City of Oak Creek

Common Council Report

Meeting Date:  09/16/03

Item No.:         8

Recommendation:  That the Common Council:

a.         adopt Resolution No. 10280-091603, A Resolution Accepting the Liability Insurance Proposal from Cities and Villages Mutual Insurance Company (CVMIC)  and Agreeing to Continue the City’s Membership in CVMIC for Policy Years 2004, 2005, and 2006;  and,

b.         authorize the City Clerk to execute the membership and premium acceptance documents, with selection of Option 2, $37,500 Retentions.

Background: 

Each year the City renews its various insurance coverages.  In 2000, the City chose to enroll as a member of the Cities and Villages Mutual Insurance Company (CVMIC), a not-for-profit state-wide municipal mutual insurance company with membership limited to Wisconsin cities and villages.  Our membership in CVMIC is continued automatically with no annual confirming action needed.  We believe membership in CVMIC is in the city’s best interest for the long term since there is a benefit to carrying insurance through an organization that is directly designed for the needs of municipalities.  

The City had previously awarded liability coverages for policy years 2001-2004 for General Liability, Automobile Liability, Excess Liability, Law Enforcement Liability, and Public Officials Liability to CVMIC, so a membership contract approval would not ordinarily be needed at this time.  CVMIC has now implemented an updated three-year pricing structure for the liability renewal package, to enable members to control costs and allow for greater budgetary stabilization.   In order to provide these guaranteed premiums, CVMIC is seeking a commitment to membership for the next three-year period.  The coverage previously accepted for 2004 will now be part of an updated three-year package, along with modified retention rates.

A choice of retentions (deductibles) is being offered.  The City carried a $25,000 retention level for the first three years of coverage.  Based on our claims history, we believe  that an increase to the $37,500 level is reasonable since it offers a premium savings of $46,560 over the three year renewal.  The annual aggregate exposure level would increase from $100,000 to $150,000.  Under the CVMIC program, we had aggregate claims of approximately $75,000 in 2001, and $18,000 in 2002.   The efforts of the Small Claims Committee and Deputy Clerk Pam Bauer continue to control our non-health insurance costs.

This three-year guaranteed pricing structure would apply to General Liability, Automobile Liability, Excess Liability, Law Enforcement Liability and Public Officials Liability.

The balance of the City’s insurance coverage plans will continue to be renewed on an annual basis (Workers’ Compensation, Boiler & Machinery, Local Government Property Insurance, Auto Physical Damage and Public Employee Dishonesty), and will be presented near the end of the calendar year.

Fiscal Impact:

Premium costs for the liability coverages for 2003 were $123,736.

Premium costs for the proposed three-year period for the liability coverages are:  

                        2004:   $111,691

                        2005:   $114,483

                        2006    $117,345

These costs would be budgeted for in the General Fund, General Government Acct. 535-Insurance, each year.

Prepared by and Fiscal Review by: Beverly A. Buretta, CMC City Clerk

Respectfully submitted, Robert L. Kufrin City Administrator