HomeMy WebLinkAboutResolution No. 2013-44Suggested by: Administration
eti «ty °( CITY OF KENAI
RESOLUTION NO. 2013 -44
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 2013 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, 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 %,
$18,835.00 for FY14, 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 FY14
member dividend is $50,071.84 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 $50,793 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, the 2013 renewal is $63,646.15 higher than 2012 premiums, a 20.6%
increase, $48,817.49, 15.8 %, of the increase is related to workers compensation and is
due to new medical fees schedules adopted by the State in 2012; and,
WHEREAS, the remaining increase of $14,828.66, 4.8 %, is related to property and
liability premiums and is a result of new facilities such as the water treatment facility
and hardening of the insurance market; and,
WHEREAS, based upon the high quality coverage, competitive premiums and credits
totaling $119,699.84 for FY14 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 2013 -44
Page 2 of 2
PASSED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, this 19th day of June,
2013. ( _
PAT PORTER, MAYOR
ATTEST:
XWJO
San r odigh, City Clerk,,
Approved by Finance: EC
M
"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, 2013
Re: Resolution No. 2013 -44 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 FY14 City credit will be
$50,071.84 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 received the maximum property credit of 4% or
$730.19, the maximum liability credit of 15% or $9,477.77 and the maximum workers
compensation credit of 15% or $40,585.04. 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 credit in all lines of insurance for FY14 for its program. The credit equals
$50,793.00 for FY14 and is reflective of the City's active safety committee and more than 5,000
hours of safety related training taken by City personnel in FY 13.
APEI also provides a 3% longevity premium credit to members who enter into a three year
commitment for coverage with APEI. The FY14 longevity credit offered to the City is $18,835.
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 FY14 increased 20.6 %, $63,646.15 over FY13 premiums.
$48,817.49, 15.8 %, of the increase is related to workers compensation and is due to new medical
fees schedules adopted by the State in 2012. The remaining increase of $14,828.66, 4.8 %, is
related to property and liability premiums and is a result of new facilities such as the water
treatment facility and hardening of the insurance market.
Based upon the quality coverage, competitive rates, excellent service, and $119,699.84 in credits
offered to the City for renewing it coverage, I recommend renewing coverage with APEI.