WILLMAR -- The city is taking steps to reduce the increase in the cost of liability and property insurance.
The city's annual insurance premium was proposed to increase 21.8 percent from $124,922 in 2010 to $152,222 in 2011. The increase was due to two to three large claims during the past couple of years.
The claims include $115,000 paid to Warren and Jan Lee Jorgenson who sued the city over the loss of their home caused by flooding in 2007, plus $62,217 in attorneys' fees and expenses, according to City Clerk-Treasurer Kevin Halliday.
The city is a member of the League of Minnesota Cities and is insured through the League's Insurance Trust. Corneil-Elkjer Insurance of Willmar acts as the local agent.
When Halliday saw the amount of the proposed increase, he asked Corneil-Elkjer to investigate options to reduce the increase. One option was to retain the $100,000 deductible per occurrence but increase the deductible for aggregate claims from $150,000 to $200,000.
If aggregate claims ex-ceed $200,000, the city pays the first $1,000 and insurance covers the remainder.
By increasing the aggregate deductible, the in-crease in the proposed premium will be smaller -- 5.5 percent -- from $124,922 to $131,837, saving $20,385.
Halliday proposed the option to the City Council's Finance Committee Monday afternoon and the committee voted to recommend the council approve the increase at next Monday's regular meeting.
In other business, the committee took no action on a staff recommendation to buy a new airport credit card fuel system from B & H Petroleum Equipment Company of Mankato at a cost of $11,674.
Another equipment supplier, The Hiller Group Inc. of Tampa, Fla., offered a system for $12,500.
The price quotes were obtained by Brian Negen, owner of Maximum Cruise Aviation, the airport's fixed-base operator. Under new requirements that went into effect June 30, a new credit card fueling system must be installed, Negen told the Airport Commission.
The current system retains the credit card data of all users for an entire day before dropping the information. New requirements provide that the system must drop the information after each transaction in an attempt to protect users and reduce credit card fraud.
Airport Manager Megan Sauer and airport operations supervisor Eric Rudningen favored the less costly B & H proposal, but Negen and the Airport Commission favored the Hiller proposal. Hiller proposed a lease-to-own contract, which city staff did not support.
Committee members said they wanted more information from Negen before making a decision.
The committee also:
- Received information from Halliday on the $309,840 deficit in the Willmar Fire Relief Association, the retirement program for firefighters. The association projects it will have assets of $783,556 on Dec. 31, 2010, but will owe $1,093,396 to present and future retirees.
The deficit can be paid in annual installations over 10 years. The committee referred the first installment to be included in the mayor's proposed 2011 budget.
- Reduced the interest rate paid by property owners who are assessed for the cost of street improvements. The rate was reduced from 5 percent to 4.25 percent, which Halliday said will result in a savings to property owners.