City of Oak Creek

Common Council Report

Meeting Date:  08/16/05

Item No.:         17

Recommendation:  That the Common Council:

a.         adopt Resolution No. 10538-081605, 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 2006, 2007, and 2008;  and,

b.         authorize the City Clerk to execute the membership and premium acceptance documents, with selection of Option 1, $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 2004-2006 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 2006 will now be part of an updated three-year package.

A choice of retentions (deductibles) is being offered.  The City carried a $37,500 retention level for the last two years of coverage.  We believe that remaining at the $37,500 level is reasonable for at least the next two years, because although it offers a modest premium savings of about $9,400 per year, it would increase the annual aggregate exposure level from $150,000 to $200,000.  At a time that claims for excessive assessments, for example, are becoming commonplace, it does not seem to be a time to increase the City’s out-of-pocket expense potential.

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 2005 were $114, 483

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

                        2006:   $117,345

                        2007:   $118,163

                        2008:   $121,117

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/Comptroller