Agenda - 12-19-1986 - Laserfiche WebLink

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allow counties who had lost coverage to get insurance and to hopefully save premium dollars for other Counties. This coverage was first available July 1, 1986. Currently 14 counties are participating the Plan and six (6) others including Orange County, are considering proposals. As you can see from Exhibit A, the reinsurer's for this coverage are extremely large, well-known companies, rated A+ by Best's. I would like to call to your attention the major, if not only, drawback of the James plan. There is a $2500 maintenance deductible applicable to each and every loss. This amount is lower than the liability and property deductible to which we've been accustomed ($5000) , but considerably higher than the $500 deductible currently on Motor vehicles. After analysis of the 1986 claims it is determined we would have been reimbursed approximately $7000 less on the James plan than what was acutally received from Charter House. However, Charter House has modified their deductible in 1987 such that with like accidents we would have received approximately $6500 rather than $11,000. For the difference in premium amounts the higher deductible would seem a wise trade-off. The advantage/disadvantage comparison (Exhibit B) and the policy data sheet (Exhibit A) will indicate that for stability and cost the recommendation for acceptance must be in a favor of the proposal from Fred S. James. I cannot stress enough the importance of strong reinsurance companies and from that stand point alone James is miles ahead of the other company, There would also be advantages to consolidating some of our smaller, specialized property policies, such as computer and communications equipment. This coverage is provided in the James proposal under the blanket property section. !I Last, but not least, is the cost factor. Up front the cost appears to have only a $6773 difference. However, when you consider the above mentioned policies that could be dropped as a result of the coverage being provided in the James proposal, the difference soars to approximately $25,233. That's 14% of the total policy! Whichever policy is finally selected, I would suggest a reserve account be set up with the funds from the premium savings and be designated for payment of deductibles. This will serve a two fold purpose: 1. ) It will ease the strain likely to be placed on the budgetary account when deductibles are charged and, 2. ) It would provide a better tracking method for payments of deductibles and would alert us early on if claims were getting out of hand. Ii I would further suggest that County designate approximately $3000 of surplus funds in the insurance account to set up a data base to track claims activity and coverage information and to begin a safety program with primary focus on driver and worker safety. Since the deductible is substantial, a learning process of how to avoid accidents seems in order.