Staff outlines insurance switch option that would lower premiums but raise deductibles

City staff provided a detailed briefing on Jan. 8 about rising municipal insurance costs and an option to change providers.

Staff (Travis) said the current trust projects an insurance increase of roughly $402,000 next year for citywide property, liability, auto and cyber coverage; Olympus Insurance quoted approximately $320,000 for a comparable package. "We're seeing a really good trend at the city of what we're spending, what the claims kinda look like, versus the premium that the trust is providing for us this year," Travis said, and estimated the city could save about $60,000 per year by switching to a lower-premium plan that raises deductibles.

Travis emphasized the tradeoffs: the Olympus option would raise property deductibles from about $1,000 to $25,000; auto deductibles would increase (transcript numbers discussed as higher per-vehicle tiers); general-liability deductibles would rise as well, and the cyber-coverage arrangement would shift from a pooled $2 million bucket within the trust to a $1 million city-specific cyber limit with more costly coverage above that threshold. Staff described the alternative as a "semi-self-insured" approach that would require budgeting to cover larger claim outlays and that could be managed over time by setting aside realized premium savings.

Travis noted the city's historically low workers-comp claims and an active safety committee and incentive program that he said reduce claim frequency and exposure. Councilmembers asked clarifying questions about whether coverages must be bundled, the potential budget impact of higher deductibles, and the governance steps needed to change providers. No formal procurement decision was made at the work session; staff sought council feedback and indicated they would return with more detail, including budgeting scenarios that show how to cover larger deductibles if the city proceeds.