June 21, 2005 sub-committee

[Guest sullinss]

Proceedings of the Business Committee

School District No. 2, Yellowstone County

High School District No. 2, Yellowstone County

Billings, Montana

 

June 21, 2005

 

The June 21, 2005 Sub-Committee of the Business Committee was called to order at 3:30 p.m. by Business Committee Chair Dale Getz. Sub-Committee members of the Business Committee present were Dale Getz, Katharin Kelker, and Curt Prchal. Other Business Committee members present were Jerry Hansen, Shanna Henry, Joel Guthals, Peter Grass. Business Committee member Joan Sleeth came at 4:15 p.m. Also in attendance was Business Manager Thomas Harper, James Smith of Insurance Consulting and Education, Casey McGowan and Richard Begger of Western States Insurance Agency, and Les Jensen and Debbie Wagner and Scott Mcpherson of Payne Financial Group Inc., Hoiness Labar Insurance.

 

Comprehensive Insurance FY2005-06

 

Representatives from Western State Insurance Agency and Payne Financial Group Inc., Hoiness Labar Insurance, delivered presentations to the Committee on their proposals for the District’s Comprehensive Insurance program for year 2005-06.

 

Casey McGowan and Richard Begger of Western States Insurance Agency presented their proposal for the District FY 2005-06. Western States Insurance is the Third Party Administrator of the MSBA Property and Liability Program for Montana schools. They receive an administrative fee for services which is included in the premium. The school insurance pool originated in 1996 and they have 332 Montana School Districts insured. They have a dedicated claims processing center in Helena that handles only school claims and have a program that provides public liability limits that surpass the minimum requirements in Montana statutes. Each year’s premiums would be based on the prior five year claims experience and recalculated each year. All claims would be turned into the company and the deductibles would be billed back to the District. An annual premium of $623,766 allows a $25K deductible for all insurance coverage except boiler, with expected losses within the deductible range of $102,795. An annual premium of $514,263 allows a $50K deductible for all insurance coverage except boiler, with expected losses within the deductible range of $163,486. The boiler premium is an additional $24,780. Since this is “currency” based coverage, Mr. Begger would need to check and see if this policy would cover acts prior to July 1, 2005.

 

James Smith of Insurance Consulting & Education was retained by the District to review proposals from Western States Insurance and Payne Financial Group, Hoiness Labar Insurance. Mr. Smith stated the Western States Insurance proposal was not the program he was given to analyze three months ago. He has not seen the insurance contracts that will be put out, and the company is also different. Mr. Smith advised that annual aggregates limit the most you can recover in a 12-month period. Since he has not seen a specimen policy on coverage, we can only get a feel for pricing. The original program he analyzed had a $2,500 deductible across the board on all losses with a pool taking us up to the next $1M of claims. This proposal offers a $25K or $50K deductible. If you have to buy a “tail” for prior acts claims, it may add substantially to the premium along with the boiler premium.

 

Les Jensen, Debbie Wagner, and Scott Mcpherson of Payne Financial Group Inc., Hoiness Labar Insurance, presented their proposal for the District FY2005-06. This agency has handled our District’s comprehensive insurance for approximately 25 years. They took advantage of improving market conditions to propose reduced annual premiums. Defense is a large part of our claims and is covered in addition to liability. The total package premium is $481,306. Some of the renewal highlights are: increase building and contents limits by over $10M; add computer virus coverage; maintain ordinance or law coverage at $1M, School Board Legal limit at $5M, General Liability and auto limit at $5M, Sexual Abuse limit at $1M; maintain deductibles of Property losses at $10K, School Board losses at $50K, Boiler losses at $1K, General Liability of $15K, Auto Liability of $25K, Auto Physical Damage $2,500, and $500 reimbursement of deductible for employee’s damaged vehicles if on school business.

 

Les Jensen encouraged the District to maintain our self-funding insurance reserve to pay deductibles and help guard against insurance fluctuations. Thomas said we have approximately $100K in the self-funded comprehensive insurance fund at year-end.

 

James Smith related that we have monetarily benefited from comparing insurance proposals. The District has done due diligence by comparing insurance proposals. There has been a softening in the insurance market. Thomas stated that last year we paid $617K for insurance premiums.

 

The Sub-Committee does not find a need to look at the policies.

 

James Smith said we currently have available to us the ability to request our insurance company, at no cost, to have a person review all of our buildings from a property and liability standpoint to minimize potential risk. Mr. Smith recommends awarding a minimum three-year contract.

 

Member Katharin Kelker left the meeting at 5:25 p.m.

 

The Business Committee will make a recommendation to the Board at their next regular meeting.

 

Health Insurance

 

The update on health insurance will be deferred until the next Business Committee meeting.

 

Superintendent Personal Leave Payoff FY2004-05

 

This item will be deferred until the next Business Committee meeting.

 

Adjournment

 

There being no further business, the meeting was adjourned at 5:32 p.m.

 

 

 

 

K. Dale Getz, Chair

 

 

 

 

Sherrill Sullins, Recorder