04-27-1992 CC - Laserfiche WebLink

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April 27, 1992 Page 2 The various LMCIT coverages decreased primarily as a consequence of General Liability coverage premiums being lower due to a reduced level of expenditures for 1992/1993 compared to 1991/1992. An additional coverage for 1992/1993 is petrofund reimbursement for an annual premium of$500. The City is required by EPA regulations to show financial responsibility in the event of a leak in underground fuel storage tanks. This coverage is for such an eventuality and it is excess to any reimbursement the City may receive from the MPCA Superfund. Boiler and machinery coverage premiums increased from $4,417 in 1991/1992 to $ 4,859 for 1992/1993. In addition to an inflationary price increase the premium reflects the addition of the standby generator planned for the new water tower and the ground reservoir. The renewal premiums maintain the City's deductible at $5,000 per occurrence with an annual aggregate of $50,000. An annual savings of$21,000 is realized with that deductible compared to the $1,000 deductible that the City formerly had approximately five years ago. I requested information on larger deductibles in an effort to save some money in light of our budget wocs. A$10,000 deductible with an annual aggregate of$50,000 would result in an additional savings of$5,459 on the 1992/1993 renewal premium. A$25,000 deductible with an annual aggregate of$50,000 would result in an additional savings of$13,690 on the 1992/1993 renewal premium. My recollection of the five years that the City has had a $5,000 deductible is that the savings in reduced premiums more than compensated for the increased deductible. I have requested from the LMCIT a listing of the claims that the City paid compared to the premium savings for that period. Hopefully that information will be available for the April 27 Council meeting. My inclination is that the City increase the deductible from $5,000 to $10,000 and establish a self insurance account to pay claims that are under $10,000. If this account were established I would recommend that the savings realized from the larger deductible be placed into the account each year. In that way sufficient monies would be available if there were large claims to be paid and such claims would not be "budget busters". I would appreciate Council's thoughts on this matter. Presently the City has $10,000 blanket honesty bonds on all employees and a total of$50,000 for the Clerk- Administrator and the Finance Director-Treasurer. Our Agent is recommending that the bonds for all employees be $50,000 for an additional annual premium of$130. The increased bonding would provide better protection for the City at a nominal cost. I concur with our Agent's recommendation. Presently the City has a lot of citizen volunteers assisting on boards and commissions and with various projects. The LMCIT is now offering a $1,000 Accident Plan for City Volunteers. Presently the City has liability coverage which would pay for an injury to a volunteer if it were proven that the City was at fault. The Accident Plan would provide up to $1,000 medical coverage on a no fault basis for a premium of$1,818 per year. This coverage could be a nice way to say that volunteers are appreciated. If they are injured their medical bills would be paid regardless who is at fault. Actual coverage is small ($1,000) and coverage is somewhat restricted, i.e., if a volunteer is part of a group working on a project there is no coverage as it is assumed that the group will be carrying their own coverage for their members. The majority of people carry some type of medical insurance which would pay their medical expenses should they be injured and the City was not at fault. Thus, it appears to me that-this-aim ageis-oflimited-benefit-to he€ity-and-thatthe premium—is high in-relation-to-the-benefit. l- seek the Council's direction on this matter. The renewal premiums are $27,459 under the amounts budgeted for insurance in the 1992 Budget as an increase in all premiums was budgeted whereas overall the premiums are approximately the same as last year. A brief comparison of the premiums to budget is shown below. Comparison of-1992/1993 Premiums to Budget- Budget Actual Variance Workers Comp $ 78,238 $ 58,246 - $ 19,992 All Other $ 87,500 $ 80,033 - $ 7,467 Total $165,738 $138,279 - $ 27,459