to: achd commissioners and executive team december 3, 2013 … · 2016. 3. 8. · liability,...
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___________________________________________________________________________________________________________________ Ada County Highway District • 3775 Adams Street • Garden City, ID • 83714 • PH 208 387-6100 • FX 345-7650 • www.achdidaho.org
Sara M. Baker, President John S. Franden, Vice President
Rebecca W. Arnold, Commissioner Mitchell A. Jaurena, Commissioner
Jim D. Hansen, Commissioner
To: ACHD Commissioners and Executive Team December 3, 2013 From: Michael L. Brokaw, Chief of Staff Subject: FY 2014 Insurance (Liability, Property, Auto, Inland Marine and Crime) December 11, 2013 Commission Meeting Executive Summary:
The Highway District is currently insured for all liability, property, auto, equipment, errors & emissions and crime
claims through CNA Insurance. After receiving the renewal quote from CNA Insurance and a quote from ICRMP,
District staff instructed our broker to research a self‐insured option and to compare each option. The attached
report from Moreton & Company is the result of that request. The report outlines the details of each option.
Background:
The Highway District received numerous requests over the past two years to consider an insurance quote for our
liability, property, auto, equipment and crime coverage from the Idaho Counties Risk Management Program
(ICRMP). Our broker, Moreton & Company, is not an authorized agent of ICRMP and therefore could not get a
quote from ICRMP. We went through a selection process to choose an agent to provide the District with a
quote from ICRMP and selected The Hartwell Corporation based in Caldwell, Idaho. They then provided the
District with a quote from ICRMP.
After reviewing the two quotes we determined that further research was needed to explore two alternatives.
One alternative was to look at a partial self‐insured program and the other alternative was to break out the
Commuteride insurance. The broker had been informed that the reason most insurance companies declined to
quote coverage for the District was due to the vanpool program and the associated risks. The results of the
research yielded the following:
1. CNA ‐ $489,281 premium for continuing existing insurance program.
2. ICRMP ‐ $286,700 premium for changes to current limits, deductibles and joint powers
agreement.
3. CNA ‐ $401,681 premium for separating Commuteride. Commuteride premium $165,000.
4. Partial Self‐Insuring ‐ $91,152 premium for property, auto, equipment, crime and claims
processing. Self‐insured for all liability claims.
The District Legal Department was asked to review the ICRMP Joint Powers Subscriber Agreement. The legal
Department reviews all agreements before the Commission. The legal review pointed out a concern for eight
specific sections of the agreement that could create issues for the District. Three of the sections are the
following.
Article VI (pg. 4): Members are required to comply with loss reduction and prevention
recommendations.
Article IX (pg. 6): Member Contributions – ICRMP reserves the right to discontinue membership
or diminish coverage or limits or increase self‐insured responsibility of any member who does
not cooperate with ICRMP’s “goals, objectives or requirements or acts without regard to
consequences concerning matters that affect ICRMP.”
Article VVIII (Sec. 1, pg. 14): Member Expulsion – A member can be terminated from the
program for “willful failure to undertake or continue loss reduction or loss prevention
recommendations by ICRMP” or “Failure to allow ICMP reasonable access to all facilities and
records.”
The Highway District has been in contact with Corey Pence, Risk Manager with Boise City in regards to being self‐
insured. They have been self‐insured for Liability and Worker’s Compensation since 1989. The District has also
been in contact with Kelly Paananen, Risk Manager with Ada County. They have been self‐insured for the past
10‐years. They both expressed a high level of satisfaction with their respective self‐insurance programs.
Moreton & Company also hired an actuary to review the District claims and recommend an amount to reserve
for 2014 if the District chooses to self‐insure. The actuary projected claims for 2014 at approximately $100,000.
Fiscal Implications:
Savings of $398,129 from CNA renewal versus self‐insured. Savings of $195,548 from ICRMP quote versus self‐
insured. Savings would be deposited into insurance reserve account at the level recommended by an actuary.
Policy Implications:
None.
Alternatives:
1. Renew existing insurance policy with CNA Insurance at a cost of $489,281.
2. Breakout Commuteride policy and purchase insurance at a cost to Commuteride of $165,000 and a cost
to the General Fund of $401,681.
3. Purchase insurance from the Idaho Counties Risk Management Program (ICRMP) at a cost of $286,700
4. Begin a Self‐insured program at a cost of $91,152 that excludes all liability coverage’s and establish a
reserve account at the level recommended by the actuary.
Recommendation:
Staff recommendation is Alternative #4.