After a series of claims in the past decade, the City of Memphis is anticipating a roughly 12% premium increase from liability and equipment insurance.
Representatives from Hawkins/Harrison Insurance met with the Board of Alderman at the November 7th city council meeting to discuss options. Initial premium estimates from MOPERM came it at just shy of $73,000 for the municipal vehicle fleet, equipment and liability coverage for its buildings and services. That represented a roughly 10% increase.
“Plain and simple, the issue is claims,” said Chase Brenizer of Hawkins Harrison. “Standard premiums typically are calculated based on the past three to five years, but municipalities use a 10-year window. And over the past 10 years, the city has paid out at a 190% rate, so it is easy to see why premiums are going up.”
In the past decade, the city’s insurance has made six figure payouts on a pair of liability issues, one related to the swimming pool and one related to a vehicle accident involving the fire department. The hail storm two years ago also caused significant damage to city property, with the municipal electric department also sustaining a loss related to some wiring deficiencies that were blamed for some private property losses.
While the cost to maintain the existing coverage was quoted at a roughly $10,000 cost increase, the agency representatives highlight other saving opportunities for the city.
Brenizer introduced some options for safety training made available through Hawkins Harrison and its affiliates which likely would produce discounted rates once successfully completed by the city. He indicated the services are offered free of charge.
Memphis account managers Shirley Bair and Denise Probst also highlighted some potential cost savings by addressing deductible levels as well as reducing coverage for older vehicles and structures.
They explained the city currently maintains a $500 deductible for both comprehensive and collision coverage on its vehicles
City officials will be scheduling a workshop with the agents to review the municipal fleet for the purpose of eliminating full coverage on some of its older vehicles and equipment. The meeting will also focus on reviewing building valuations to insure adequate coverage for newly renovated structures such as the water plant while possibly identifying cost savings through reduced coverage for facilities, such as the former light plant, which no longer house significant equipment or services.
The city hopes to identify cost saving opportunities before the end of the month to allow adjustments to the application, as the new premiums will take effect January 1, 2020.