BACKGROUND

The Village is self-insured for General Liability and Workers’ Compensation claims.  To limit claims exposure, the Village purchases excess insurance which is effective for each single claim over a self-insurance retention amount for Workers’ Compensation and General Liability insurance.

The Village’s excess general liability insurance is currently covered by the High Level Excess Liability Pool (HELP), with an attachment level of $2 million.  HELP is a consortium of 14 communities that have banded together to lower the cost of excess general liability insurance.  The Village also purchases an excess general liability policy for claims between $1 million and $2 million, and a Boiler & Machinery insurance policy, which includes a $100,000 deductible. 

In October 2016 the Village’s insurance broker, Arthur J. Gallagher, was directed to market the insurance coverage to companies capable of underwriting the Village’s account.  Listed below are the lowest and most responsive premium quotes recommended by our insurance broker for the Village’s consideration.

To provide the Village Board with a basis to review the insurance premium quotes, annualized premiums were computed for the 2016 Workers’ Compensation and Property/Boiler & Machinery costs.  Insurance coverages for these policies were previously for a 20-month period due to the change in the Village’s fiscal year.  The Public Entity Excess insurance policy cost for 2016 reflects the actual 12-month cost as this coverage was preceded by an 8-month policy.

INSURANCE PREMIUM SUMMARY

                                        2016               2017               Insurance        

                                    Annualized      Budget             Quotes            Difference        Carrier

Workers’ Comp             $263,845          $267,000          $273,032            $  6,032          Safety Nat’l

Property/Boiler                                                                                                                                                

  & Machinery                133,209             165,000            133,902             (31,098)         Chubb

Public Entity Excess         75,984               80,000              76,270             ( 3,730)          Argonaut

                                    $473,038          $512,000          $483,204          $(28,769)        

Annual Workers’ Comp SIR                    $750,000                     

Annual General Liability SIR                  $1,000,000                   

Notes:    SIR = Self-Insurance Retention per occurrence.

 Excess Liability Insurance starts at $2 million per occurrence and is covered by HELP.

 All insurance carriers have an A.M. Best rating of “A” and above.

Recommendation

It is recommended that the Village Board approve the 2017 insurance policies for Worker’s Compensation, Property/Boiler & Machinery, and the Public Entity Excess policy as listed under Insurance Quotes.