5.3. SR 09-17-2007 - Laserfiche WebLink

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111 FIRST NATIONAL INSURANCE AGENCY 81 " Main Streel Elk River MN 55330 Phone: 1763) 441-2500 wwwJirstnationalfinancial.com September 10, 2007 To: Honorable Mayor & Council Persons City of Elk River Thank you for permitting time on your September 17th agenda to review the 2007 League of Minnesota Cities Insurance Trust proposal. Although still beyond the official renewal date, the proposal has come in much earlier than in the past severa) years. The City's coverage has been under Binder since the official July I sl renewal date. Tim Simon, L<>ri Johnson, members of the City's staff, and the ERMU staffhave all spent time and energy working on this year's renewal and I appreciate their expertise and dedication to getting the rene\val accurately completed. It is a pleasure to work with such professional people! As the City continues to grow and adds to its assets, the importance of risk management and loss control also grows. Your staff and LMCIT's loss control service staff have worked together to manage the City's operations and exposures. It appears these efforts are meeting with some success as the frequency of claims seems to be declining in the past 4-5 years. The LMCIT program continues to be a very effective risk management and loss financing tool for member cities. Although there is another increase in cost for this year, it is not nearly as significant as last year's. The overall increase for 2007 comes to about 4.6%. We will take a few minutes to explain some of the material changes, and then will present some options for new deductibles and additional coverages for the Council's consideration. These are some of the special points I would like to bring to your attention: I) 2007 LMCIT Rates - LMCIT property rates increased 10% for 2007, due primarily to greater than projected storm and fire losses over 2005 and 2006. and to increased reinsurance costs for the LMCIT program's broad and comprehensive coverage program. Rates for other lines of coverage have either stayed the same, or decreased by about 3%. 2) The City of Elk River received a dividend in the amount of$ 18,665 in December 2006. This is considerably less than in previous years, and about 25% of what the City received last year. Greater than expected losses and the League's retention and reinsurance strategies also resulted in a smaller declared dividend. According to the League, recent decisions with regard to reinsurance costs and increased retentions may continue to make dividends more variable, as well as generally smaller. Over the 20 years the City ofBlk River has been participating in the LMCIT program, it has returned an average dividend of 18.9% annually.