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ICAP Insurance Renewal CITY OF DUBUQUE, IOWA MEMORANDUM March 30, 2000 TO: The Honorable Mayor and City Council Members FROM: Michael C. Van Milligen, City Manager SUBJECT: ICAP Insurance Renewal The ICAP board has offered Dubuque, the DMASWA and other members of the ICAP pool the opportunity to lock-in insurance coverage capped at the 1999 rate. The City must agree to stay in the ICAP program for the three-year period to receive the lock-in rate. This agreement must be signed by April 15, 2000. Finance Director Duane Pitcher is recommending that the City enter into this agreement. I concur with the recommendation and respectfully request Mayor and City Council approval. (Ylíc il (/J¡tÝl / Michael C. Van Milligen ~ MCVM/dd Attachment cc: Barry Lindahl, Corporation Counsel Tim Moerman, Assistant City Manager Duane Pitcher, Finance Director 'Vi ';¿,cr=;nqno 8:)!J;Cì '~.' AKJ 80:S Hd O£ ð~¡'¡OO 03í\13J3C:1 {~2:¿:¿/Z~ ~ 3 fl;:tÜ:¥4~ /!;¿;.~~/ L/ /4j~ CITY OF DUBUQUE, IOWA MEMORANDUM March 29, 2000 TO: lMichael C. Van Milligen, City Manager Pauline Joyce, Administrative Services Manager Don Vogt, Operations/Maintenance Manager ()~ FROM: Duane Pitcher, Finance Director SUBJECT: ICAP Insurance Renewal The ICAP board has offered Dubuque, the DMASW A and other members of the ICAP pool the opportunity to lock-in insurance coverage capped at the 1999 rate. The contribution rate for the City can go down but will not go up over the three-year period even for changes in risk exposure such as the addition of the skate park or additional vehicles. The City must agree to stay in the ICAP program for the three-year period to receive the lock-in rate. This agreement must be signed by April 15, 2000. Additional information ITom Frank O'Connor is attached to this memo along with the agreements. We have looked at other options for liability coverage over the past several years and have not identified another program that is certain to be cheaper and stable in price over the long-term. With the relatively soft insurance market, there is likely some opportunity for significant short- term savings by going back to purchasing traditional insurance. We also need to consider that there is always a chance of significant increases or even cancellation of traditional liability insurance polices as happened in the mid 1980's prompting Dubuque and others to start ICAP. There are some short falls in the ICAP agreement that make it difficult to exit the pool and receive credit for pool equity other than annual distributions. These provisions strengthen the pool overall at the expense of the individual pool members. Overall I feel that the City and DMASW A experience with the ICAP pool has been good and we should seriously consider entering the lock- in agreement unless there are plans to dedicate considerable time and money to review other alternatives for liability insurance in the near future. I!SURAN¡E IGEHY, In T h i r d & l 0 C us! P.O. Box 7J7 Ouhuque.IA 52004.0737 319.557.7440 fax 319.5B3.9142 An I ndepend en! In su ra n co A9 en! March 13, 2000 Duane Pitcher City of Dubuque 50 West 13th Street Dubuque, IA 52001 Dear Duane: During the past two years I offered to you an amendment to your intergovernmental contract with the Iowa Communities Assurance Pool, which agreed to ITeeze your contribution level for casualty coverage for a period of three-years in exchange for your agreeing to remain with the pool for the same three-year period. In a recent communication, the ICAP Board is extending the time period of that agreement with some additional modifications. In my judgement, now would be a good time for the City of Dubuque to consider signing the original three-year contribution ITeeze, because casualty rates have begun escalating as of January 2000. It is reasonable to predict that your contribution levels in the Year 2000 will be higher than they were in 1999 and based upon insurance cycles I would anticipate the hardening market to continue for a minimum of two years. The extension certificate is not available to the City of Dubuque because you have not signed the original agreement and frankly, this is to your advantage at the present time. The original agreement is substantially broader than the extension certificate. The original agreement freezes all casualty coverages for a three-year period. In the new extending agreement only casualty coverages up to $2,000,000 would be ITozen. Secondly, the extension period has a stipulation that the contribution level may warrant a debit rating due to poor loss experience or a failure to comply with reasonable loss control recommendations. This is a continuing stipulation for the second and third year of the extension. The oril!inal al!reement does not contain anv such stioulation. In other words, your contribution levels remain the same regardless of increase in exposures or increase in losses. The agreement also provides that in the event your exposures would reduce, there would be a corresponding reduction in contribution. Now for the good news, ICAP is willing to provide the City of Dubuque with the original three-year agreement effective Julv 1. 1999. This means that your contribution level paid last year would be your ITozen casualty contribution. This opportunity to participate with a ITozen casualty contribution at July 1, 19991evels must be executed within thirty days. ICAP, I believe, would offer the guarantee on your anniversary date of July 1, 2000, but it would then be based upon July 1, 2000 contribution levels which I ITankly anticipate will be higher than in 1999. Enclosed are two copies of your Intergovernmental Contract amendment for you to execute if this protection is desired. Please sign both copies and return to me. Thank you. Sincerely, Frank R. O'Connor, CPCU Enclosure lOW A COMMUNITIES ASSURANCE POOL PARAGRAPH 1. OF ARTICLE XI OF THE INTERGOVERNMENTAL CONTRACT IS AMENDED AS FOLLOWS: At the request of Dubuque, the Board of Directors of the Iowa Communities Assurance Pool agrees to maintain a level contribution for an casualty coverages for the three year period beginning July 1, 1999. In the event the exposure bases are reduced in the second or third year of this agreement, the resnlting redueed contribution shaD apply. The Member agrees 10 continne membership in ttÅ“ Iowa Communities Assurance Pool for the three year period mentioned above, to not withdraw or terminate the Intergovernmental Contract at any time during this period, and to not request or accept any proposals that replace any and an parts of the Intergovernmental Contract, including any of its coverage agreements. In Witness whereof, this amendnmrt is eneutedou the day of . 19 , by the the unders~ duly authorized officer of the Governmental Authority indicated below: Governmental Authority: Dubuque By: Official Title: Accepted for the Iowa Communities Assurance Pool By: Administrator on behalf of an other current and future sigDatories Date: 119