional Included Included
Law Enforcement Liability $ 120,916 $ 122,378
Public Entity Management Liability $ 13,574 $ 14,953
Employment Practices Liability $ 84,422 $ 107,132
Umbrella Liability $15,000,000 Limit $ 143,043 $ 131,500
Terrorism $ 11,565 $ 14,611
TOTAL $ 857,743 $ 861,147
l
29
Premium Summary
Insured: City Of Elgin
_ Policy Term: 10/01/05 to 10/01/06
Coverage Expiring Premium Renewal Premium
Contractors Pollution $ 9,661 $ 9,596
Terrorism $ 93 $ 83
Commercial Pollution $ 33,733 $ 33,922
Terrorism $ 1,896 $ 2,500
Total $ 45,383 $ 46,101
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.
.This proposal reflects a summary of coverages only;the actual policy will supply all terms and conditions 8
Premium Summary
Insured: City Of Elgin
Policy Term: 10/01/05 to 10/01/06
Coverage Expiring Premium Renewal Premium
Workers Compensation $ 68,538 $ 71,665
Total $ 68,538 $ 71,665
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.
.This proposal reflects a summary of coverages only;the actual policy will supply all terms and conditions 7