Council here has agreed to switch insurance carriers in a bid to cut costs on what has been an ever-increasing expense in recent years.
The town received two responses to a request for proposals, one from current insurer Frank Cowan Company and one from Jardine Lloyd Thompson (JLT) Canada.
The Cowan submission, presented through broker Todd Farrell of Miller Insurance, which recently purchased Minto-based Larry Grummett Insurance, calls for a premium of $255,712.
The JLT submission, brokered by Wylie Insurance of Harriston, includes a premium cost of $227,953.
The town’s 2013 premium was $249,000.
A staff report from CAO Bill White points out the lower premium is about $21,047 less than 2013, while the higher bid is about $6,000 (2.4 per cent) more than last year.
Despite a staff recommendation to accept the JLT proposal at the Feb. 3 meeting, council deferred the decision for further study and to ensure more councillors would be present to consider the issue. Councillors Dave Turton, Rick Hembly and Ron Faulkner were absent from the Feb. 3 meeting.
On Feb. 10, Mayor George Bridge, councillors Ron Elliott and Mary Lou Colwell, treasurer Gordon Duff, White and Randy Bushey, a consultant hired to assist in evaluating the proposals, met with representatives from the two insurance companies.
At a special meeting called to consider the proposals on Feb. 13, White presented a staff report noting several issues had been clarified at the Feb. 10 meeting, including a perception that more staff support from the town would be required at renewal times from JLT than from Cowan.
“Staff anticipates the renewal process will be very similar regardless of the selected firm,” White stated in his report.
The report also noted, “The JLT proposal is lower priced and has more coverage than the Cowan bid. In addition there is the conditional three-year rate guarantee on liability and two-year on property.”
Elliott expressed concern about the possibility of claims triggering an “out” for JLT on their rate guarantee, but White noted the clause would only allow the rates to be raised if claims exceed 40 per cent of the premium.
“JLT confirmed in their interview the rate guarantee is rarely forfeited,” White stated in his report.
Elliott also expressed concern about switching from a company that had been flexible in application of coverage in the past.
“If our staff happened to make a mistake, for example not to list an asset or whatever, we know that in the past with Cowan’s – we had a truck roll and it wasn’t listed and they didn’t hesitate to pay it,” said Elliott.
He also pointed to reports that Wellington North, which recently switched to JLT, saw an increase in premium of $10,000 or six per cent.
“It was thought that they would hold the line, but obviously they are like every other insurance company and they will raise the fees if necessary,” said Elliott.
“I believe we are going into the unknown if we go to an new insurance company. We know what we have. We’re protecting our citizens and I’m concerned we won’t be protecting our citizens as well as we should.”
Elliott continued, “It’s easy to say we saved $26,000 when in reality we may be costing the town hundreds of thousands of dollars if we make the wrong move.”
Colwell said she learned of the Wellington North increase through a report in the Wellington Advertiser.
“The reason their insurance went up is they added assets,” she said.
Mayor George Bridge said Wellington North also increased liability coverage to $50 million (from $25 million).
Colwell said she favoured making the switch largely because of JLT’s pledge to hold the line on premiums.
“To me the three-year price guarantee is a very important issue,” she said.
Bridge agreed.
“If they give us a three-year rate guarantee and we’re debating whether that’s good or bad, or if they will try to get out of it … well, Cowan’s doesn’t even give use that,” Bridge said, noting Cowan representatives said the company reviews policies annually and does not guarantee rates into the future.
Councillor Dave Turton pointed out the town is not required to make a long-term commitment to either company.
“At the end of three years it’s very easy to go back and do the same thing over again,” Turton said.
A resolution directing to staff to negotiate the 2014 renewal with JLT and Wylie Insurance was approved in a recorded vote, with Bridge, Colwell, Turton and deputy mayor Terry Fisk in favor and Elliott opposed. Hembly and Faulkner were absent.
