HomeMy WebLinkAboutCOW 2011-11-14 Item 5D - MOU - Washington Cities Insurance Authority for $25,000 DeductibleCOUNCIL AGENDA SYNOPSIS
ITEM NO.
1 CASNU,\ II1I-'1IZ:
A(;1 :ND:\ I'IT', T I' 17,L'
Meeting Date Prepared by I JA.If yor's review Coanaci! review
11/14/11 PMc LxklK C%
11/21/11 PMc 5.D.
ITEM INFORMATION
STAFF S1 PEGGY MCCARTHY OIZIGINAi,AcE,NDA DA'II� 11/14/11
A memorandum of understanding with WCIA authorizing a reduction in the City's
liability insurance deductible to $25,000.
Ct \'1EGORY ®Discussion ®Motion Resolution E] Ordinance ❑Bid Award Public Hearin 01ber
AP g Date 11/14/11 A7tg Date 11/21/11 11Itg Date A4tg Date A7tg Date Altg Date Aft Date
SPONSOR Council Mayor [:].HR DCD Finance .Fire IT P6R Police PW
ShoNSOIZ's City Council is being asked to approve a memorandum of understanding with Washington
Cities Insurance Authority (WCIA) setting forth a $25,000 liability insurance deductible
level per occurrence.
RI?v11 ;UiBD BY COW Mtg. CA &P Cmte F &S Cmte Transportation Cmte
Utilities Cmte Arts Comm. Parks Comm. Planning Comm.
DATE: 11/08/11 COMMITTEE CHAIR: HOUGARDY
RECOMMENDATIONS:
SP( /ADMIN. Finance
Co\1n -rIT 1 h.1 Unanimous Approval; Forward to Committee of the Whole
COST IMPACT FUND SOURCE
E\PI?NI)rruiU I RI;X)U AMOUNT BUDGETED APPROPRIATION REQUIRED
$0
Fund Source:
Comments:
MTG. DATE I RECORD OF COUNCIL ACTION
11/14/11
MTG. DATE I ATTACHMENTS
11/14/11 I Informational memorandum dated 11/2/2011
Memorandum of Understanding
WCIA Assessment Comparison
Minutes from the Finance Safety Committee Meeting of 11/8/11
11/21/11
L.*%
City of Tukwila
Jim Haggerton, Mayor
INFORMATIONAL MEMORANDUM
TO: Mayor Haggerton
Finance and Safety Committee
FROM: Peggy McCarthy, Interim Finance Director
DATE: November 2, 2011
SUBJECT: Reduction of Liability Insurance Deductible
ISSUE
Reduce the City's liability insurance deductible from $100,000 to $25,000 for 2012 and beyond.
BACKGROUND
Washington Cities Insurance Authority (WCIA), the City's liability insurance provider, prepared
an analysis comparing total costs to the City using a $25,000, $50,000 and $100,000 deductible
scenario, the City's actual claim history from 2006 through 2010, and the increase in insurance
premiums under each of these scenarios. The City's current deductible amount is $100,000.
DISCUSSION
The analysis demonstrates that if the City had had a deductible of $25,000 rather than the
$100,000 over this period of time, the City would have saved $264,568 ($3,145,042 total under
the $100,000 deductible scenario versus $2,880,474 total under the $25,000 scenario). To
realize these potential cost savings, staff recommends reducing the deductible to $25,000 for
2012 and re- evaluating the issue in the fourth quarter of 2012.
A revised Memorandum of Understanding (MOU) between WCIA and the City has been drafted
and includes the reduced deductible amount of $25,000; the Memorandum has been signed by
the City Attorney. The Council is being asked to authorize the Mayor to sign the agreement.
RECOMMENDATION
The Council is being asked to consider this item at the November 14, 2011 Committee of the
Whole Council meeting and subsequent November 21, 2011 Regular Council Meeting.
ATTACHMENTS
-Draft Memorandum of Understanding
WCIA's City of Tukwila Assessment Comparison
MN
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Memorandum of Understanding
This Memorandum of Understanding (Memorandum) is made and entered this day by and
between the City of Tukwila and Washington Cities Insurance Authority, (WCIA) to clarify
Tukwila and WCIA responsibilities under the WCIA Large Deductible program.
Tukwila as a current member of WCIA, has qualified and has exercised its option to participate
in the Large Deductible Program and will maintain a $25,000 deductible level per occurrence.
I. CLAIMS ADMINISTRATION
During the period or periods of Tukwila participation in the Large Deductible Program,
WCIA shall continue to represent and act for Tukwila in matters pertaining to the
automobile, errors omissions, police and general liabilities of Tukwila, including the
following:
A. Receive notice of and create files on each claim reported and maintain these files for
Tukwila. Each claim file shall be maintained on a current basis to reflect liabilities,
value, recommended disposition, and desirability of risk.
B. Investigate all claims submitted to WCIA by Tukwila to determine their liability and
settlement value.
C. Request timely payment to WCIA, in accord with payment procedures established
herein. Tukwila will be wholly responsible for providing payment as may be
required for any claims assessed against it, up to $25,000 per occurrence, and/or in
excess of or upon exhaustion of WCIA liability coverage.
D. Maintain and provide Tukwila pertinent data on all claim payments.
E. Promptly report to Tukwila the status of claims in a timely manner.
II. PAYMENT OF CLAIMS
A. Tukwila shall at all times provide funds to WCIA adequate for the payment of
qualified claims or losses and of allocated loss expenses within Tukwila's $25,000
per occurrence deductible -to a Deductible Fund (Fund) managed by WCIA. For this
purpose, allocated loss expenses shall mean all costs, charges or expenses of third
parties, incurred by WCIA, its agents or its employees, which are properly
chargeable to a qualified claim or loss including, without limitation, court costs, fees
and expenses of defense attorneys, independent investigators, experts and witnesses,
and fees for obtaining diagrams, reports, documents and photographs.
B. The initial deposit to the Fund of $25,000 was established in 2003. WCIA will
periodically analyze the sufficiency of this amount and may require Tukwila to
adjust the deposit amount to more accurately represent cash flow demands placed
upon the Fund.
5R
C. WCIA will provide Tukwila with monthly reports detailing all expenditures charged
to this Fund. Tukwila will have ten (10) working days from the date of this
notification to reimburse the Fund to its required deposit level, as established in
clause B above, by wiring finds to WCIA's bank account.
D. In the event that the Fund is impacted by an unusually large volume of current or
pending claims or expenses, and upon special notice from WCIA detailing the nature
of this unusual demand and the amounts thereof, Tukwila will wire transfer the
requested amount within ten (10) days to avoid the possibility of a negative balance
in the Fund.
E. It is expressly understood that WCIA shall not be required to advance its own funds
to pay losses, allocated loss expenses or banking charges within the Deductible level,
or to perform any services hereunder if Tukwila fails to provide adequate funds as
herein set forth.
F. Reimbursement of the Fund not received within ten (10) days of written notification
will be charged a finance fee of I
III. TERM
This Memorandum shall become effective on January 1, 2012 and shall continue to be in
force as long as Tukwila continues as a WCIA member participating in the Large
Deductible program.
IV. GENERAL PROVISIONS
A. WCIA shall continue to have full authority to negotiate and settle claims within
Tukwila's deductible level, and up to WCIA coverage limits without prior approval
from Tukwila. WCIA, where possible, shall review all claims with Tukwila prior to
settlement.
B. WCIA shall continue to have full authority to appoint and retain defense attorneys to
defend Tukwila on any claim or lawsuit tendered to WCIA under this Memorandum
and to control the defense of said claims or lawsuits.
C. All claims and related files generated by WCIA as a result of its activity under this
Memorandum shall remain at all times the property of WCIA. All such files will be
available at WCIA offices for review and inspection by agents of Tukwila.
D. It is understood and agreed by the parties that a claim has occurred when the
incident, accident or event giving rise to the claim has occurred. The fact that the
claimant may not report the claim until some subsequent time or that Tukwila might
not report it to WCIA until some Subsequent time does not change the meaning of
when the claim occurred for purposes of this Memorandum. Any claim that occurs
during a coverage year in which Tukwila is a participant in the Large Deductible
program shall be administered and handled by WCIA per the provisions of this
memorandum.
E. Nothing in this Memorandum changes, alters or relieves WCIA or Tukwila of their
duties and obligations as set forth in the WCIA Interlocal signed by all member cities
of WCIA, or the Bylaws, Joint Protection Program and Coverage Document that was
approved by the membership.
F. Any changes in deductible status or levels cannot be implemented until the
conclusion of the calendar fiscal coverage year.
G. Tukwila shall keep the Fund replenished until all claims covered under this
Memorandum have been fully resolved or release WCIA from any further liability to
administer, defend or pay said claims within the deductible layer.
WASHINGTON CITIES INSURANCE AUTHORITY
LEWIS E. LEIGH, Executive Director Date
CITY OF Tukwila
Pke L
Authorized Signature Date
APPROVED AS T O FORM:
Mark Bucklin, Authority Counsel
APPROVED AS TO FORM:
e2 UJUA 1� I �,c
Shelley Kerslake, Kenyon Disend
Tukwila City Attorney
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City of Tukwila Assessment Comparison
1/1/2006- 12/31 /2010 as of 9 -8 -11
Note
*Claims capped at $25,000 $50,000 $100,000 respectively
*Multiple claimants for each occurrence considered
*Statutes have not run on all years and not all claims have matured
May be rounding errors as no decimals
(A) Claims (B) C) MY (E) (F)
Total cost of Difference in Cost
No Deductible Deductible 2006 2010 LTD. Incurred'year Propdsed'Frogram to City (E)
Year Assessment Assessment by year w /Applicable (B)
$25,000 Deductible
2006
573,242
468,339
175,448
643,787
70,545
2007
531,720
434,415
150,418
584,833
53,113
2008
481,392
393,297
82,700
475,997
(5,395)
2009
549,411
448,869
148,723
597,592
48,181
2010
580,880
474,579
103,686
578,265
(2,615)
Total
2,716,645
2,219,499
660,975
2,880,474
163,829
$50,000 Deductible
2006
573,242
423,053
300,448
723,501
150,259
2007
531,720
392,409
211,408
603,817
72,097
2008
481,392
355,267
157,700
512,967
31,575
2009
549,411
405,465
232,627
638,092
88,681
2010
580,880
428,689
132,436
561,125
(19,755)
Total
2,716,645
2,004,884
1,034,619
3,039,503
322,858
$100,000 Deductible
2006
573,242
330,187
473,783
803,970
230,728
2007
531,720
321,449
311,408
632,857
101,137
2008
481,392
303,277
267,700
570,977
89,585
2009
549,411
344,481
299,595
644,076
94,665
2010
580,880
360,726
132,436
493,162
(87,718)
Total
2,716,645
1,660,120
1,484,922
3,145,042
428,397
Effect of change from
$100K deductibe
to $50K
2006
(92,866)
173,335
80,469
2007
(70,960)
100,000
29,040
2008
(51,990)
110,000
58,010
2009
(60,984)
66,968
5,984
Effect of change from $100K deductibe to $25K
2006 138,152 (298,335) (160,183)
2007 112,966 (160,990) (48,024)
2008 90,020 (185,000) (94,980)
2009 104,388 (150,872) (46,484)
Premium goes up by if change Out -of- pocket claims expenses Savings (lower claims expenses partial
from $100K to $25K deductible go down with lower deductible offset by higher WCIA assessment)
i
AM
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Finance Safety Committee Minutes
November 8. 2011— Paoe 2
D. Ordinance: 2011-2012 Budget Amendment
Staff is seeking Council approval of an ordinance amending the 2011-12 Biennial Budget.
After discussion, the City Administrator explained that the Council's legal authority is the fund and
appropriation. The responsibility to move /transfer dollars within a fund is an executive function.
Councilmember Robertson asked for more specific details regarding where the "surplus" funds came
from (Public Works /Mayor's Office /.Parks and Rec) i.e. vacant positions, reductions in overhead, etc.
Councilmember Hougardy noted that we seem to be consistently over budget in the City Attorney's
office, and she wondered if the City should consider moving back to an in -house attorney. Dennis
suggested that staff review the budgeting process further, especially in the area of legal costs, to look at
history, budget versus actual, etc. to see if we can do a better job m estimating expenditures
Discussion continued regarding the subsidies for Foster Golf Course. Dennis requested that staff provide
a summary of what the general find would have to subsld;izepr the next six years, since it has been
difficult to get a clear understanding of the costs related to t1e golfqurse. He also suggested a detailed
walk thru of this summary with Council members at the November 14 meeting.
As required by the Revised Code of Washington,, staff is seeking Council approval of an ordinance
amending the 2011- 12 Biennial Budget. The amendment includes many items that have been discussed
and addressed throughout the year.
UNANIMOUS APPROVAL. FORA .TO NOVEMBER 14 COW FOR DISCUSSION.
E. Memorandum of Understandiniz with W 19hmszt6n :C ties Insuraiw're Authority
Staff is seeking Council approval of a meffiorandum of:understand�tn� Washington Cities Insurance
Authority (WCIA) which ww ll reduce the Cf ,s liability insurance deductible from $100,000 to $25,000.
ft
Peggy explained that this change in deductible -could reduce the City's costs. After discussion, staff will
consider reformatting/siiriplifying the data and analysis. It was 1 suggested that staff look specifically
at the number and types of claims w eh this analysi8js done next year.
UNANI1VIOIS" APPROVAFO�RWART} TO NOVEMBER 14 COW FOR DISCUSSION.
F. Proposal�'.�Additional Police. Staffina
Chief Villa explained that the C#t�&had a bicycle patrol in the mid '1990's (he was one of the City's first
two bicycle officers). The recen closure of the Neighborhood Resource Center has resulted in more
reporting by citizen srgarding panhandling and prostitution. Whether crime has actually increased along
Tukwila lnternational 6'iulevard o> not, the Police Department is doing whatever it can to help create a
safe neighborhood environ inentA bicycle patrol cannot be staffed with the current number of officers.
He also explained that out oftle existing number of officers (68), the number that can actually be
deployed in the field is around 59, based on officers on administrative leave, military deployment
overseas, training, etc. The Police Dept. loses about 3 seasoned officers every year through attrition.
They are constantly training and trying to keep the pipeline filled.
UNANIMOUS APPROVAL. FORWARD TO NOVEMBER 14 COW FOR DISCUSSION AND
RECOMMENDATION FOR APPROVAL.
I11. MISCELLANEOUS
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