Memorandum 16-105 AMLJIA Insurance Coverage

Memorandum ID: 
16-105
Memorandum Status: 
Backup

Details

Memorandum 16-105

TO:                       Mayor Wythe and Homer City Council

FROM:                 Katie Koester, City Manager 

DATE:                  June 8, 2016                  

SUBJECT:         Resolution 16-073 recommending AMLJIA for insurance coverage

Insurance coverage with Alaska Municipal League Joint Insurance Association (AMLJIA) expires at the end of this month. This year the City solicited bids from the only other municipal insurer in Alaska, Alaska Public Entity Insurance (APEI) in addition to AMLJIA. Both organizations operate in a similar manner: they are not-for-profit insurance membership organizations that operate under Alaska Statues 21.76 that insure public entities.  

Attached you will find the quotes from each organization. I also requested each organization to analyze the major differences in their policies. These are summarized below.

 

AMLJIA

APEI

Cost (with  3 year agreement)

$396,487 + $35,000 Separate Marina policy ($431,487 total insurance cost to COH)

$416,371

Coverage

Higher limits for uninsured motorist and property, full replacement value for all property damage, lower deductible for police protection, offers pollution liability

In general, lower limits of insurance, property is insured at full replacement if appraised, 125% of listed value if not appraised

Reputation

Great history with COH

Professional. Good reputation among municipalities

 

Chief Robl, Finance Director Li and myself met to deliberate on the quotes and provide a recommendation to Council.  As you can see from the attached quotes, analysis, and above chart, AMJIA offers generally a higher level of coverage. Because APEI is able to offer marina coverage as part of its policy, there is a savings of $15,116 if the City were to go with APEI. However, the increased level of coverage for property and uninsured motorist more than justifies this difference in cost. Additionally, the City of Homer has had excellent coverage with AMLJIA. Not only do they provide quick and efficient response when called upon and excellent training and support, but they fight to protect the reputation of the City. An example of this is the Airport Shooting case. In general, AMLJIA has a reputation of being more likely to fight wrongful accusations in the courts than settle, which has worked out in the City’s favor. AMLJIA also has a number of programs the city has taken advantage of in the past including professional consulting and loss control programs.

Our contract with AMLJIA is for three years, with an out clause if the total cost of coverage increases by more than 10%. However, AMLJIA has committed to approaching their re-insurer about including marina insurance. If they are able to offer us marina coverage, we would no longer have to purchase a separate policy, but our rates at AMLJIA would increase by more than 10% to cover the difference. The Resolution allows the renewal rate to increase by more than 10%, but only by the cost of the separate marina policy and only if it the coverage is comparable. My main concern is the bottom line for insurance at the Ctiy of Homer, though there is value in having to deal only with one provider that we have a solid track record with. I am hopeful that AMLJIA will be able to renegotiate with their provider and offer the City this coverage in the future.

Though my recommendation is to continue with AMLJIA, we are fortunate to have two municipal insurance providers to choose from in this state that and I am confident that either firm would do an excellent job insuring the City of Homer. APEI is a long established public insurer in Alaska with over 66 members including our neighbors Soldotna and Kenai.  Though I have no direct experience working with APEI, they were very professional and comprehensive in their presentations and every municipality staff reached out to had positive things to say about APEI.

This process has been beneficial for the City and resulted in significant savings: FY16 budget for insurance is $641,372. AMLJIA’s quote plus the separate policy for marina coverage results in an annual savings of $209,000. We will realize half of the savings in this fiscal year with contract renewal in July.