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HomeMy WebLinkAboutResolution No. 2012-39the d(y of KENAl. ALASKA Suggested by: Administration CITY OF KENAI RESOLUTION NO. 2012 -39 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 2012 AND END JUNE 30, 2013. 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 entered into a three year commitment with APEI for insurance coverage commencing July 1, 2011 and ending 2014; and, WHEREAS, the three year commitment with APEI entitles the City to a 3 %, S 15,639.00 for FY13, discount 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 FY13 member dividend is $57,281.65 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 wi11 also receive a premium credit of $40,677.84 for its loss control programs; and, WHEREAS, the APES, 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, the 2012 renewal is 526,848 higher than 2011 premiums, a 9.5% increase, but includes increased property values, mobile equipment values, vehicle counts, and employee covered payroll; and, WHEREAS, based upon the high quality coverage, competitive premiums and credits totaling $113,598.49 for FY13 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 with APEI continuing the three year commitment for coverage which commenced July 1, 2011 and ends June 30, 2014. Resolution 2012 -39 Page 2 of 2 PASSED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, this 20th day of June, 2012. ATTE Sand Approved by Finance: PAT PORTER, MAYOR N KENAI, A S "Village with a Past, Ci y 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 5, 2012 Re: Resolution No. 2012 -39 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 FY13 City credit is $57,281.65. APE1 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 FY13 for its program. The credit equals $40,677.84 for FY13 and is reflective of the City's active safety committee and more than 5,082.75 hours of safety related training taken by City personnel in FY12. APEI also provides a 3% longevity premium credit to members who enter into a three year commitment for coverage with APEI. The FY13 longevity credit offered to the City is $15,639. 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. The FY13 renewal represents a S26,847.63 increase, 9.5 %. The premium increase also includes increased coverage for higher property values, higher mobile equipment values, greater vehicle counts, and larger employee covered payroll. Based upon the quality coverage, competitive rates, excellent service, and $113,598.49 in credits offered to the City for renewing it coverage, I recommend renewing coverage with APEI.