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Iowa Risk Management Agreement_Iowa Communities Assurance PoolMasterpiece on the Mississippi TO: The Honorable Mayor and City Council Members FROM: Michael C. Van Milligen, City Manager SUBJECT: Iowa Risk Management Agreement for the Iowa Communities Assurance Pool DATE: June 14, 2011 Frank O'Connor submitted various information relative to renewing the City's liability insurance coverage with the Iowa Communities Assurance Pool. The increase is less than 1 %. Two options were presented to increase the deductible levels and reduce premiums, but Finance Director Ken TeKippe recommends the City keep the current deductible of $10,000 with a maximum cap of $100,000. Finance Director Ken TeKippe recommends City Council approval of a Revised Iowa Risk Management Agreement for the Iowa Communities Assurance Pool. I concur with the recommendation and respectfully request Mayor and City Council approval. MCVM:jh Attachment cc: Barry Lindahl, City Attorney Cindy Steinhauser, Assistant City Manager Ken TeKippe, Finance Director Michael C. Van Milligen Dubuque btAtil All- AmedcaCity 1 I I 1 2007 Masterpiece on the Mississippi Dubuque bikil Ai-America City 1 1 i f 2007 TO: Mike Van Milligen, City Manager FROM: Ken TeKippe, Finance Director (-t& �q4T SUBJECT: Iowa Risk Management Agreement for the Iowa Communities Assurance Pool DATE: June 8, 2011 Frank O'Connor submitted various information relative to renewing the City's liability insurance coverage with the Iowa Communities Assurance Pool (ICAP). A copy of the letter and benefits is enclosed. The increase is less than 1%. The FY'12 premium will be paid the first business day of the new fiscal year, July 1. A recap of several years premium is included. Two options to increase the deductible levels and reduce premiums were also provided. The reduction in premium would be $12,623 for a $15,000 liability deductible and $29,041 premium reduction for a $20,000 liability deductible. Both of these options have a maximum cap of $150,000. Our current deductible is $10,000 with a maximum cap of $100,000. I do not recommend the City accept either option since the potential premium savings would most likely be exceeded by the new maximum cap. A revised Risk Management Agreement needs to be signed this year for the Pool. It requires signature on page 10. I request that you sign and return the agreement to me. I will deliver to continue participation in the program. Frank would like the agreement returned within the next week. The City of Dubuque was the third entity to join the Pool in 1985. A similar revised agreement for the DMASWA will be sent to Don Vogt. If you have any questions on this information, please let me know. Thank you. KT /jg Enclosures cc: Barry Lindahl, City Attorney City of Dubuque ICAP Premium Recap Fiscal Year 2012 2011 2010 2009 2008 2007 General Liability 198,099.00 199,876.00 181,070.00 175,001.00 157,551.00 155,130.00 Excess 42,080.00 42,505.00 38,505.00 37,264.00 33,420.00 25,649.00 Auto Liability 131,329.00 130,644.00 122,832.00 123,568.00 116,102.00 121,653.00 Excess 43,005.00 43,005.00 39,574.00 39,722.00 38,231.00 20,069.00 Wrongful Acts Officials Liability 43,406.00 41,481.00 38,692.00 40,114.00 37,576.00 39,074.00 Excess 9,962.00 9,589.00 9,048.00 9,323.00 8,833.00 6,479.00 Law Enforcement Liability 44,652.00 42,453.00 43,583.00 49,359.00 47,246.00 46,551.00 Excess 9,263.00 8,822.00 8,911.00 10,126.00 9,690.00 6,861.00 Auto Physical Damage 83,956.00 81,089.00 134,553.00 131,732.00 120,862.00 118,006.00 Less Member Credit (36,986.55) (36,120.53) (35,357.29) (32,496.66) (35,940.90) (50,587.93) Agency Fee 7,800.00 7,200.00 7,200.00 7,000.00 7,000.00 7,000.00 Total 576,565.45 570,543.47 588,610.71 590,712.34 540,570.10 495,884.07 $12,000,000 liability limit, increased from $5,000,000 in FY'07 $10,000 liability deductible, $100,000 maximum per fiscal year Vehicle liability deductible increased from $600 to $2,500 in FY'11 F: \123DATA \FINSEC \Ken \Insurance \ICAP - O'Connor \ICAP Expense Recap.xls To: The Members of the Iowa Communities Assurance Pool From: The Board of Directors of the Iowa Communities Assurance Pool RE: Revised Iowa Risk Management Agreement for the Iowa Communities Assurance Pool We are pleased to announce we have revised the Iowa Risk Management Agreement for the Iowa Communi- ties Assurance Pool (IRMA), which is the document that sets forth the agreement among the Pool and its members. We would like to take this opportunity to share with you some information about the IRMA. The IRMA was created when ICAP was formed in 1986 and has been amended from time to time thereafter. For example, the IRMA was amended in 1989 to reflect the addition of property coverage to the ICAP program. The IRMA was amended again in 2006. Recognizing the growth in the Pool's financial strength over the previous two decades, the ICAP Board of Directors conducted a member equity and surplus evalu- ation in 2005. The evaluation showed that ICAP could return a portion of member equity and continue to maintain a strong financial position (indeed, ICAP has received an AAA Unsurpassed Financial Sta- bility Rating® for twenty consecutive years). Consequently, the IRMA was amended in 2006 to reduce the Cumulative Reserve Fund (CRF) maintenance level, which resulted in the return of a portion of vested members' contributions to the CRF. And now, in 2011, we are at it again! We recently revisited our evaluation of member equity and surplus and concluded that ICAP could return a portion of member equity and continue to maintain a strong financial position. This is one of the many advantages of pooling with ICAP - returning Pool surplus to its membership! Accordingly, we have amended the IRMA again to provide flexibility with respect to CRF maintenance levels and distributions and to provide for another return of a portion of vested members' contribu- tions to the CRF. And while we were making those changes, we updated and modified the agreement in various other areas as well. The following are some changes that were made (this is not a comprehensive list; the revised IRMA should be reviewed in its entirety): • We revised the introduction to set forth the history of the IRMA and to include citations to the pooling statute; • We merged the content of the Property Rider into the main body of the IRMA; • We modified Article III to delete references to terms that are no longer used, add definitions from the Property Rider, and revise existing definitions; • We modified Article VI and added provision 13, which relates to distributions of surplus; • We included the Property Budgetary Fund (formerly in the Property Rider) and clarified the pur- poses of each fund (Article IX, X and XI); • We provided flexibility with respect to surplus and deficiencies in the casualty and property funds (Articles IX and X); • We provided flexibility with respect to CRF funding, maintenance and distributions (Article XI); and • We clarified the CRF refund formula (Article XII). In addition, we made several other changes and reorganized the content of the IRMA to make it easier to read. Your ICAP agent will present the revised IRMA to you and will ask that you return a signed copy with your entity's anniversary materials. If you have any questions regarding the revised IRMA -- or any other ICAP document -- please ask your ICAP agent. On a final note, this year ICAP celebrates its 25th anniversary. Congratulations ICAP members on 25 years of success! ICAP's success is due, in no small part, to your dedication and long -term commit- ment, and so we are extending a sincere note of appreciation with this new document. Thank you for your membership in ICAP. Together we are making ICAP the premier local government risk sharing pool in the country. Sincerely, The Board of Directors of the Iowa Communities Assurance Pool Jody Smith Larry Burger Pam Ward Gary Mahannah Holly Fokkena Bill Peterson David Hageman Tom Roth Alan Kemp ortties Ass 0 \' CI 0 1986 I 2011 SCOPE OF COVERAGE APPENDIX The Iowa Communities Assurance Pool may provide the following: 1. Coverage Documents a. Coverages offered by the Pool may include: 3. Limits of Coverage 4. Deductibles ICAP IRMA APPENDIX 2011 General Liability Automobile Liability Automobile Physical Damage Public Officials Liability Property and Inland Marine Police Professional Liability Workers' Compensation Public Officials Bonds b. THE COVERAGES LISTED ABOVE ARE INTENDED TO BROADLY OUTLINE THE PROGRAM THAT MAY BE PROVIDED BY THE POOL. SEPARATE RISK SHARING CERTIFICATES ITEMIZING ALL COVERAGE INCLUSIONS, EXCLUSIONS AND CONDITIONS WILL BE ISSUED TO EACH POOL MEMBER. THE RISK SHARING CERTIFICATES AND THE IOWA RISK MANAGEMENT AGREEMENT FOR THE IOWA COMMUNITIES ASSURANCE POOL, AS AMENDED FROM TIME TO TIME, CONTROL THE POOL MEMBER'S SCOPE AND TERMS OF COVERAGE. 2. Pool Retention Casualty: The Pool may retain up to $350,000 of any one claim or loss. Property: The Pool may retain up to $150,000 of any one claim or loss. The Pool offers limits of coverage above the Pool Retentions through various risk - sharing, reinsurance and excess arrangements. Such additional limits are offered subject to availability of reinsurance. Deductibles may be applied as appropriate to the individual risk, subject to the approval of the Administrator. NOTICE: CONFIRMATION OF THE SCOPE, TERMS AND CONDITIONS OF THE COVERAGE OF ANY MEMBER OF THE POOL CAN ONLY BE MADE BY A CAREFUL EXAMINATION OF THAT MEMBER'S RISK SHARING CERTIFICATES. IOWA RISK MANAGEMENT AGREEMENT FOR THE IOWA COMMUNITIES ASSURANCE POOL Whereas, Section 670.7 of the Code of Iowa, as the same may be amended from time to time, authorizes and permits Governmental Authorities to form, join, and pay funds into a local government risk pool to protect against any or all liability. Whereas, in 1986, certain Governmental Authorities formed a local government risk pool by entering into an agreement bearing the title Intergovernmental Contract_ for the Iowa Communities Assurance Pool, which agreement has been amended from time to time and is now referred to as the Iowa Risk Management Agreement for the Iowa Communities Assurance Pool (Agreement); Whereas, since 1986, additional Governmental Authorities have joined the Pool by executing the Agreement; Whereas, the Board desires to update the Agreement and hereby amends and restates the Agreement in its entirety as set forth herein; and Now, therefore, all new and existing Members agree to abide by the terms and conditions of this Agreement and all actions taken pursuant to this Agreement. In consideration of the mutual covenants of all signatories hereto, it is agreed as follows: ARTICLE I - NAME AND DURATION The signatories hereto, together with future signatories, establish a local government risk pool as a separate legal and administrative entity for the purpose of effectuating this Agreement. The local government risk pool created by this Agreement shall be known as the Iowa Communities Assurance Pool and shall have a perpetual duration and shall continue until terminated pursuant to this Agreement. ARTICLE II - PURPOSE The purposes of this Agreement are to form a local government risk pool pursuant to Section 670.7 of the Code of Iowa, as amended, protect against any or all liability, provide for joint or cooperative action by Members relative to their financial and administrative resources, provide risk management services and risk sharing facilities to the Members and to the Members' employees, and defend and protect any Member against liability in accordance with this Agreement and the risk sharing certificates. The Pool is not insurance and the Pool's activities and operations pursuant to this Agreement shall not constitute conducting an insurance business. This Agreement shall constitute a contract among those Governmental Authorities that are currently Members or that at any time enter into this Agreement and become Members of the Pool. The liability of each Member is limited to the amount of financial contributions required to be made to the Pool pursuant to this Agreement. This Agreement shall not inure to the benefit of third parties nor does any party hereto waive, by becoming a Member of the Pool, such sovereign or governmental immunity as may be available to it individually. Except as provided for herein, no Member shall be responsible, jointly or severally, for the liabilities of any other Member. ARTICLE III - DEFINITIONS In the interpretation of this Agreement the following definitions shall apply unless the context requires another interpretation: 1. "Administrator" shall mean American Risk Pooling Consultants, Inc., and its successors and assigns, the entity designated to supervise the administration of the Pool and to perform those duties delegated to it by the Board and those duties set forth in the Administration Agreement incorporated herein by reference. 2. "Agreement" shall mean this Iowa Risk Management Agreement for Iowa Communities Assurance Pool, including all attachments, appendices and amendments hereto and all of its counterparts. 3. "Annual Casualty Budgetary Contribution" shall mean those contributions made by Members pursuant to Article IX. ICAP IRMA 2011 Page 1 of 10 4. "Annual Property Budgetary Contribution" shall mean those contributions applicable to coverage for Property Risks made by Members pursuant to Article X. 5. "Basis Rate" shall mean that amount annually promulgated by the Administrator deemed necessary to provide the Scope of Coverage afforded to a Member for the period of one year. 6. "Board" shall mean the Board of Directors of the Iowa Communities Assurance Pool. 7. "Casualty Budgetary Fund" shall mean that fund established and maintained pursuant to Article IX, which may be supplemented by investment income. 8. "Cumulative Reserve Fund" also referred to herein as the "CRF" shall mean that fund established and maintained pursuant to Article XI, which may be supplemented by investment income. 9. "Deficiency" shall mean the amount withdrawn from surplus, including without limitation the CRF, to fulfill the purposes of either budgetary fund should either budgetary fund become exhausted during any Pool fiscal year. 10. "Director" shall mean a member of the Board of Directors of the Iowa Communities Assurance Pool. 11. "Governmental Authorities" shall mean without limitation, cities, counties, townships, school districts, and any other unit of local government exercising quasi - legislative, quasi-judicial, or quasi- executive power over a territory comprised of municipalities, except soil and water conservation districts. 12. "Member" shall mean a Governmental Authority participating in the Iowa Communities Assurance Pool by approving and executing this Agreement. 13. "Pool" shall mean the Iowa Communities Assurance Pool, an unincorporated association of all of its Members. 14. "Property Budgetary Fund" shall mean that fund established and maintained pursuant to Article X, which may be supplemented by investment income. 15. "Property Coverage" shall mean the coverage afforded a Member for Property Risk as outlined in the Scope of Coverage and the Member's Property Risk Sharing Certificate and subsequent amendments and /or endorsements thereto. 16. "Property Risk" shall mean Property, Vehicle Physical Damage, Inland Marine, Fidelity and other similar coverage commonly provided to a Governmental Authority. 17. "Property Risk Sharing Certificate" shall mean that document provided to a Member evidencing its scope, nature and limits of Property Coverage participation in the Pool. 18. "Casualty Risk Sharing Certificate" shall mean that document provided to a Member evidencing its scope, nature, and limits of participation in the Pool. 19. "Scope of Coverage" shall mean the coverage, limits, and deductibles as outlined in the Appendix and subsequent amendments and /or endorsements thereto. ARTICLE IV - MEMBERSHIP The membership of the Pool shall consist of Governmental Authorities that have entered into this Agreement by and through an individual duly authorized by the governing body of the Governmental Authority to execute this Agreement. Members agree to the admission of future Members and acknowledge that they shall have no right to object to the addition of new Members provided the new Members are admitted in accordance with the terms hereof. This Agreement shall automatically renew and continue in force unless the provisions for withdrawal or termination are applied. Each Member shall appoint an individual and an alternate to represent the Member with the Pool. That individual shall act as liaison between the Member and the Pool and shall communicate to the Member risk reduction and loss control information, and any other information or instructions concerning the obligations of the Member imposed by this Agreement and the rules and regulations established hereunder. Either the individual or alternate shall vote on behalf of the Member. ICAP IRMA 2011 Page 2 of 10 Members of the Pool shall: l . Promptly report to the Pool any incident that could result in a claim being made by or against the Member within the Scope of Coverage; 2. Cooperate with the Board and Administrator in establishing, to the degree possible, loss control procedures required by the Board and Administrator; 3. Provide to the Pool such information as needed for rating purposes, including, but not limited to, an audit prepared by the Member's staff or a certified public accountant of all revenues and expenditures by the Member for any fiscal year of the Member for which figures are requested by the Administrator and/or the Pool; 4. Provide access to all records, including financial records and/or properties of the Member upon request of the Administrator and/or representatives of the Pool; 5. Cooperate with the Pool's attorneys, claims adjusters, the Administrator and any employee, officer or subcontractor relating to the purpose, powers and work of the Pool; 6. Allow attorneys and others employed by the Pool to represent the Member in investigation, settlement, and all levels of litigation arising out of any claim made against the Member within the Scope of Coverage furnished by the Pool; and 7. Pay when due all contributions or other monetary obligations, due or required, pursuant to this Agreement. ARTICLE V - BOARD OF DIRECTORS l . Administration of the Pool. The administration of the Pool and management of the Casualty Budgetary Fund, Property Budgetary Fund, and the Cumulative Reserve Fund shall be governed by the seven (7) voting Directors. 2. Director's Qualifications. Directors shall be either: (a) elected or appointed officials of Pool Members, or (b) representatives or employees of a Pool Member. 3. Board Composition. The Board shall be comprised of two (2) Directors affiliated with county Members, three (3) Directors affiliated with city Members, and two (2) at -large Directors. The Board may periodically appoint no more than three (3) additional, non- voting Directors representing sponsoring organizations. Non - voting Directors may not be an officer of the Pool or a member of the Executive Committee. 4. Term of Directors and Resignation. Directors shall serve a term of four (4) years or until such new Director or Directors are elected. Director terms shall be staggered so that no more than three (3) Directors are up for election in any one (1) year. There shall be no prohibition on successive terms. Directors may resign by sending notice of resignation to the Board. 5. Election Procedures. Director elections shall be by majority vote and shall be held annually within forty -five (45) days before the close of the fiscal year of the Pool. Members may nominate candidates for the Director positions affiliated with their specific class (city or county) and the at -large Director positions. Each Member shall have one (1 vote for each Director position up for election, which may be cast in person, by proxy, electronically or by mail. 6. Eligibility and Vacancies. Should the number of voting Directors become less than seven (7) due to disqualification, death, incompetence, resignation or other cause, the remaining Directors shall appoint by majority vote a person or persons to fill such vacancy or vacancies so that a Board of seven (7) Directors shall be maintained. The new appointee(s) shall be of the same class (city, county or at- large) of the vacated Director(s) and shall serve the remaining portion of the term of the vacated Director(s). 7. Board Meetings. Meetings of the Board shall be held at least annually at such time as it shall prescribe. Any item of Pool business may be considered at a meeting where a quorum of four (4) voting Directors is present. Special meetings may be called by the Administrator or by a majority of the Board. Meetings may be held by telephone, electronically, or by written executed document. 8. Executive Committee. At the first meeting of each fiscal year, by majority vote the Board shall select no more than three (3) voting Directors to form an Executive Committee. Membership of the Executive Committee may be changed at any time by a ICAP IRMA 2011 Page 3 of 10 two - thirds majority vote of the Board. The Executive Committee shall inform and direct the Administrator on Board policy and shall exercise powers for and on behalf of the Board as it deems necessary for the prudent operation and management of the Pool until matters requiring Board action are considered at the next Board meeting. 9. Directors Compensation. The Directors shall be entitled to reimbursement of actual expenses incurred in the pursuit of Pool business and such other reasonable and lawful compensation as may be awarded from time to time by a majority vote of the Board. 10. Officers. At the first meeting of each fiscal year, by majority vote the Board shall select from the seven (7) voting Directors a Chair, Vice Chair and Secretary. Officers may be changed at any time by a two - thirds majority vote of the Board. The Officers shall inform and direct the Administrator on Board policy and shall exercise powers for and on behalf of the Board as it deems necessary and prudent for the operation and management of the Pool. 1 1 . Clerk. The Administrator or designee shall serve as clerk to the Board and shall attend all Board meetings. ARTICLE VI - BOARD POWERS AND DUTIES The Board shall be permitted and authorized to perform and carry out, or delegate to others to perform and carry out on behalf of the Pool, each and every act necessary, convenient or desirable for carrying out the purpose of the Pool, including but not limited to: 1. Administer a local government risk pool, receive Members' contributions and contractual obligations to the Pool, and settle and pay claims and losses on behalf of its Members; 2. Make and enter into contracts to conduct and operate the business of the Pool, including, but not limited to, the execution of any Administration Agreement; 3. Employ agents and employees; 4. Incur debts, liabilities and obligations on behalf of the Pool, but no debt, liability or obligation so incurred shall be the specific debt, liability or obligation of any Member to this Agreement; 5. Engage in legal actions deemed necessary by the Board and/or Administrator and prosecute and defend claims against the Board. Pool, and Director(s); 6. Acquire, hold or dispose of real and personal property; 7. Advise Members on loss control guidelines and procedures, and provide them with risk management, loss control, and risk reduction services and information; 8. Purchase reinsurance and/or excess insurance and enter into such excess risk sharing pools as may be available and deemed desirable for the protection of the Members and /or the Pool itself; 9. Invest Pool funds and securities and investments in a prudent, lawful manner and direct where investment earnings may be applied; 10. Promulgate procedures and regulations for the general operation of the Pool and the general administration of this Agreement, including Board procedures; 11. Take such action as is necessary to cancel the participation/terminate the contract of any Member as provided herein; 12. Provide surety and/or fidelity bonds, as may be available, for Directors, Officers, and all persons charged with the custody or investment of Pool monies. 13. Authorize distributions of any surplus, including without limitation, casualty and property surplus and the Cumulative Reserve Fund. The Board shall have the sole authority to establish a basis for distribution and decide when the distribution of surplus shall be made and the amount to be distributed. ICAP IRMA 2011 Page 4 of 10 ARTICLE VII - ADMINISTRATOR The Board shall have the authority to hire the Administrator and delegate to the Administrator certain powers and duties as the Board shall deem advisable, and all signatories hereto ratify and endorse the Administration Agreement currently in effect between the Pool (executed by the Board) and the Administrator. The undersigned further acknowledges that in the event the Administration Agreement has been executed prior to the execution of this Agreement, the undersigned ratifies and adopts the Administration Agreement currently in effect. At least annually the Board shall receive a report from the Administrator. The nature and details of the report shall be established by the Board and shall be in addition to any reports that the Administrator shall be required to file with any regulatory authority having jurisdiction over the Pool. ARTICLE VIII - LIABILITY OF THE BOARD, ADMINISTRATOR, SUBCONTRACTORS AND EMPLOYEES The Directors of the Pool and the Administrator, its directors, officers, employees, and subcontractors shall: 1. Use reasonable and ordinary care in the exercise of their duties hereunder; 2. Be afforded all of the privileges and immunities that attach generally to governmental officers; 3. Not be liable for, and be held harmless and defended by the Pool, for any act, omission, or any other action, made, taken or omitted in good faith; and 4. Not be liable for any loss incurred through investment of funds, securities and investments or failure to invest the same. Pool funds may be used to purchase insurance providing coverage for Directors, Officers and the Administrator. The Pool shall, and the undersigned agrees that the funds of the Pool shall be used to, indemnify, hold harmless and defend any Director, Officer, Administrator or its employees (including its officers) or its subcontractors for any act or omission taken or omitted in good faith by the Board or a Director or by the Administrator, its employees (including its officers) or its subcontractors relating to or arising out of the conduct of Pool business. The hold harmless and indemnity provisions of this Article shall be considered an expense of the Pool and in no event shall any individual signatory be liable for more than its pro rata contractual obligation. Neither the Administrator, its employees (including its officers) nor any of its subcontractors shall be liable for any act, omission, or any other action, made, taken or omitted in good faith, nor for any loss incurred through investment of funds, securities and investments or failure to invest the same, unless the same is the result of a willful act done in bad faith. No covenant or agreement contained herein shall be deemed to be the covenant or agreement of any member of the Board or the Administrator nor any of its employees (including its officers) or subcontractors, and none of such persons shall be subject to any personal liability or accountability by reason of the acceptance of a position or the undertaking of the performance of any of the responsibilities, obligations, or duties contemplated in the carrying out of this Agreement, whether by virtue of any construction, statute or rule of law. ARTICLE IX - ESTABLISHMENT AND MAINTENANCE OF THE CASUALTY BUDGETARY FUND The Board shall establish and maintain a Casualty Budgetary Fund for the purpose of: I. Funding the Pool's general and administrative expenses for casualty; 2. Funding the Pool's casualty reinsurance and excess expenses; 3. Funding the Pool's claims and claims expenses; 4. Funding all or any portion of any Deficiencies which may occur from withdrawals from the Cumulative Reserve Fund and/or the Property Budgetary Fund; 5. Funding the Pool's obligation to satisfy the requirements of any regulatory authority and the Pool's obligations and expenses set forth in this Agreement; and establishing and maintaining surplus in a reasonable amount deemed appropriate by the Board. At least thirty (30) days prior to the Pool's fiscal year end, the Administrator shall prepare an Annual Casualty Budget for the succeeding fiscal year, which shall consist of the foregoing items in amounts deemed sufficient for the succeeding fiscal year; the total of which shall be known as the Annual Casualty Budget. ICAP IRMA 2011 Page 5 of 10 Each Member's share of the Annual Casualty Budget shall be allocated to the Member as its Annual Casualty Budgetary Contribution and shall be in the proportion that each Member's total paid Basis Rate bears to the total paid Basis Rates of all Members as of the date of such calculation, modified to reflect the loss experience of the Member and with due consideration to the Member's individual characteristics. In the event that there shall exist a surplus in the Casualty Budgetary Fund at the end of the Pool's fiscal year, any portion of or all of such surplus maybe retained by the Pool as surplus or applied toward the Annual Casualty Budget for the subsequent year. In the event that the Casualty Budgetary Fund is exhausted during any Pool fiscal year, any funds required to fulfill the purpose of the Casualty Budgetary Fund may be withdrawn from the Cumulative Reserve Fund and/or the surplus within the Property Budgetary Fund. The sum so withdrawn shall constitute a Deficiency and shall be repaid with funds from the Casualty Budgetary Fund in the time and manner prescribed by the Board. ARTICLE X - ESTABLISHMENT AND MAINTENANCE OF THE PROPERTY BUDGETARY FUND The Board shall establish and maintain a Property Budgetary Fund for the purpose of: 1. Funding the Pool's general and administrative expenses for property; 2. Funding the Pool's property reinsurance and excess expenses; 3. Funding the Pool's losses and loss expenses for Property Risks; 4. Funding all or any portion of any Deficiencies which may occur from withdrawals from the Cumulative Reserve Fund and /or the Casualty Budgetary Fund; 5. Funding the Pool's obligation to satisfy the requirements of any regulatory authority and the Pool's obligations and expenses set forth in this Agreement; and establishing and maintaining surplus in a reasonable amount deemed appropriate by the Board. At least thirty (30) days prior to the Pool's fiscal year end, the Administrator shall prepare an Annual Property Projection for the succeeding fiscal year, which shall consist of the foregoing items in amounts deemed sufficient for the succeeding fiscal year; the total of which shall be known as the Annual Property Projection. Each Member's share of the Annual Property Projection shall be allocated to the Member as its Annual Property Budgetary Contribution, which shall be due on the Member's Property Risk Sharing Certificate anniversary date. In the event that there shall exist a surplus in the Property Budgetary Fund at the end of the Pool's fiscal year, any portion of or all of such surplus may be retained by the Pool as surplus or applied toward the Annual Property Projection for the subsequent year. In the event that the Property Budgetary Fund is exhausted during any Pool fiscal year, any funds required to fulfill the purpose of the Property Budgetary Fund may be withdrawn from the Cumulative Reserve Fund and /or the surplus within the Casualty Budgetary Fund. The sum so withdrawn shall constitute a Deficiency and shall be repaid with funds from the Property Budgetary Fund in the time and manner prescribed by the Board. ARTICLE XI - ESTABLISHMENT AND MAINTENANCE OF THE CUMULATIVE RESERVE FUND The Board shall establish and maintain a Cumulative Reserve Fund for the purpose of providing funds in the event that the Casualty Budgetary Fund and /or the Property Budgetary Fund are exhausted during any Pool fiscal year and establishing and maintaining surplus in an amount deemed appropriate by the Board. In addition to the Annual Casualty Budgetary Contributions made to the Casualty Budgetary Fund pursuant to Article IX, Members purchasing casualty coverage shall make annual contributions to the CRF until each Member's annual contributions to the CRF total the amount required by the Board, which shall not exceed 300% of Basis Rate. Such contributions shall be based on each Member's Basis Rate in accordance with the following schedule (prorated as needed): Initial Contribution First Anniversary Second Anniversary Third Anniversary Fourth Anniversary Fifth Anniversary ICAP IRMA 2011 Page 6 of 10 100% of Basis Rate 75% of Basis Rate 50% of Basis Rate 30% of Basis Rate 25% of Basis Rate 20% of Basis Rate Thereafter, no contribution shall be made to the CRF unless the Board shall require contributions for the purpose of maintaining the CRF at a level determined by the Board not to exceed 300% of Basis Rate or to comply with the requirements of any applicable regulatory authority having jurisdiction over the Pool. The Board may authorize distributions of Cumulative Reserve Funds to fully vested Members whose CRF balance exceeds the level determined by the Board for a distribution. The Board shall have the sole authority to establish a basis for distribution and decide when the distribution of surplus shall be made and the amount to be distributed. ARTICLE XII - MEMBER WITHDRAWAL, CANCELLATION, OR TERMINATION OF CASUALTY COVERAGE The provisions of this Article pertain exclusively to casualty coverage. 1. Members agree to continue membership for a period of not less than one full year. At the conclusion of such period, or anniversary thereof, a Member who has given sixty (60) days prior written notice to the Pool may withdraw. Within one hundred twenty (120) days following withdrawal, the Pool shall apply the following formula to determine the amount (if any) to be refunded to the withdrawing Member. The formula to determine the amount (if any) to be refunded to the withdrawing Member shall be calculated as follows: The withdrawing Member's "Vested Interest in CRF Contributions" minus distributions of CRF received by the withdrawing Member; minus the Annual Casualty Budgetary Contribution which the withdrawing Member would have made for the one year period following withdrawal; minus the withdrawing Member's proportionate share (determined in the same proportion as contributions) of any Deficiencies Total: to be received by the withdrawing member As used herein, "Vested Interest in CRF Contributions" shall mean the percentage of CRF contributions made to the Pool by said withdrawing Member according to the following vesting schedule: End of Member's First Full Year 50% End of Member's Second Full Year 60% End of Member's Third Full Year 70% End of Member's Fourth Full Year 80% End of Member's Fifth Full Year 90% End of Member's Sixth Full Year and thereafter 100% Effective 12:01 a.m. on the date of withdrawal and notwithstanding anything contained to the contrary within this Agreement or the Casualty Risk Sharing Certificate issued pursuant to this Agreement, payments for all claims and claims expense shall thereafter become the sole responsibility of the withdrawing Member without regard to whether a claim occurred or was reported prior to the withdrawal of the Member's participation in the Pool. At the request of the withdrawing Member, the Pool will continue to service all claims which have been reported to the Pool during the withdrawing Member's period of participation so long as the withdrawing Member shall promptly reimburse the Pool for all claims expenses incurred. Payment of all claims so serviced by the Pool for a withdrawing Member shall be the sole responsibility of the withdrawing Member and the Pool shall incur no liability for payment of claims by virtue of servicing claims under the terms of this paragraph. 2. The Pool may, by a two- thirds (2/3) majority vote of the Board and by providing a Member sixty (60) days prior written notice, cancel a Member's participation in the Pool effective at the end of any Casualty Risk Sharing Certificate year. Thereafter it shall be the responsibility of the Pool to defend, settle and pay claims within the scope and limits set forth in the cancelled Member's Casualty Risk Sharing Certificate in effect on the date of the occurrence out of which such claim arose. This responsibility of the Pool to defend, settle and pay claims shall apply solely to claims that occurred during the cancelled Member's participation and evidenced by the Member's Casualty Risk Sharing Certificate. The cancelled Member shall have the right, prior to the actual date of cancellation, to withdraw from the Pool by giving notice of such withdrawal. Electing to so withdraw, the ICAP IRMA 2011 Page 7 of 10 Member shall be subject to the provisions of section one (1) of this Article. Failure to elect to give notice of withdrawal, the cancelled Member forfeits all rights to a refund pursuant to the formula set forth in section one ( 1 ) of this Article. 3. Any Member failing to make payments when due as required by this Agreement shall be terminated from the Pool effective on the date the payment was due and upon that effective date of termination all coverages and benefits hereunder shall cease. All claims and claims expenses thereafter shall become the sole responsibility of the terminated Member without regard to whether a claim occurred or was reported prior to the termination of the Member's participation in the Pool. At the request of the terminated Member, the Pool will continue to service all claims which have been reported to the Pool during the terminated Member's period of participation so long as the terminated Member shall promptly reimburse the Pool for all claims expenses incurred. Payment of all claims so serviced by the Pool for a terminated Member shall be the sole responsibility of the terminated Member and the Pool shall incur no liability for payment of claims by virtue of servicing claims under the terms of this paragraph. The terminated Member shall also forfeit all rights to any return of contributions including a refund pursuant to the formula set forth in section one (1) of this Article. The Pool shall apply any or all of the terminated Member's forfeited funds towards said Member's Annual Casualty Budgetary Contribution due for the one (1 ) year period following termination. If the Member shall subsequently submit its payment, the Administrator may, in its discretion, reinstitute such membership. 4. If a Member created pursuant to Section 28.6 of the Code of Iowa, as amended, dissolves and ceases to exist by resolution of the governing body without a statutory or contractual procedure that provides for the distribution of liabilities, the Pool agrees to continue to service and pay, to the extent of the coverage provided pursuant to said Member's Casualty Risk Sharing Certificate and this Agreement, all claims that are properly reported to the Pool that occurred during said Member's period of membership in the Pool in exchange for said Member's release of all rights to any return of contributions, including a refund pursuant to the formula set forth in section one (1) of this Article, and relinquishment of same to the Pool. Nothing herein shall be deemed to increase the amount or type of said Member's coverage and all other conditions of the Casualty Risk Sharing Certificate and this Agreement shall continue to apply. ARTICLE XIII - SCOPE OF RISK SHARING PROTECTION 1. The Pool provides risk sharing protection to each Member and will make or secure payment on behalf of each Member under criteria and procedures to be established for the payment of claims and losses as provided in the Member's risk sharing certificates. A Member may, with the approval of the Administrator, add additional parties to its risk sharing certificates. 2. The Pool may obtain excess insurance, reinsurance, or join in excess risk sharing pools as may be available to the Pool. 3. In the event that a claim or loss or a series of claims or losses exceed the amount of risk sharing protection provided by the Member's risk sharing certificates, or in the event that a claim or loss or a series of claims or losses should exhaust the Casualty Budgetary Fund, the Property Budgetary Fund, the Cumulative Reserve Fund and any reinsurance, then payment of claims and losses shall be the sole and separate obligation of the individual Member or Members against whom the claim was made or the loss was incurred. 4. The Pool's retention in any one claim or loss is limited to that amount stated under "Pool Retention" in the Appendix. The Pool shall have no responsibility to respond to claims or losses in excess of the stated retention except to the extent that such sums are recoverable from reinsurance or excess insurance. The Pool shall use its best effort to collect or recover any reinsurance running to or benefiting the Pool. The failure of such reinsurance or excess insurance to respond to any request for payment shall in no way increase the Pool's liability to an amount greater than that stated as the Pool retention. 5. A Member may purchase, in its sole discretion, any insurance coverage in addition to those amounts provided by the Pool. 6. The Board may make changes in the Scope of Coverage, the amount of risk sharing protection or risk sharing retention by the Pool upon consideration of the needs and requirements of Members, loss experience, the kind and amounts of reinsurance coverage available and any such changes shall require a two - thirds (2/3) majority of the Board. When the Board makes changes in the Scope of Coverage, notice after the taking of such action shall be sent to all Members (or their representatives) at the next certificate anniversary together with a replacement or updated Appendix to reflect the changes made. ARTICLE XIV - TERMINATION The Pool shall terminate at such time as two- thirds (2/3) of the Members vote for such termination. After a vote to terminate, the Board shall commence with the orderly liquidation of the Pool's business and shall complete the same as promptly as possible. During such period of liquidation the Pool shall continue to pay claims and losses incurred within the Scope of Coverage and pursuant to the risk sharing certificates until all funds of the Pool are exhausted. After payment of all claims and losses, any ICAP IRMA 2011 Page 8 of 10 • remaining funds held by the Pool shall be paid to all Members of the Pool at the time of the vote of termination, on a pro rata basis determined by the Board. No Member shall be responsible for any claim, claims, judgment or judgments against any other Member or Members except to the extent of the assets of the Cumulative Reserve Fund, the Casualty Budgetary Fund and the Property Budgetary Fund. However, if upon termination of the Pool the remaining assets of the Pool are insufficient to satisfy indebtedness of the Pool (excluding claims or judgments against the Members), such deficiency shall be made up by the Members of the Pool by a fair and reasonable method established by the Board. ARTICLE XV — PROVISIONS PERTAINING TO PROPERTY COVERAGE The provisions of this Article pertain exclusively to Property Coverage. I. Members agree to continue Property Coverage for a period of not less than one (1) full year. At the conclusion of such period, or anniversary thereof, a Member may terminate such coverage by giving notice to the Pool at least thirty (30) days prior to the end of such period. A Member's election to cease Property Coverage shall not constitute a withdrawal from the Pool under any other terms and conditions of this Agreement. 2. Termination for Non - Payment. In the event that a Member does not make its Annual Property Budgetary Fund Contribution, all Property Coverage shall terminate on the date when such contribution was due (the Property Termination Date). If the Member shall subsequently submit its payment, the Administrator may, in its discretion, reinstate Property Coverage. 3. Termination Other Than Non- Payment. The Pool may, by a two- thirds (2/3) majority vote of the Board, terminate a Member's Property Coverage for reasons other than non- payment by giving notice to the Member of such termination at least sixty (60) days prior to the end of any Property Risk Sharing Certificate year. The notice of termination shall state the last day of the then - expiring Property Risk Sharing Certificate year as the effective date of termination (the Property Termination Date), at which time the coverage provided by the Property Risk Sharing Certificate shall terminate. 4. Property Coverage applies only to losses that occur prior to the Property Termination Date. All rights for reimbursement and any right to make a claim against the Pool shall terminate for losses that occur after the Property Termination Date. ARTICLE XVI - MISCELLANEOUS PROVISIONS 1. The provisions of this Agreement shall be interpreted pursuant to the laws of the State of Iowa. 2. The parties hereto consent that courts in the State of Iowa shall have jurisdiction over any dispute arising under this Agreement. The terms of this Agreement may be enforced in a court of law in the State of Iowa either by the Pool or by any Member. 3. The consideration for the obligations imposed upon Members pursuant to and under this Agreement shall be based upon the mutual promises and agreements of all Members who now execute or who hereinafter execute this Agreement. 4. The Board shall make available to requesting Members a copy of the annual audit of the financial affairs of the Pool within a reasonable time after the end of the fiscal year. The audit shall be made by a certified public accountant in accordance with generally accepted auditing principles which must make it possible both: (a) to present fairly and with full disclosure the financial operations of the Pool; and (b) to determine and demonstrate compliance with finance- related legal and contractual provisions. 5. This Agreement may be executed in duplicate originals or counterparts now or at any time in the future. The individual executing this Agreement on behalf of the participating Member hereby represents and certifies that he is duly empowered to so execute this document. 6. No waiver of any breach of this Agreement or any provision herein contained shall be deemed a waiver of any preceding or succeeding breach thereof or of any of the other provisions herein contained. No extension of time for performance of any obligation or act shall be deemed an extension of time for performance of any other obligations or acts. 7. This Agreement shall be binding and shall inure to the benefit of all Members who shall have executed this Agreement and complied with the financial requirements hereunder; provided that the Members shall have been duly approved in accordance with the terms and provisions of this Agreement. ICAP IRMA 2011 Page 9 of 10 8. The provisions of this Agreement shall be deemed severable and if any provision or part thereof is held illegal, void or invalid under applicable law, such provision or part may be changed to the extent reasonably necessary to make the provision or part, as so changed, legal, valid or binding. If any provision of this Agreement is held illegal, void, or invalid in its entirety, the remaining provisions of this Agreement shall not in any way be affected or impaired but shall remain binding in accordance with their terms and this Agreement shall be so interpreted. 9. This Agreement, the Appendix, and the risk sharing certificates contain the complete Agreement between the parties and no representations or oral statements made or heretofore given shall constitute a part of this Agreement. In the event that any provision of this Agreement is in conflict with or is incompatible with the Appendix or attachments hereto or the risk sharing certificates issued hereunder, the terms and conditions of this Agreement shall prevail and take precedence. 10. This Agreement may be altered or amended only by amendments duly adopted in accordance with the terms and conditions of this Agreement; provided, however, that the risk sharing certificates may be amended from time to time to reflect the exposures of each Member and such changes shall be exempted from the preceding ternis of this paragraph. 11. The caption headings used in this Agreement are used merely for identification purposes and shall not be deemed apart of this Agreement. 12. Whenever in this Agreement words, including pronouns are used in the singular or plural, or masculine or feminine they may be read and construed in the plural or singular, or feminine or masculine, respectively, wherever they so apply. 13. This Agreement may be amended by the Board with the approval of two- thirds (2/3) of the Directors. Amendments shall be sent to all Members (or their representatives) at the next risk sharing certificate anniversary. All Members agree to accept, as a condition of their membership in the Pool, those amendments adopted from time to time by the Board. 14. The Board may, with the approval of two - thirds (2/3) of the Directors, elect to reform or reconstitute the Pool to a stock, mutual, or reciprocal insurance company operating as a captive, Risk Retention Group, or other risk bearing entity. 15. The Pool shall maintain a fiscal year ending December 31. 16. The parties acknowledge and agree that facsimile and electronic signatures shall be legal and binding and the signature of the Administrator on behalf of the Pool shall be legal and binding. ARTICLE XVII - AGENT AND OFFICE The agent of the Pool for service of notice shall be the Iowa Communities Assurance Pool, attention General Counsel. The office of the Pool shall be 5701 Greendale Road, Johnston, Iowa, 50131. ARTICLE XVIII - NOTICE All notices required to be given under this Agreement shall be in writing and sent certified mail, return receipt requested, with postage prepaid. Notices by a Member to the Pool shall be sent to the address in Article XVII to the attention of the Administrator. Notices to any Member shall be sent to the representative of the Member at the Member's last known address. In the event that any party to this Agreement desires to change its address, notice of change of address shall be sent to the other party in accordance with the terms and provisions of this Article. In witness whereof, this Agreement was executed on the day of , 2 , by the undersigned duly authorized officer of the Governmental Authority indicated below: ACCEPTED FOR THE IOWA COMMUNITIES ASSURANCE POOL By: ADMINISTRATOR ON BEHALF OF ALL OTHER CURRENT AND FUTURE SIGNATORIES ICAP IRMA 2011 Page 10 of 10 GOVERNMENTAL AUTHORITY: Title: Mayor Pro —Tem Mr. Ken TeKippe City Treasurer City of Dubuque 50 West 13 Street Dubuque, Iowa 52001 O'CONNOR ASSOCIATES 305 Locust St. I P.O. Box 737 I Dubuque, Iowa 52004 -0737 563.557.7440 I Fax: 563.583.9142 I www.oconnor - insurance.com Re: IOWA COMMUNITIES ASSURANCE POOL (ICAP) Anniversary July 1, 2011 Dear Ken: June 6, 2010 Enclosed are the following materials for your coverage anniversary with ICAP effective July 1, 2011: 1. Summary of liability coverages. 2. Anniversary Information Acknowledgement form —needs signature. 3. Proxy Statement —needs signature. 4. Schedule of covered Vehicles —needs signature. 5. Concentration of Values form —needs signature. 6. Statement of Values —needs signature. 7. Cost breakout for automobile, general liability and physical damage. 8. Anniversary Invoice. 9. Revised Iowa Risk Management Agreement (IRMA)— signature required. The change in ICAP contribution from 2010 to 2011 is $6,288 (less than 1 %) without taking into account the member credit or agent fee. A copy of your third part liability benefits schedule is attached for review. The schedule as well as the coverage document continues automatically with your continued participation in the ICAP program. There has been no change in coverage. Please recall that the City has declined premises medical payments coverage which could be provided at no cost. Upon completion of the IRMA agreement and payment of contribution, ICAP will prepare all certificates of coverage for third parties. A member of State Central Financial Services, Inc. An Independent Insurance Agent Trusted Choice® Last year we reviewed with you options to the deductible levels. The same options are available to you this year if you are interested. The reduction in cost was $12,623 for a $15,000 deductible and $29,041 cost for a $20,000 deductible. Both of these had a maximum cap of $150,000. Thank you for your participation in the best third party liability program in Iowa. If you have any questions or concerns please contact me. Enclosures FRO /j Very truly you O'C• nnor Ins �,�.- Agency Frank R. O'Connor, CPCU Last year we reviewed with you options to the deductible levels. The same options are available to you this year if you are interested. The reduction in cost was $12,623 for a $15,000 deductible and $29,041 cost for a $20,000 deductible. Both of these had a maximum cap of $150,000. Thank you for your participation in the best third party liability program in Iowa. If you have any questions or concerns please contact me. Enclosures FRO /j truly you nnor Ins Agency Frank R. O'Connor, CPCU LDCP Benefit Form No. 0101 Legal Liab. /3rd Party 0101 Automobile Liab 0101 Wrongful Acts 0101 Law Enf. Liab. 0101 Appeal Bonds 0101 Bail Bonds 0101 Bonds to Release Property 0101 Claim and Defense Expenses 0101 Covered Pollution Cost or Expense for Automobiles 0101 Employee Benefit 0101 Employment Expense 0101 Good Samaritan 0101 Injunctive Relief 0101 Medical Malpractice 0101 Member Expenses 0101 Post- Judgement Interest 0101 Pre - Judgement Interest 0101 Stop Gap 0101 Underinsured Motorist 0101 Uninsured Motorist 0101 Uninsured Motorist (Buses Only) 0101 Underinsured Motorist (Buses Only) 0205 Broad Legal Defense Fund 0225 Moral Obiligation to Pay 0235 -10 Public Health Department POLLUTION LIABILITY BENEFITS 0240 Chlorine 0245 Fire Department Training Activities 0250 Fire Departments 0255 Pesticides 0260 Anti -Skid Material Storage & Application 0265 Sewer Back -Up 0290 Wastewater Treatment Plants - Third Party Liability 0291 Wastewater Treatment Plants - Clean Up Expense LDCP 0100 -ICAP SB (7/98) IOWA COMMUNITIES ASSURANCE POOL SCHEDULE OF BENEFITS Effective Retroactive Limit Date Date 07/01/2006 07/01/2006 $12,000,000 10/24/2006 10/24/2006 $12,000,000 07/01/2006 07/01/2006 $12,000,000 07/01/2006 07/01/2006 $12,000,000 Unlimited Unlimited Unlimited Unlimited 10/24/2006 10/24/2006 $12,000,000 07/01/1999 07/01/1999 07/01/2006 07/01/2006 07/01/2006 07/01/2006 07/01/1998 07/01/1998 07/01/2006 07/01/2006 07/01/2006 07/01/2006 07/01/1999 07/01/1999 07/01/1999 07/01/1999 07/01/1999 07/01/1999 07/01/1999 07/01/1999 07/01/1998 07/01/1998 07/01/1998 07/01/1998 02/08/2010 02/08/2010 07/01/2006 07/01/1999 07/01/1999 07/01/2006 07/01/2006 07/01/1999 07/01/1999 07/01/1999 07/01/2006 $12,000,000 07/01/1999 $500,000 07/01/1999 $500,000 07/01/2006 $12,000,000 07/01/2006 $12,000,000 07/01/1999 07/01/1999 07/01/1999 REVISED $100,000 $12,000,000 $12,000,000 Each Action $25,000 $12,000,000 $10,000 Unlimited Unlimited $12,000,000 $40,000 $40,000 $1,000,000 $1,000,000 $5,000 Each Claim $5,000 Aggregate $2,500 Aggregate $12,000,000 $250,000 each occurrence, $250,000 aggregate $50,000 each accident, $50,000 aggregate $50,000 each accident, $50,000 aggregate Deductible $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 See Benefit $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 See Benefit See Benefit $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000