Finance Committee Agenda and Packet 2010 01 19

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MEMO To: From: Subject: Date: Mayor and City Council Malcolm Fleming Liability and Property Insurance Coverage, Worker's Compensation Coverage January 19,2010 The City's liability and property insurance recently came up for renewal at the end of 2009. Staff has compiled a summary for Council's review and advisement. Last year's coverage through One Beacon cost the City $297,906.00. Similar coverage with One Beacon for the period 2010-2011 is $302,465.00 an increase of $4,459.00, or a 1.5% increase over last year's premium. Specifically, the difference in premiums is attached in the spreadsheet, pages 1-2. Terrorism coverage is included in the total of $302,465.00 for 20 I 0-20 II. The City budgeted $ 296,600.00 in 2010 for property and liability coverage. The Worker's Compensation premium is $127,414.00 for the 2010-2011 coverage. This is an increase of $3,787.00 or 4% over the 2009-2010 premium. The City budgeted $136,690.00 in 2010 for Worker's Compensation coverage. As for changes in premium over the previous year a number of changes occurred. They are as follows: I) Terrorism Coverage premiums through One Beacon increased 12%. 2) This increase is calculated on the total value of property the City insures. In November the Finance Department did an audit of all property to determine the correct value. The value of property increased from $43,937,254 to $52,968,219 or 20%. 3) The City's Experience Modification Rate increased from .91 in 2008 to 1.02 in 2010 which resulted in an increase to the premium. The Experience Modification Rate is recalculated each year using a combined claims history from a three-year rolling period along with a payroll calculation multiplier. The average Experience Modification Rate is 1.00 and simply means that a company has average workers' compensation losses for their like business of similar size. The City experienced 32 workers' compensation claims in 2009 as compared to 30 in 2008. This accounted for the increase in the premIUm. OneBeacon provides property and casualty insurance products and services to public entities across the United States. The Best Co. rates insurance from A+ to D as it relates to performance, finances and reserves. A number corresponds to that indicating size. OneBeacon is rated A (excellent) with financial assets of $1.5 billion. OneBeacon's Public Sector Services currently has over 100 public entity clients nationwide as of 01/01/09. 6