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HomeMy WebLinkAboutResolution No. 2015-42Suggested by: Administration CITY OF KENAI RESOLUTION NO. 2015 -42 A RESOLUTION OF THE COUNCIL OF THE CITY OF KENAI, ALASKA, AUTHORIZING THE CITY MANAGER TO RENEW THE CITY'S INSURANCE COVERAGE WITH ALASKA PUBLIC ENTITY INSURANCE (APEI) TO COMMENCE JULY 1, 2015 AND END JUNE 30, 2016. WHEREAS, the City has been a member of APEI since July 1, 2000 receiving competitive rates and quality insurance coverage for the City; and, WHEREAS, the City has entered into a three year commitment with APEI for insurance coverage for the period of July 1, 2014 through June 30, 2017; and, WHEREAS, the three year commitment with APEI entitles the City to a 3% annual discount, $18,751.07 for FY16, on renewal premiums; and, WHEREAS, as a long -term member of APEI the City receives annual premium renewal credits based upon APEI's prescribed member dividend program. The City's FY16 member dividend is $38,021.54 and is based upon the City's longevity with APEI and the City's insurance loss history; and, WHEREAS, in addition to receiving a member dividend the City will also receive a premium credit of $48,074.50 for its loss control programs; and, WHEREAS, the APEI, three -year commitment allows the City to terminate the agreement should the City's net premium increase by more than 10% in any single year; and, WHEREAS, coverage for FY2016 will include new flood and insurance coverage for City facilities at a cost of $12,090.54. Earthquake and flood coverage has been declined in prior years; and, WHEREAS, based upon the high quality coverage, competitive premiums and credits totaling $104,847.11 for FY16 it is in the City's best interest to retain coverage with APEI for the City's insurance needs. NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, the Council authorizes the City Manager to renew its coverage for FY2016 with APEI, continuing its three year commitment for coverage which commenced July 1, 2014 and ends June 30, 2017. Resolution 2015 -42 Page 2 of 2 PASSED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, this 17th day of June, 2015. T PORTER, MAYOR "Villaye with a Past, C# with a Future" FINANCE DEPARTMENT 210 Fidalgo Avenue, Kenai, Alaska 99611 -7794 Telephone: 907 - 283 -7535 ext 221 / FAX: 907 - 283 -3014 To: Rick Koch, City Manager From: Terry Eubank, Finance Director Date: June 10, 2015 Re: Resolution No. 2015 -42 Annual Insurance Renewal. Each year the City goes through a process of renewing its insurance coverage's. The City has purchased its coverage for Alaska Public Entity Insurance (APEI) since July 1, 2000 and has always received quality insurance at competitive rates. As an insurance pool, APEI provides insurance coverage to its members. APEI has implemented a premium credit program to return excess equity to its members. Excess equity is created when insurance premiums are in excess of actual claims. APEI has determined its retained earnings are in excess of its needs and has instituted a rebate program to its members. The program rewards members for longevity with APEI and for a positive loss history. The credit is only available to entities that renew their coverage with APEI. The FY16 City credit will be $38,021.54 upon renewal. APEI provides a premium credit for active safety programs of its insured. The credit is for up to a 4.0% of the City's property insurance premium, 15% of the City's liability insurance premium, and 15% of the City's workers compensation premium, all credits are net of APEI's premiums for reinsurance. Reinsurance is coverage provided by other insurance companies for liability in excess of APEI self - retention. The City will receive the maximum for each insurance type in FY16 totaling $48,074.50. The loss control credit requires the City to establish and operate a safety committee and provide safety training for its employees. APEI also provides a 3% longevity premium credit to members who enter into a three year commitment for coverage with APEI. The FY16 longevity credit offered to the City is $18,751.07. The three -year agreement required to receive the credit allows the City to terminate the agreement at any time should the net premium for coverage increase by more than 10% from one fiscal year to the next. Based upon the quality coverage, competitive rates, excellent service, and $104,847.11 in credits offered to the City for renewing it coverage, I recommend renewing coverage with APEI and continuing the three year term for coverage which began July 1, 2014 and ends June 30, 2017.