City Council

CITY OF SARATOGA SPRINGS CITY COUNCIL MEETING CITY COUNCIL ROOM TUESDAY, APRIL 22, 2002 6:00 P.M PRESENT: Commissioner Thomas Curley, DPS Commissioner Michael Lenz, Finance Commissioner Thomas McTygue, DPW Commissioner Stephen E. Towne, Accounts ABSENT Mayor Kenneth Klotz Anthony Scirocco, Supervisor ALSO PRESENT: Phil Klein, Supervisor STAFF PRESENT: Bruce Brown, Deputy Commissioner, DPW Debbie Harper, Deputy Commissioner Accounts Bob King, Deputy Commissioner, DPS Jeff Wait, City Attorney CALL TO ORDER Commissioner Michael Lenz called the meeting to order at 6:00 p.m. ACCOUNTS DEPARTMENT Liability Insurance (02-099) Commissioner Stephen Towne said in January he informed the Council that he was concerned that the City=s budget had a substantial shortfall for insurance premiums for this year. He said Jack Perry, Risk Manager, had made a recommendation that because of September 11 the projected premiums should be approximately $500,000 than last year. He said, though, that ultimately the budget was passed with a shortfall of nearly $350,000 in the insurance premium line. Commissioner Stephen Towne said the existing carrier had an opportunity to continue to cover the City, however, due to the City=s loss history, they chose not to continue coverage. He said the bid process then began. He said 17 companies were contacted with two submitting bids which were opened on April 4. He said he believed there were only two bidders because of the City=s loss history which averaged, over the last several years, about $400,000/year. Page 1 of 4 City of Saratoga Springs City Council Meeting Minutes Monday, April 22, 2002 Commissioner Stephen Towne said he had kept the Council informed of this process and had recently circulated memos with bid comparisons, recommendations and motions. Jack Perry said the City was faced with two different types of proposals. He said one was a self-insured retention and the other was a deductible type which is what the City currently has for protection. He said the difference between the two was that with the retention program it is the carrier=s duty to investigate, settle or defend suits which applies only after the ultimate net cost exceeds the self-insured retention. He said with the deductible program the carrier settles and then pays the City minus the deductible. Jack Perry said the retention rate was either $50,000 or $100,000 depending on the item. He said one of the advantages of the self-insured program was that the City had more control over the claims and which attorney would be used. He said any monies not used this year could be forwarded to the following year. He said a disadvantage of the self-insured plan was that it would not cover prior acts. He said the cost of hiring an attorney could cost the City another $150,000 to cover those prior acts. Jack Perry said the advantage of the deductible program is that the carrier pays all of the legal expenses, handles all of the claims and deductibles are lower. He said this particular carrier New York Municipal Insurance Reciprocal (NYMIR) only insures New York State Municipalities. He said he had talked to other municipalities that are covered under this program and received good comments. Jack Perry said when comparing some of the deductibles, the cost was about the same, however there would be an additional third party administrator cost added to the self- insured program. Jack Perry then recommended that the Council select the firm of Marshall & Sterling for the proposed cost of $567,748. Commissioner Stephen Towne moved and Commissioner Thomas Curley seconded to accept the New York Municipal Insurance Reciprocal (NYMIR) proposal, as adjusted for recommendations by Jack Perry, as our Property & Casualty insurance carrier for the period of May 1, 2002 through April 30, 2002. The annual cost associated with this insurance will be approximately $467,748. Commissioner Thomas Curley asked for background on previous lawsuits and their costs. Jack Perry said he did not have that information available. He said he had a total dollar amount but not a breakdown. Commissioner Thomas Curley asked about potential exposure. Jack Perry said there were only a few claims that were more than $100,000. He said generally most claims are around $50,000. Page 2 of 4 City of Saratoga Springs City Council Meeting Minutes Monday, April 22, 2002 Commissioner Thomas Curley asked if NYMIR was similar to a consortium. Jack Perry said it is a reciprocal insurance company which is licensed by New York State. He said their rating is A- which is the highest rating that can be held. He said their overall losses have not been high. Commissioner Thomas Curley asked if there were a lot of downstate municipalities in this group. Jack Perry said no more than normal. He said Washington County, Fulton County and many local villages and towns are included in this plan. Commissioner Thomas Curley asked how the liability would be treated. Jack Perry said it was both joint and severability. He said it would be a shared cost. Commissioner Stephen Towne said local municipalities include Clifton Park, Cohoes, Johnstown and Gloversville. Commissioner Thomas Curley asked what would happen if this company suffered a catastrophic claim. He asked if the participants would be assessed by what they contribute. He said he was concerned about locking into this program for five years. Jack Perry said if the City chooses to select the self-insured program, additional funds would be necessary for the third party administrator and legal fees. Commissioner Thomas Curley asked about NYMIR=s reserves. Jack Perry said their surplus is about $9,000,000. Commissioner Thomas Curley again stated that he was concerned with locking in for five years. Commissioner Stephen Towne informed Council members that the New York Conference of Mayors (NYCOM) had endorsed this carrier. Commissioner Thomas McTygue suggested that perhaps NYMIR could offer some technical assistance to the City on safety programs. He said perhaps if there were some incentives for employees accidents could be lowered. Jack Perry said that could be possible. Commissioner Thomas Curley said his biggest concern was with locking in with the company for five years. He pointed out that at this particular time the market is not good and it was difficult to predict what it may be in another year or two. Commissioner Michael Lenz said the City was in a difficult position at this time. He said we need to make a choice with what is being offered. He agreed with Commissioner Thomas McTygue that reducing claims was a key issue and educating the employees on safety could only help the City. Commissioner Thomas McTygue suggested that a committee be formed to look at this issue. Commissioner Stephen Towne said he planned to create such a committee and would return to the Council with recommendations. Page 3 of 4 City of Saratoga Springs City Council Meeting Minutes Monday, April 22, 2002 Ayes all. Commissioner Stephen Towne moved and Commissioner Thomas Curley seconded to utilize surplus funds for the excess property and casualty premium costs over and above that which was budgeted for the year May 1, 2002 through April 30,2003. The estimated amount will be approximately $234,000. Ayes all. Commissioner Stephen Towne said he would return to the Council at a later date with recommendations on establishing a safety committee. He said he would also have recommendations on the possibility of charging deductibles back to the departments. Commissioner Stephen Towne thanked both Cindy May, Insurance Coordinator and Jack Perry, Risk Manager for their work on this matter. ADJOURNMENT There being no further business, Commissioner Thomas Curley moved and Commissioner Thomas McTygue seconded to adjourn the meeting at 6:35 p.m. Ayes all. There being no further business, Commissioner Michael Lenz adjourned the meeting at 6:35 p.m. Respectfully submitted, Kathy Moran Clerk Approved: Page 4 of 4