This past Monday the Sunnyside City Council was unable to reach a decision in deciding to approve Washington Cities Insurance Authority (WCIA) as its new property and casualty insurance carrier.
Much controversy surrounded the decision. A special session will be held Monday, Aug. 30, at 7 p.m. in the council chambers to readdress the issue.
The city's insurance carrier has been Cities Insurance Authority of Washington, which in January of 2010 was served a cease and desist order by the state risk manager. That order was issued because the 2008 financial statements of the insurance carrier contained uncollectable insurance receivables, according to Sunnyside Finance Director Byron Olson. He said the issue has been resolved, but the insurance carrier has had to also change its policies in regard to cities like Sunnyside.
Sunnyside has been an "associate member" of the insurance agency, but would need to become a full-fledged member if it renews its insurance with Cities Insurance Authority of Washington. The cost would be minimal because Sunnyside is already a member, but Olson told council he had other concerns regarding the insurance carrier.
He said there has only been minimal oversight by the insurance carrier's board "...and little, if any participation on an active, on-going basis by the members (full or associate) in issues related to cooperative risk management."
The city, said Olson, has a renewal cycle that begins Wednesday, Sept. 1. The item of retaining the insurance carrier or finding a new carrier was set for discussions in previous workshops, however the council was focused on safety concerns and the insurance discussions were shoved to the back burner.
Councilmen Don Vlieger and Mike Farmer, as well as Nick Paulakis all felt they should have been provided more information at an earlier date.
Farmer said he was on council when the city approved Cities Insurance Authority of Washington over Washington Cities Insurance Authority several years ago. He said the change was made because Sunnyside's insurance costs were on the rise.
Addressing the issue was WCIA Executive Director Lewis Leigh. He told council the insurance carrier has subsidized rates for the past two years and Sunnyside would be eligible for a subsidized rate in 2011. "This keeps the city from experiencing a rate increase," he said.
Farmer questioned Leigh in regard to premiums. He asked Leigh if the premiums are determined based on losses within a pool, and Leigh answered in the affirmative.
"The least weight is based on pool performance. We use an actuary to assess the performance and create an assessment for the entire pool," said Leigh.
Both insurance carriers, noted Farmer, offer training for employees within the membership pools. He questioned Leigh about the differences between the two carriers and the training provided.
Cities Insurance Authority of Washington, the city's existing carrier, does not require member employees to receive training. However, WCIA does require employees to attend three trainings each year. The first, said Leigh, is training determined by his organization.
"All mandatory training is provided to employees on-site," said Leigh.
He said training is provided at no additional cost to the city, and public disclosure training is not offered by Cities Insurance Authority of Washington. His company, however, provides that training in addition to tort and near-tort training.
"This year the mandatory training topic was personnel," Leigh continued, stating the city chooses two of the three training topics provided employees each year.
Vlieger was concerned how mandatory training would affect the city's emergency services personnel, stating the personnel would have to either be compensated for overtime or face staff shortages when training is provided during the hours of a particular shift.
Leigh said he has spoken with Olson and feels his company can accommodate emergency personnel.
Councilwoman Theresa Hancock entered the discussion, stating she feels the training is far more valuable to the city than the concern about overtime.
"I understand the need to keep the cost down...CIAW (Cities Insurance Authority of Washington) did not avail themselves to any trainings...I believe there is a hidden cost to not attending training. We can prevent lawsuits with proper training. I like the idea of making it mandatory...they are coming to us," said Hancock, adding there is a value in the fact that employees will not have to travel for training purposes.
Because WCIA provided the council with a formal presentation and a formal presentation from Cities Insurance Authority of Washington was not provided, Vlieger said he felt he was only provided "half the information." He was displeased with this and said, "I feel this is a done deal."
Mayor Jim Restucci offered to allow council more time to review the information from both insurance companies. He suggested council could return for a special session.
Hancock said she was confident Olson had completed his research with due diligence. "I trust his judgment," she said.
The council heard more about the two insurance carriers and Councilman Tom Gehlen agreed it would have been better if council had been given more time to consider the carriers.
Following a motion to accept WCIA as the new insurance carrier, Gehlen, Hancock and Restucci all voted in the affirmative. Paulakis abstained from the vote, citing he felt he was not provided enough information. Both Farmer and Vlieger voted against changing insurance carriers.
Despite the 3-2 vote in favor of switching to WCIA, a fourth 'yes' vote was needed to make that happen because a majority of the seven-person council must approve such a decision. Councilman Pablo Garcia was absent from Monday's meeting, but is expected to be at the special session on Monday, Aug. 30.