06-233 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
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;J City of Elgin Agenda Item No.
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September 22, 2006 to!!
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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
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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.
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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.
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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
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This proposal reflects a summary of coverages only;the actual policy will supply all terms and conditions. 28
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