NO. 174

Renewal of insurance is a budgeted expense and will be allocated to department budgets.  The combined cost of this policy is $513,453 and will be charged as follows:

$205,381.20 - 642.08.9277.820.020 Insurance and Bonds Property Premium

$308,071.80 - 642.08.9260.820.040 Insurance and Bonds Liability Premium

The City opted to solicit proposals from our current broker HUB International Midwest Limited, Michigan Municipal Risk Management Authority (MMRMA) through IBEX Insurance Company broker, and from Michigan Municipal League (MML). The latter two organizations specialize in public entity coverage.  Unfortunately, Michigan Municipal League (MML) would need an additional 2 months to prepare a proposal due to the volume of coverage that we require; therefore, is not being considered.  

The City's current broker provided two proposals, Traveler's and PEPIP. After careful consideration, Staff decided to move forward with MMRMA through IBEX Insurance Company. Michigan Municipal Risk Management Authority is a public entity self-insurance pool that provides liability and property coverage to municipal governmental entities across Michigan.

Despite a slight premium increase ($88,044.37) to join MMRMA through IBEX Insurance Company, there are several advantages, including:

• MMRMA will pay the City's assigned claims fee to the Michigan Automobile Insurance Placement Facility as part of the contract.  Currently the City pays this fee ourselves.  For 2015, the fee was $12,785.59. 
• MMRMA will act as a Third Party Administer (TPA) for all City claims including sewer backups; eliminating further needs to contract for TPA services. As part of this agreement they will investigate and adjust all claims. 
• Availability of Risk Avoidance Program (RAP) Grants - RAP grants were created by MMRMA in 1997 to help members fund risk management projects. 
• MMRMA will pay Auto Personal Injury Protection (PIP) claims as a first dollar coverage, meaning that the City does not have a deductible or retention to meet before MMRMA will pay the claim.  Currently the City is responsible for the first $500,000.00 for these claims.  In the last 10 years, the City has made payments totaling $352,455.87 for an average of $35,245.58 per year for this type of claim.
• There is a possibility of premium distribution after the first year.  In 2016, MMRMA distributed $31.8 Million distribution of excess net assets to the current renewing MMRMA individual and State Pool members.  MMRMA has distributed over $226,000,000 to its renewing members since 2006. 
• MMRMA has a Risk Management Information System claim and reporting system that will be available to the City of Battle Creek.
• MMRMA has a department specializing in cost recovery and will assist the City when it is necessary to recover against a 3rd party on insurance claims.

To clarify, the City's property insurance is up for renewal on July 1. However, The MMRMA proposal is for both property and liability concurrently.  The excess liability policies expire on 10/1/16.  If the City chooses to go with MMRMA through IBEX Insurance Company, the current liability policies will be canceled as of 7/1/2016 and a prorated premium refund will be received.