12-13-1999 Council Packet - Laserfiche WebLink

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COUNCIL MEET" '1 DEC 1 3 CITY Ur Unv^iMU REQUEST FOR COUNCIL ACTION DATE; December 9, 1999 ITEM NO: ^ ^ Department Approval: Administrator Reviewed: Name Tom Kuehn "p^ i Title Finance Director Agenda Section: City Administrator’s Report Item Description: Request to Establish Insurance Internal Service Fund Attachments: Resolution to Create Insurance Fund. Currently the City budgets for insurance costs within the various risk areas of the General Fund and the Water, Sewer and Golf Course enterprise funds. The City has generally experienced a low loss ratio through 1998, but has incurred higher than normal losses in 1999. We have recently reimbursed the LMCIT for a portion of legal defense costs related to the Woodhill Country Club road matter. The City's share was $10,597. In addition there are four other claims for which the City has paid deductibles totaling $3,116. In 1997 the City increased the deductible in the municipal liability coverage from $500 to $1,000 per occurrence which resulted in premium cost savings of $5,300. Staff reviews the policy premium levels each year to determine if a higher deductible is reasonable based on the additional premium savings vs. the additional potential cost in deductibles. The City has received unusually high dividends from the League of Minnesota Cities Insurance Trust (LMCIT) for both the municipal and worker compensation liability programs for several years, due to the City's experience rating and high investment eeunings from the LMCIT program. Since 1993 the City has received $180,340 in dividends from the municipal liability program. The net dividends from the worker compensation liability program total $40,007 since 1993. The dividends have been included in the miscellaneous revenues of the General Fund and are part of the undesignated fund balance. The dividends have decreased significantly over the last three years, from a high in 1996 of $36,513, to $17,756 in 1999. Based on the City's recent and on-going experience with worker's compensation and municipal liability claims, it is reasonable to assume that dividends will continue to decrease and may eventually be eliminated. Also the City's insurance costs will veiy likely increase significantly because of the recent claims.