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HomeMy WebLinkAboutCAG1987-0515 - Original - Washington Cities Insurance Authority - Joint Protection Insurance Program - 05/18/1987 WASHINGTON CITIES INSURANCE AUTHORITY Joint Protection Program for the Policy Year May_IS, 1987 to May 18, 1988 I. AUTHORITY LIABILITY COVERAGE COVERAGE AGREEMENT The Washington Cities Insurance Authority, hereinafter called "The Authority" has been formed to provide pooled insurance coverage for losses occurring during the policy year 12:01 a.m. May 18, 1987 to 12 :01 a.m. May 18, 1988 for General, Automobile, Police Enforcement, Employee Benefits, and Errors and Omissions liability. The Authority will pay on behalf of each participating city and Authority employees all sums which each shall become legally obligated to pay on account of: Personal Injury (inclusive of bodily injury) Property Damage Advertising Liability Coverage will consist of a Self-Insured Retention (S.I.R. ) layer and succeeding excess layers as available. This first coverage layer form is defined as the S.I.R. 1987 policy herein adopted as exhibit A. Succeeding excess layers retain their own individual policies, which may differ from each other and the S.I.R. policy, including language, exclusions and coverage (claims- made) basis. Coverage among the various policies may not be continuous. In the event a city leaves the Authority, future losses may apply against the occurrence based S.I.R. policy and limits only. (Excess coverage is on a claims-made basis. ) Coverage is extended to member cities, their employees and agents, and Authority employees within the Authority's $1 million per occurrence retention level. Included in the Authority's payment obligations is the legal defense expense, which becomes part of the loss cost and contributes towards the S.I.R. and aggregate. Page 2 EXCLUSIONS Exclusions of coverage are identified by each policy of each coverage layer. Policies may differ from each other in the number, language and underwriters intent of exclusions. Under insured/uninsured motorist coverage is not provided to member cities or employees. Additionally, there will not be provided any underinsured motorist coverage to member cities or employees under this program. CITY MEMBERS Current Members include: Aberdeen Anacortes Arlington Auburn BattleGround Camas Centralia Chehalis Colfax College Place Coupeville Des Moines Edmonds Elma Enumclaw Goldendale Grandview Issaquah Kelso Kent Kirkland Lacey La Conner Lake Forest Park Lake Stevens Leavenworth Long Beach Mabton Marysville McCleary Medical Lake Medina Mercer Island Mill Creek Milton Monroe Montesano Mountlake Terrace Mount Vernon Mukilteo Normandy Park North Bonneville Ocean Shores Olympia Pasco Port Townsend Pullman Puyallup Richland Shelton Snohomish Snoqualmie Sumner Sunnyside Tenino Toppenish Tukwila Tumwater . Union Gap Walla Walla Westport Winslow Woodway Zillah LIMITS The Authority will pay all sums which member cities become legally obligated to pay, up to the Authority's $1 million per occurrence retention level and no stop loss for all member city claims. It is understood and agreed that any legal liability exceeding the Self-Insured Retention is the responsibility of the excess insurance carrier to $11 million. Page 3 It is further understood and agreed that in the event a liability obligation remains beyond the $11 million coverage, such obligation will be the sole responsibility of the applicable member city and shall not be the responsibility of the Authority nor any other member city. It is also understood and agreed that any liability claim not within the coverage definitions of the S.I.R. or excess layer policy for the policy year shall be the sole responsibility of the applicable member city or employee against whom the claim is made and not the responsibility of the Authority nor any other member city. In the event of an excess carrier financial failure, the total liability of the Authority for the policy year shall remain at $1 million per occurrence, Any remaining obligation over the $1 million limit is also - the responsibility of the applicable member city. The Executive Director and Authority Counsel will be available for assistance and coordination. The Board may authorized the purchase of new excess liability insurance, including retroactive "Tail Coverage" . II. DESCRIPTION OF SERVICES AND COST ALLOCATION INSURANCE COVERAGE A $11 million cover is provided, consisting of the $1 million Self-Insured Retention, and $10 million excess policy. All policies are on an aggregate basis except the Retention, which is on an occurrence basis. Insurance cost per city is based on a ratio of individual city employee worker hours to total WCIA member city worker hours for the period consisting of the four quarters of the previous year. A loss experience factor is also included. AUTHORITY ADMINISTRATION The Executive Director shall administer Authority operations and be accountable to the Board of Directors in the areas of insurance purchases, claims and loss control administration, coverage determinations and new membership. Fifty percent of the cost is allocated equally on a flat fee basis among all cities. The remaining fifty percent if allocated on the same worker basis as is the insurance cost. Page 4 LEGAL SERVICES Counsel for the Authority is appointed by the Board of Directors to provide legal assistance concerning Authority operations to the Board and Executive Director. Authority Counsel is an administrative expense. CLAIMS COSTS A claims service company administrates the claims program and coordinates legal defense under field authority of $10,000. Smaller claims up to $350 are resolved in-house by Authority staff. Defense counsel is selected by the Executive Director and is assigned cases by the Claims Administrator. Expenses included are settlements, judgments, defense costs and specific claim investigation expenses. Costs are borne solely by the city up to its sharing level. Beyond that level the costs are allocated by member city sharing levels. Claims administration costs are exclusive of the loss expense and are treated as administrative costs. XJNANTICIPATED LOSS RESERV FUND An Unanticipated Loss Reserve Fund has been established to provide for an unanticipated financial expense. This fund is to be used for an expense which was not budgeted for and could not be anticipated. In order for the fund to be utilized, the Board of Directors must authorize the expenditure. New cities upon membership contributed on a one time basis to the Unanticipated Loss Reserve Fund. III. AUTHORITY CLAIM SHARING POOLS SHARING POOL I. A city pays the first $5,000 of each loss. Each member shares in $5,0001 to $10,000 of all Pool I losses; Each member shares in $10,0001 to $25,000 of all Pool I and Pool II lossess; Each member shares in $25,001 to $1,000,000 of all Pool I, II and III losses. Page 5 Pool I member cities are: Arlington Battle Ground Camas Chehalis Colfax College Place Coupeville Elma Enumclaw Goldendale La Conner Lake Forest Park Lake Stevens Leavenworth Long Beach Mabton McCleary Medical Lake Medina Mill Creek Milton Monroe Montesano Mukilteo Normandy Park North Bonneville Port Townsend Shelton Snohomish Snoqualmie Sumner Tenino Tumwater Union Gap Westport Winslow Woodway Zillah SHARING POOL II. A city pays the first $10,000 of each loss; Each member shares in $10,001 to $25,000 of all Pool I and Pool II losses; Each member shares in $25,001 to $1,000,000 of all Pool I, II, and III losses. Pool II member cities are: Anacortes Centralia Des Moines Grandview Issaquah Kelso Lacey Marysville Mount Vernon Ocean Shores Sunnyside Toppenish Tukwila SHARING POOL III. A city pays the first $25,000 of each loss; Each member shares in $25,001 to $1,000,000 of all Pool I, II, and III losses: Pool III member cities are: Aberdeen Auburn Edmonds Kent Kirkland Mercer Island Mountlake Terrace Olympia Pasco Pullman Puyallup Richland Walla Walla IV. AUTHORITY DEPOSIT ASSESSMENTS Each city will deposit it's assessment with the Authority within 30 days of billing of each fiscal year. Individual accounts are established for each member city, Page 6 If at any time the member cities' assessed cost exceed the deposit amount, the Board of Directors shall request repayment of that debit amount and the member city shall pay the amount requested. Member cities may with Board approval borrow from the Authority any debit amounts incurred as a result of Authority activity. Period of repayment and rate of interest shall be determined by the Board upon the loan request and approval of the same. V. CLAIMS PROCESS The claims process is supervised by the Executive Director and includes development and implementation , of claims procedures. The program, including excess carrier coordination, is administered by the claims service company. Member cities shall cooperate by promptly reporting all occurrences, claims and suits which may result in potential liability, by participating fully in any investigation conducted by the administrator, and by adhering to the claims procedures as set forth in the Authority Claims Manual. The Executive Director may settle any claim up to $10,000 on his own authority. Dollar authority above that level must be brought before the Board for authority. VI. COVERAGE DETERMINATION The Executive Director shall be responsible for making all coverage determinations in regard to all claims or suits filed against the member city in which a question of coverage and/or defense exists. An appeal process has been adopted in Authority By- Laws, Article VI , Section 2 , to allow member cities and Authority Employees to bring before the Board any coverage decisions which they may contest. Respective requirements of each participating party are detailed as appropriate in the Authority By-Laws. Failure to follow the stated requirements may result in a waiver of legal rights. VIII. CO-INSURANCE If any member city has other valid and collectible insurance, which is written by another insurer, and such insurance is available to the member city covering a loss also covered by this Joint Protection Program, other than insurance that is provided in excess of this program, the protection and excess insurance afforded by this Joint Protection Program shall be in excess of and shall not contribute with such other insurance. _ aao MEMORANDUM DATE: March 29, 1988 TO: Mayor Kelleher and Councilmembers 0 FROM: Mi ebby, Assistant City Administrator SUBJECT: WASHINGTON CITIES INSURANCE AUTHORITY - AMENDMENT OF INTERLOCAL AGREEMENT The purpose of this memorandum is to discuss amendments to the Interlocal Agreement governing the operation of the Washington Cities Insurance Authority. From time to time, it is necessary to amend the Agreement in which case, following Board approval , amendments must then be ratified by each member city. A resolution has been prepared for your review and approval (see attached) . Three of the four changes approved by the Board relate to cancellation of insurance program(s) participation and termination of membership in the Authority. The fourth change is related to the bonding requirements of persons authorized by the Authority to distribute funds. The original interlocal ,addressed only one program, liability. Cancellation of coverage also terminated membership. Given that we now offer two additional programs, property and workers' compensation, new language is necessary to allow members the flexibility to join or leave these two additional programs without jeopardizing basic Pool membership. New Article 20-A restates the original withdrawal procedural requirements for a city to voluntarily leave the Authority, and adds language which cancels all programs. New Article 20-B restates the Authority' s termination process against a member city. The coverage time frame has been reduced from an impractical 180 days to 60 days, the same as the insurance industry uses. An appeal process is available, a favorable procedure the industry does not provide. New Article 21 speaks to the Authority' s ability to cancel a city's participation in any of the additional programs as summarized in the paragraphs above. Copies of the new articles; Article 15, Article 20-A, Article 20-B, and Article 21 are attached for your information. I have also attached a copy of Article 15 which relates to the bonding requirements for Authority officers and personnel for your review. The change simply modifies the bonding requirement from a stated amount to an amount as determined by the Board of Directors of the Insurance Authority. I have placed this item on your agenda for the April 5 Council meeting and will be discussing these modifications with the Operations Committee at their meeting on April 1 , 1988. If for any reason the Operations Committee would request further study, the item will be removed from the agenda prior to seeking Council action. If you have any questions regarding this item, please contact me prior to Tuesday evening' s meeting. Attachments 2126W-32W (�L RESOLUTION N0. A RESOLUTION of the City Council of the City of Kent, Washington, approving amendments to the Interlocal Agreement creating the Washington Cities Insurance Authority. WHEREAS, the Washington Cities Insurance Authority has been a functioning and operating organization for the past seven years; and WHEREAS, Article 26 of the Interlocal Agreement creating the Washington Cities Insurance Authority allows for amendment of the Interlocal Agreement; and WHEREAS, the Board of Directors of the Washington cities Insurance Authority has identified certaiq articles of the Interlocal Agreement creating W.C.I .A. as in need of amendment to promote the future efficient operation of W.C.I .A.; NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF KENT, WASHINGTON DOES HEREBY RESOLVE AS FOLLOWS: Section 1. The City Council of the City of Kent adopts the below described changes to certain sections of the Interlocal Agreement creating the Washington Cities Insurance Authority. A. COMBINE ARTICLES 20 & 21 - "WITHDRAWAL" & "CANCELLATION" - IN ITS ENTIRETY. REPLACE WITH NEW ARTICLE 20 - (A) "CITY WITHDRAWAL FROM AUTHORITY MEMBERSHIP" AS FOLLOWS: (1) A Member City may withdraw as a party to this Agreement pursuant to requirements of Article 18. (2) A Member City which signs the Agreement and enters the Joint Protection Program pursuant to Article 18 may not withdraw as a party to this Agreement and as a member of the Authority for a three-year period commencing on the effective date of the Joint Protection Program, as determined by Article 18. (3) After the initial three-year non-cancellable commitment to the program, any Member City may withdraw from membership only at the end of any fiscal year of the Authority, provided it has given the Authority twelve months prior written notice of its intent to withdraw from this Agreement. Such notice shall be hand carried or mailed to the offices of the Authority by certified mail. (4) withdrawal of membership will result in automatic cancellation of such Member city's participation in the Joint Protection Program, any excess insurance and any other programs offered by the Authority effective the date of withdrawal. Further, the Authority reserves the right to non-renew said withdrawing Member City's coverage in any Authority program during such City's notice period. B. DELETE ARTICLE 20 - "CANCELLATION" AND REPLACE WITH NEW ARTICLE 20B. 20B) "AUTHORITY TERMINATION OF CITY MEMBERSHIP". (1) The Authority shall have the right to terminate any City's membership in the Authority at any time. Such Termination of Membership shall be upon a majority vote of the Board of Directors present at a full Board meeting where such motion for termination of membership is presented. A City's termination of membership shall become effective no later than sixty (60) days after the date such motion is passed, but in no event shall membership extend beyond the last day of coverage in the current Authority insurance coverage program in which said City is a participant. (2) For purposes of this section, Membership in the Authority consists of a Member City's right to have a representative on the Board of Directors and to vote on Board matters, and the right to participate or receive coverage in any Joint Protection Program, self-insured retention or excess insurance program, and to utilize any Authority services or programs. (3) The Authority shall notify a City in writing of its intent to vote on a motion for Termination of Membership of the City at least 30 days before the meeting at which the motion is to be' voted upon. The notification shall include reasons for the proposed Termination of Membership. The affected City has the right to be represented at the meeting where the motion for Termination of Membership is to be voted upon and will be provided an opportunity to address the Board members present if they so choose. C. ARTICLE 21 - "CANCELLATION" SHOULD BE DELETED IN ITS ENTIRETY AND REPLACED WITH NEW ARTICLE 21 - "CANCELLATION OF COVERAGE". (a) The Authority shall have the right to cancel any Member City's participation in any insurance coverage program offered by or through the Authority. The terms of such cancellation of coverage will be specified in each of the coverage documents for the Authority's various programs, except that excess coverage in any program shall automatically cancel effective the date of cancellation of its self-insured coverage. Further, 2 - coverage in all Authority programs shall cease effective the date of a Member City's voluntary withdrawal of membership from the Authority. (b) The Authority may cancel any Member City's participation in any insurance coverage program offered by or through the Authority without termination of the Member City's membership in the Authority. However, any City whose Membership in the Authority has been terminated pursuant to Article 20B shall automatically be cancelled from participation in all insurance coverage programs offered by or through the Authority as of the effective date of termination of membership. D. INTERLOCAL CHANGE: ARTICLE 15 "RESPONSIBLE FOR MONIES" SECTION B: (b) A bond in the amount set by the Board, but not less than one million dollars ($1,000,000) Has outlined by State RCW) ) shall be required of all officers and personnel authorized to disburse funds of the Authority, such bond to be paid for by the Authority. Passed at a regular m ting of t City uncil of the City of Kent, Washington this day of 1988. Concurred in by the Mayor of the Ci y of Kent, this day of , 1988. DAN KELLEHER, MAYOR ATTEST: MARIE JENSEN, CITY CLERK APPROVED AS TO FORM: ' SANDRA DRISCOLL, CITY ATTORNEY I hereby certify that this is a true and correct copy of Resolution No. , passed by the City Council of the City of Kent, Washington, the day of , 1988. (SEAL) MARIE JENSEN, CITY CLERK 5570-180