Agenda Packets - 1984/10/22 - Laserfiche WebLink

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MEMO TO: MAYOR AND CITY COUNCIL FROM: CLERK -ADMINISTRATOR: DATE: OCTOBER 19, 1984 SUBJECT: COOPERATIVE HOME INSURANCE PROGRAM (CHIP) Attached is a photocopy of a letter from William C. Hanna of CI.MA, Inc. regarding their efforts with the League of Minnesota Cities to start a CHIP program in the State of Minnesota and a booklet on the CHIP program: In simple terms, the purpose of a CHIP program is to develop a cooperative effort between a city and a private insurance carrier to offer home insurance to owners of 1-4 unit build- ings offering the following features. 1. Reduced premiums resulting from a more accurate reflection of the quality of the city's housing stock, public safety system, and historical loss experience. i" 2. A security analysis of each building, when re- quested by the owner, whether or not insurance is purchased through the CHIP program. 3. If a return in premium paid i.s generated as a result of favorable loss experience, the re- turned premium is gifted to the city on the owners behalf for Public Safety purposes. You may be saying to yourself, "This sounds good, but why can't all of this be available without our having to enter into an arrangement with an insurance carrier?" Private insurance carriers presently pool their loss experience irregardless of the location of the home and offer reduced premiums only for certain items such as non-smokers and participants in Operation I.L'.. Thus, policyholders do not always experience the full benefit of participating in these programs as not - participants "hold" them down. Also, if an insurance carrier experiences fewer claims they simply have a greater profit which is not always reflected in reduced premiums. Under the CHIP program all policyholders must participate in the Home Security Program and since the carrier gets specified percentages of premiums for expenses, commissions, profits, etc., any money set aside for claims but not paid out must be return- ed as a premium refund. Based on the information before you, the City faces no liabil- ity for participating in such a program and our only expense would be the Home Security Program which would be conducted by US.