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HomeMy WebLinkAboutResolution No. 2011-49the cif cy KENAI. ALASKA Suggested by: Administration CITY OF KENAI RESOLUTION NO. 2011 -49 A RESOLUTION OF THE COUNCIL OF THE CITY OF KENAI, ALASKA, AUTHORIZING THE CITY MANAGER TO ENTER INTO A THREE YEAR AGREEMENT FOR INSURANCE COVERAGE WITH ALASKA PUBLIC ENTITY INSURANCE (APEI) TO COMMENCE JULY 1 2011 AND END JUNE 30, 2014. 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, 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 FY12 member dividend is $48,529 and is based upon the City's longevity with APEI and the City's excellent insurance loss history; and, WHEREAS, in addition to receiving a member dividend the City will also receive a premium credit of 530,797 for its loss control programs; and, WHEREAS, APEI offers a 3 %, 513,785 for FY12, commitment credit to members signing a three -year commitment for coverage with APEI; 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, based upon the high quality coverage, competitive premiums and credits totaling $93,111 for FY 12 it is in the City's best interest to retain coverage with and enter into a three year commitment 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 with APEI and enter into a three year commitment for coverage to commence July 1, 2011 and end June 30, 2014. PASSED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, this 2011. 7 Carol L. Freas, City Clerk Approved by Finance: th day of June, AI A. ish 'IA. r> y. BSYL , ICE ' rOR A fy o KENAI, ALASKA /laye with a Past, C# with a Futurell 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 2, 2011 Re: Resolution No. 2011 -49 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 I, 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 FY12 City credit is $48,529. APEI provides a premium credit for active safety programs of its insured. The credit is for up to a 9.5% of the City's insurance premium net of APEI's premiums for reinsurance. Reinsurance is coverage provided by other insurance companies for liability in excess of APEI self - retention. The loss control credit requires the City to establish and operate a safety committee and provide safety training for its employees. The City will receive the maximum 9.5% credit for FY12 for its program. The credit equals $30,797 for FY12 and is reflective of the City's active safety committee and more than 4,707 hours of safety related training taken by City personnel in FYI 1. APEI also provides a 3% longevity premium credit to members who enter into a three year commitment for coverage with APEI. The FY12 longevity credit offered to the City is $13,785. 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 $93,111 in credit offered to the City for renewing it coverage, I recommend renewing coverage with APEI and entering into the attached three year agreement for coverage. The three -year agreement would be effective July 1, 2011 through June 30, 2014. A Public Ent Insurance Alaska 2233 Jordan Avenue Juneau, AK 99801 Phone: (907) 523 -9400 Fax:4907i. 586 -2008 www.akryei.com AGREEMENT TO REMAIN IN APEI PROGRAM The mission of Alaska Public Entity Insurance ( "APEI ") is to provide our members with stable, affordable insurance, broad insurance coverage, and effective risk management services to ensure that maximum funds are available for local government and education programs. APEI is a non - profit corporation, and all member contributions are allocated to, and utilized for, the payment of claims and program expenses. APEI is generally referred to as an insurance "pool ", meaning that risks, liability and expenses are shared on an equitable basis among all pool members. In order to encourage stable membership and more membership predictability, an important factor in procuring excess and reinsurance, the APEI Board of Directors has authorized the establishment of a program whereby a member's annual contribution will be discounted in exchange for an agreement to remain in the program for three years. Other than the annual allocation of the discount to the amount due from the participating member, a member's election to participate or not in this discount program will have no effect on any other aspect of the program as it relates to the member. APEI and the undersigned member of. APEI ( "Member "), for mutual consideration, hereby agree as follows: 1. Except as provided in paragraph 3 below, Member agrees to remain a member of APEI for at least three years, through the conclusion of the 2013 -2014 policy year that will end on June 30, 2014. Consistent with this paragraph, Member agrees not to give notice of intent to withdraw from the program during the three year period, and further agrees not to seek quotes during that time from other potential insurers for coverage provided under the APEI program. 2. APEI agrees to provide Member with a discount on Member's annual contributions each year for the provision of insurance coverage under the program. Each policy year, the discount shall be 3% of the net premium received by APEI. 3. If APEI determines that the net premium rate charged to Member, after deductions for excess insurance and broker commissions (not including changes in premium due to increases in Member's payroll, total insured property value, or vehicle count) is greater than 10% more than the rate charged for the preceding policy year, APEI will so notify Member and Member may, at its sole option, elect to cancel its commitment under this program without incurring charges or penalties under paragraph 4. Agreement to Remain in Program, 3/1/2011; page 2 of 2 4. If Member gives written notice to the Administrator (APEI Executive Director) of intent to withdraw from the program prior to the conclusion of this three year agreement, or otherwise acts inconsistent with the terms of this agreement, Member will forfeit all credits received during this three year term pursuant to this agreement and will be required to repay all such credits to APEI, with interest, and will further be required to pay penalties in the amount of 10% of the total premium charged for the last year Member was in the APEI program, as determined by the Administrator. 5. This agreement is effective July 1, 2011 through June 30, 2014. IN WITNESS WHEREOF, the parties hereto, acting through properly authorized officials, hereby execute this Agreement. Member: Alaska Public Entity Insurance By: By: Title: Title: Date: Date: