HomeMy WebLinkAbout12/17/2013 2014 Property and Workers Compensation Insurance ProgramTO: MICHAEL E. JANONIS, VILLAGE MANAGER
FROM: FINANCE DIRECTOR
DATE: DECEMBER 12, 2013
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SUBJECT: 2014 PROPERTY AND WORKERS COMPENSATION INSURANCE PROG
PURPOSE:
To present a recommendation for the property and workers compensation
policy year beginning January 1, 2014 and ending December 31, 2014,
insurance program for the
DISCUSSION:
The Village's current property and workers compensation insurance policies are set to expire on
December 31, 2013. With the assistance of the Village's insurance consultant, staff sought quotes with
the existing broker and insurance companies to secure coverage for 2014. We did not seek alternative
proposals for the 2014 renewal because of the continued narrow market for municipal risks. There
remains just a single competitive insurer for the excess WC - Safety National. Federal Insurance
(Chubb) has been the most competitive on cost and coverage for property. The following is a brief
summary of our expiring insurance program, an analysis of the proposals received, and a summary of
the insurance package being recommended by staff and its consultant.
Expiring Program
Attachment I provides a listing of the current schedule of insurance in force, showing the type of
coverage, the carrier, policy limits, and the broker of record.
Village buildings and vehicles were insured this past year by Federal Insurance (Chubb) Company.
Property values on which the premium was based totaled $92,717,046. A $25,000 deductible is in
place for this coverage. The annual premium was $99,466, The broker offering the coverage was
Arthur J. Gallagher and Co.
Excess workers compensation coverage was purchased from Safety National, which insured the Village
for individual claims in excess of $600,000. There is a $1 million aggregate limit for worker
compensation claims. The annual premium was $65,720. The broker again was Arthur J. Gallagher
and Co.
Proposal Received
Nugent Consulting Group assisted the Village in securing proposals from our current broker and
underwriters. Attachment II presents a summary of renewal options offered by Arthur J. Gallagher and
Co. for the upcoming policy period. A breakdown of premium by coverage type for policy year 2012
and 2013 is also included.
Property and Workers' Compensation Insurance Program
December 12, 2012
Page 2
The renewal quote for property coverage increased 4.2% from the prior year and totals $103,676.
Insurable values during the same period increased 2.8 %. The renewal quote for excess workers
compensation coverage increased 30.2% from the prior year from $65,720 to $85,538 Costs for WC
coverage continue to be driven by Safety National municipal book of business in Illinois as a
whole. Due of the poor condition of the Illinois municipal WC marketplace and benefits in place
for sworn police and fire personnel, there are no other competitive insurers doing excess WC.
The total for all premiums and commissions for selected coverage levels is $201,596, an increase of
13.5% from the 2013 premium.
Due to the size of the proposed increase we have requested Nugent Consulting to negotiate a lower
premium, if possible, and /or obtain additional concessions from the broker to lower the overall cost of
coverage. One method used in the past to reduce the premium was adjusting (upward) the self- insured
retention (SIR) level. The SIR was most recently increased with the 2013 renewal and would not likely
be a consideration for 2014. SIR /Deductible levels are found in Attachment ll.
The insurance companies being recommended are very sound financially and have an excellent claims
payment history. Federal Insurance is rated A + +, XV (Superior) by A.M. Best, a recognized insurance
company rating service. Safety National Casualty Corp. is rated A, IX (Excellent).
RECOMMENDATION:
It is recommended the Village purchase property and excess workers compensation insurance from
Arthur J. Gallagher and Co. with premiums and broker's fees not to exceed $201,596.
David O. Erb
Finance Director
060FA
Attachments
I: \Insurance \Renewals \2014 Renewal - Property and WC.docx
Attachment I
Type of Coverage
Property & Inland Marine
Workers' Compensation
Self-insured Liability Program
General Liability
Auto Liability
Employment Practices Liability
Police Professional Liability
Public Officials Liability
(Errors and Omissions)
Excess Liability
Fiduciary Liability - Police Pension
Fiduciary Liability - Fire Pension
Public Employee Dishonesty
Depositors Forgery
Contingent Tax Interruption
Employee & Retiree Health Ins.
Third Party Administrators
Workers' Comp Claims Administration
Liability Claims Administration
Carrier
Federal Insurance / Chubb
Safety National Insurance Co.
VILLAGE OF MOUNT PROSPECT
SCHEDULE OF INSURANCE IN FORCE
December 31, 2013
Deductible/
Specific
Aggregate
$0
$0
N/A
Self-insured
Excess
Excess
Expiration
Policy
$2,000,000
Retention
Limit
Limit
Date
Number
Broker Premium
$25,000
$92,717,046
none
01/01/14
35826710
Arthur J. Gallagher $99,466
$600,000
Statutory
$1,000,000
01/01/14
SP 4047829
Arthur J. Gallagher $65,720
N/A
$2,000,000
$0
$0
$0
N/A
$2,000,000
$0
$0 -
$0
N/A
$2,000,000
$0
$0 -
$0
N/A
$2,000,000
$0
$0 -
$0
NIA
$2,000,000
$0
$0 -
$0
High-level Excess Liability Pool
Federal Insurance/ Chubb
Federal Insurance / Chubb
Travelers
Travelers
Federal Insurance / Chubb
Intergovernmental Personal
Benefit Cooperative
$2,000,000
$12,000,000
$12,000,000
04/30118
$25,000
$5,000,000
$5,000,000
08/01/14
$25,000
$5,000,000
$5,000,000
08101114
$5,000
$500,000
none
05/01114
$1,000
$100,000
none
05/01/14
$25,000
$9,000,000
$9,000,000
01/01/14
$30,000/
$75,000
none
none
06/30/14
n/a
n/a
$74,699
8158-5499
Arthur J. Gallagher
$11,500
8169-8992
Arthur J. Gallagher
$12,600
105779765
Arthur J. Gallagher
$2,678
105779765
Arthur J. Gallagher
Ind. in above
35826710
Arthur J. Gallagher
Ind. in Prop
n/a
n/a
Varied
ASC
Gallagher Bassett
1:\Insurance\Schedule of Coverage0ecember 31, 2013.xlsx
Attachment II
VILLAGE OF MOUNT PROSPECT
2014 INSURANCE RENEWAL
Expiring
Renewal
Coverage Type / Values
2012
2013
2014
Property & Inland Marine
$ 93,500
$ 99,466 $
103,676
Excess Workers Compensation
52,848
65,720
85,538
Gallagher Fee
12,382
12,382
12,382
$ 158,730
$ 177,568 $
201,596
11.87%
13.53%
Property Values
$ 88,958,031
$ 92,717,046 $
95,296,056
Property Deductible
25,000
25,000
25,000
Auto Physical Damage Deductible
100,000
100,000
100,000
WC Self- insured Retention - General Employees
550,000
600,000
600,000
WC Self- insured Retention - Police /Fire
550,000
600,000
600,000