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Mounds View City Council June 25, 2001 <br />Regular Meeting Page 7 <br />City Administrator Miller stated this item was on the agenda last month, but she had requested <br />that Mr. Clysdale further research the issue and bring it back to this meeting. <br />Mr. Clysdale stated he delivered the renewal last week. The Council had asked him to provide <br />more information with respect to the deductible. He explained that the deductible for the <br />coverage is $10,000 per loss with a $50,000 annual aggregate, which means the most the City <br />will pay out is $50,000. These deductibles apply to the City's property and liability claims. The <br />property is the property the City owns, and from a liability standpoint it is the city's <br />responsibility to the public for any negligent acts. The City has had this program for 13 years. It <br />started out with a deductible of $5,000 and was changed in 1993 to a $10,000 deductible. On the <br />basis of the premium savings the City has had over that time, $336,264 has been the premium <br />savings; this is roughly $30,000/year. The insurance company has asked back from the city a <br />deductible recovery of $103,579. The difference is a savings over a period of over 10 years in <br />excess of $230,000. The program is again being offered to the city and the premium savings is <br />over $30,100. That is on the schedule Mr. Clysdale provided previously. <br />Mr. Clysdale further explained that the workers comp deductible has been in place for 8 years <br />and the deductible is $5,000. This doesn't apply to medical expenses nor indemnity payments; it <br />only applies to medical payments. When an injured employee incurs a medical cost which the <br />insurance pays, there is a deductible on that loss of $5,000. Over the 8 year period that the city <br />has had that, the premium savings has been $56, 127 and the city has paid back about $53, 067, <br />which is a difference of about $3,500 in the City's favor. On the basis of the City's loss <br />experience, the City has had an unusual number of large medical claims. The City has had 4 <br />years of fairly high medical claims. An account of this size usually wouldn't have this <br />experience. Therefore, the savings would typically be higher. From an insurance analysis, it <br />seems like it is appropriate to continue this program because of the savings that come to the Cit <br />Council Member Thomas clarified that the $30,100 figure would be our expected savings this <br />year and is about the same as it has been. Mr. Clysdale said it has gone down a little and it is a <br />matter of a rating mechanism and probably a subtle way to raise the price. <br />Y• <br />Council Member Stigney asked what the difference would be in the premium if the deductible <br />was changed from $10,000 to $5,000. Mr. Clysdale pointed out this information is on the <br />schedule and explained that the additional premium would be $13,400 over what the City pays <br />now. As an alternate to that, if an aggregate was added to the $5,000 at $50,000 the additional <br />premium would be $14,500. By reducing the deductible from $10,000 to $5,000 the additional <br />premium would be in the range of $13,000 to $14,0000. He said he is assuming the City is <br />reporting every liability claim and every workers comp case to him. <br />City Administrator Miller confirmed the City is reporting all property claims to the insurance <br />agency that she is aware of. <br />• <br />