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Commission Memorandum
REPORT TO: Honorable Mayor and City Commission FROM: Chris Kukulski, City Manager
SUBJECT: Review of Current Property and Liability Coverage
MEETING DATE: Monday, August 18, 2014
AGENDA ITEM TYPE: Action
RECOMMENDATION: Review the attached report of findings on the City’s current property and
liability coverage.
SUGGESTED MOTION: None
BACKGROUND: Over the past several years, City staff and I have been working to improve the
City’s risk management program. In 2012, the director team and I presented the Commission with a
series of goals related to administrative priorities of the City. This list included the goal of addressing
the City’s risk management program. See attached 2012-13 Adopted Work Plan. In FY 2013, the City Commission approved $15,000 to obtain risk management consulting services. We later forwarded
$10,000 to FY 2015. Earlier this year, the Commission established a second tier goal of evaluating the
City’s current insurance coverage. This agenda item is in furtherance of the Commission’s stated goal
regarding insurance, specifically, and, generally, is part of the larger risk management program managed
by the director team.
In February, I released a Request for Qualifications for Insurance and Risk Management Consulting
Services (the “RFQ”) (attached) and selected Jim Smith to act as the City’s consultant. Mr. Smith has
worked in the insurance industry since 1963 and has specialized in commercial insurance and surety. As
a producer, Mr. Smith handled Gallatin County and the Gallatin County Airport Authority for 15 years. After retiring from the insurance agency, Mr. Smith started his own consulting business.
This insurance review is identified in the RFQ under Primary Services (#3):
1) Assisting the City in identifying its insurable property and liability exposures and recommending professional methods to reduce, assume or transfer risk of loss; 2) As requested, providing risk management guidance and training to officials and employees of
the City;
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3) Advising the City with respect to the suitability of the various existing services being provided by its current property and liability coverage provider;
4) Reviewing with appropriate City officials any additional coverages that should be carried but
are not covered by the City’s current programs, and subject to City’s authorization, assist in the marketing and placing such insurance on the City’s behalf;
5) Assisting the City if requested in the preparation of applications, statements of values, and
similar documents requested by insurance underwriters, it being understood that this is not
inclusive of any appraisal work;
6) As requested, reviewing certificates of insurance, endorsements, and contracts with contractors, vendors, and professionals and reviewing any insurance requirements and/or
contracts in conjunction with such requests; and
7) As requested, reviewing applications for street closures, park reservations, and encroachment
for appropriate indemnification and insurance information; and
8) Reviewing loss reports and generally assist City officials to meet loss containment objectives.
In addition, the RFQ includes Additional Services Upon Request by City:
9) Assisting the City if requested in the preparation of its annual insurance budget;
10) Attending meetings with employees and officials as requested to promote the safety
objectives of the City; 11) Assisting where needed or requested and only as appropriate in the settlement of claims, with
the understanding that the scope of services does not include the work normally done by a
public adjuster;
12) Assist in the development if requested of a City-wide policy, regulation, and procedures to
protect the health and safety of the employees and public and protect the City from liability; and
13) Any other insurance or risk management services deemed necessary by the City.
As such, the first task I requested of Mr. Smith was to review the City’s liability and property coverage.
Mr. Smith’s analysis is attached.
Currently, the City obtains property and general liability coverage through the Montana Municipal
Interlocal Authority (MMIA) and through their various reinsurers and supplemental insurers. Program
documents related to the City’s liability coverage through the MMIA can be found here and property
coverage documents can be found here. Mr. Smith’s review is of the MMIA’s coverage documents and is not to be considered a comprehensive review of the City’s liability and property exposures. Mr. Smith
reviewed the MMIA’s liability and property memoranda, reviewed claims reports for the past five years,
and discussed various coverage with City staff, me, and officials from the MMIA. He will be available
during this agenda item to answer questions.
UNRESOLVED ISSUES: This is one step of several that are currently being undertaken to improve
upon the City’s risk management system. As such, our work at the director level and with Mr. Smith
will continue.
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ALTERNATIVES: As suggested by Commission.
FISCAL EFFECTS: After this first step of analysis, $7,200 remains in the budget for insurance
review and consulting.
Attachments:
2012-13 Adopted Work Plan
Request for Qualifications for Insurance and Risk Management Consulting Services Review of MMIA’s Insurance Program for The City of Bozeman Report compiled on: August 12, 2014
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The following matrix illustrates organizational initiatives City staff recognizes as in need of reform to fulfill the City goals as
listed in the annual budget. This matrix is designed to provide a reference during a more detailed discussion on retreat agenda
item IV. To develop and successfully implement each initiative significant staff time and/or other resources will be required.
Several of these initiatives are currently being addressed by established teams. Others are not currently being addressed but
must be within the next two years.
1. Encourage and Promote Opportunities for Citizenship 2.Provide and Communicate Quality Customer Service 3. Build a Strong Team of Staff, Elected Officials and Citizens 4.Anticipate Future Service Demands and Resource Deficiencies and be Proactive in Addressing Them 5. Develop a visually appealing and culturally rich community. 6. Commit to a strong financial position. 7. Provide excellent and equitable public services which are responsive to the community within available resources. 8. Facilitate job creation and provide economic diversity. 9. Identify Community Partners and work to provide services with and through them, where appropriate. 1. Records and Information
Management
2. Community Development Service
Delivery
3. SunGard - Community Development Module
4. Develop a Contract and Procurement Policy/Manual
5. Structure the Risk Management
Program
6. Implement New Technologies
7. Codification Part II
8. Budget Process
9. Advisory Boards
10. Integrate Economic Development
Principles Throughout Organization
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REQUEST FOR QUALIFICATIONS
SUBJECT: Insurance & Risk Management Consulting Services
DUE DATE & TIME FOR RESPONSES: Monday, March 3, 2014, at 8:00 a.m.
PROJECT OVERVIEW:
The City of Bozeman (City) is soliciting Request for Qualifications (RFQ) from interested parties and/or
firms to provide consulting services to the City for certain needs related to insurance and risk management.
Through the RFQ process, persons and/or firms interested in consulting for the City on such services must
prepare and submit a qualifications packet in accordance with the procedure and schedule outlined in this
RFQ.
THE CITY DOES NOT SEEK TO PURCHASE INSURANCE PRODUCTS AT THIS TIME. THIS
RFQ IS ONLY FOR CONSULTING SERVICES AS DESCRIBED HEREIN. ANY RESPONSE
THAT SEEKS TO OFFER SPECIFIC INSURANCE PRODUCTS TO THE CITY WILL BE
REJECTED. AN ENTITY TO WHICH THE CITY CONTRACTS FOR CONSULTING SERVICES
UNDER THIS RFQ WILL BE INELIGABLE TO PROVIDE ANY FUTURE INSURANCE
PRODUCTS TO THE CITY.
Under this RFQ, the City intends to qualify person(s) and/or firms that: (a) possesses the professional and
administrative capabilities to provide the proposed services, and (b) will agree to work under the
compensation terms and conditions determined by the City to provide the greatest benefit to the citizens of
Bozeman.
The person(s) and/or firm chosen will provide services for up to one year on an as needed and requested
basis with the possibility of continued services after the first year.
All questions or comments should be directed to the Bozeman City Manager, Chris Kukulski at
ckukulskiLbozeman.net. No phone calls please. Please include the phrase "Insurance & Risk
Management RFQ"in the subject line of an email inquiry.
SERVICES REQUESTED:
The successful individual or firm will provide the City with services included,not necessarily limited to:
Request for Qualifications for Insurance and Risk Management Consulting Services
Page I of 4
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Primary Services:
1) Assisting the City in identifying its insurable property and liability exposures and recommending
professional methods to reduce, assume or transfer risk of loss;
2) As requested,providing risk management guidance and training to officials and employees of the
City;
3) Advising the City with respect to the suitability of the various existing services being provided
by its current property and liability coverage provider;
4) Reviewing with appropriate City officials any additional coverages that should be carried but are
not covered by the City's current programs, and subject to City's authorization, assist in the
marketing and placing such insurance on the City's behalf;
5) Assisting the City if requested in the preparation of applications, statements of values, and
similar documents requested by insurance underwriters, it being understood that this is not
inclusive of any appraisal work;
6) As requested, reviewing certificates of insurance, endorsements, and contracts with contractors,
vendors, and professionals and reviewing any insurance requirements and/or contracts in
conjunction with such requests; and
7) As requested, reviewing applications for street closures, park reservations, and encroachment for
appropriate indemnification and insurance information; and
8) Reviewing loss reports and generally assist City officials to meet loss containment objectives.
Additional Services Upon Request by City:
9) Assisting the City if requested in the preparation of its annual insurance budget;
10)Attending meetings with employees and officials as requested to promote the safety objectives of
the City;
11)Assisting where needed or requested and only as appropriate in the settlement of claims, with the
understanding that the scope of services does not include the work normally done by a public
adjuster;
12)Assist in the development if requested of a City-wide policy, regulation, and procedures to
protect the health and safety of the employees and public and protect the City from liability; and
13)Any other insurance or risk management services deemed necessary by the City.
PROFESSIONAL QUALIFICATIONS TO BE ADDRESSED IN RESPONSE:
1. Name of firm or individual;
2. Address of principal place of business and telephone and fax numbers and a contact email
address.
3. For all individuals who will be providing services to the City: a description of their education,
experience, qualifications, number of years with the firm and a description of their experience
with projects similar to those described herein;
4. Experience related to providing insurance and risk management services to public entities;
5. Three references of which must have knowledge of your representation of public entities with
respect to insurance and risk management services;
6. Examples of your successes representing public entities;
7. A fee statement on either an hourly or lump sum basis for specific services and a statement on
costs to be billed such as travel, etc.;
Request for Qualifications for Insurance and Risk Management Consulting Services
Page 2 of 4
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8. A copy of any required professional federal and/or state licenses to perform the required
activities;
9. Provide samples of deliverables for similar services; and
10. Any other information the interested individual or firm deems relevant.
SELECTION CRITERIA
The selection criteria used in awarding a contract or agreement for professional services as described herein
shall be at the City's discretion but shall include at a minimum:
1. Qualifications of the entity and specific individuals who will perform the tasks and the amounts
of their respective participation;
2. Experience and references;
3. Ability to perform the task in a timely fashion, including staffing and familiarity with the subject
matter;
4. Experience working with local government; and
5. Cost competitiveness.
SUBMISSION REQUIREMENTS
This request for qualifications remains open until filled. Only electronic submissions will be accepted. Please
email submissions to a 4endaa.bozeman.net and include the following in the subject line: "Insurance and
Risk Management RFQ: Submission from [insert name]." All submissions must be delivered on or before
8:00 a.m. Monday, March 3, 2014.
RESERVATION OF RIGHTS BY CITY OF BOZEMAN
The issuance of this RFQ and the acceptance of a submittal do not constitute an agreement by the City that
any contract will actually be entered into by the City. Any costs incurred by respondents in preparation of a
response to this RFQ are completely the responsibility of the respondents. Any or all disputes arising under
this RFQ and any contract negotiated as a result of this RFQ shall be governed by the laws of the State of
Montana. The City reserves the right to issue written notices of any change in the submittal process
should the City determines, in its sole and absolute discretion that such changes are necessary or
desirable.
In addition and notwithstanding any other provision ofthe RFQ,the City reserves the right to:
1. Waive any immaterial defect or informality in a submittal;
2. Extend or otherwise revise the submittal date;
3. Reject any or all submissions or portions thereof;
4. Cancel this RFQ at any time;
5. Reissue a new or revised RFQ; and
6. Request additional information or one or more teams to submit a more detailed submittal.
This solicitation does not require the City to award a contract, to pay any cost incurred with the preparation
of a qualifications statement, or to procure or contract for services. The City reserves the right to accept or
reject any submittals received in response to this request, to negotiate with any qualified source, or cancel in
whole or part this process if it is in the best interest of the City. Prior to negotiations,prospective entities may
Request for Qualifications for Insurance and Risk Management Consulting Services
Page 3 of 4
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be required to submit revisions to their qualifications statements. All submitters should note that any contract
pursuant to this solicitation may be dependent upon the recommendation of the City staff and the approval of
the Bozeman City Commission.
SUBMITTAL REJECTION/RIGHT TO DISQUALIFY
Submittal of terms, condition and/or agreements may result in rejection if such terms, conditions, or
agreements are deemed unacceptable by the City in its sole discretion. The City reserves the right to
disqualify any entity who fails to provide information or data specifically requested herein or who provides
materially inaccurate or misleading information or data or who attempts to influence the selection process
outside the procedures established herein. The City reserves the right to disqualify any entity on the basis of
any real or apparent conflict of interest. This disqualification is at the sole discretion of the City.
CITY OF BOZEMAN'S ANTI-DISCRIMINATION POLICY
Each entity submitting under this notice shall include a statement wherein the submitting entity affirms in
writing it will not discriminate on the basis of race, color, religion, creed, sex, age, marital status, national
origin, or because of actual or perceived sexual orientation, gender identity, or disability in fulfillment of a
contract entered into for the services identified herein and that this prohibition on discrimination shall apply
to the hiring and treatment of the submitting entity's employees and to all subcontracts it enters into related
to fulfillment of the services identified in this RFQ.
Failure to comply with the above shall be cause for the City to deem the submittal non-responsive.
Dated at Bozeman, Montana, this 3rd day of January, 2014.
Stacy Ulmen, CIVIC
City Clerk, City of Bozeman
For publication on:
NnUffy 12, 19 ank.1 FebNary 23, 2014
Request for Qualifications for Insurance and Risk Management Consulting Services
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INSURANCE ...........................................................................
CONSULTING & EDUCATION
.James E Smith, CPCL", CIC, AI .. S B
July 11, 2014
Mr. Chris A. Kukulski, City Manager
City of Bozeman
121 North Rouse
Bozeman, Montana 59771-1230
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Re: Montana Municipal Interlocal Authority Insurance Program
Dear Mr. Kukulski:
The enclosure is a review of the City of Bozeman's current property and casualty insurance
coverages that are written through Montana Municipal Interlocal Authority (MMIA). This
review is based on the July 1, 2014 to July 1, 2015 contract provisions along with the October 1,
2013 to October 1, 2014 Evanston Insurance Company's Special Events policy.
The enclosure is a synopsis of the coverages, limits of liability and deductibles. Please review the
insurance contracts for the exact policy conditions, exclusions, and terms for more detailed
information. However, it is my opinion that the City of Bozeman's insurance program is
comprehensive and complete.
If more detailed information is needed, please do not hesitate to contact me with your inquiries.
Since~r l~Vh<hq ~ J
J e . Smith, CPC~SB
Mo a Consultant's License #44
:i0/.1 .\kll h;tttan Road • Bozeman. ,\\ontana 597 15 • Tel/Fax: -106-585-075/ • E-0\ail: jsmith70,'i20'aol.com 64
REVIEW OF
MONTANA MUNICIPAL INTERLOCAL
AUTHORITY'S
INSURANCE PROGRAM
FOR
THE CITY OF BOZEMAN
PREPARED BY
JAMES F. SMITH, CPCU, CIC, AFSB
JULY 11, 2014
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A. OVERVIEW.
The insurance program for the City of Bozeman is purchased through Montana Municipal
Interlocal Authority, Helena, Montana. MMIA commenced operations on July 1, 1986 as
a result of the lack of insurance coverages available to political subdivisions, principally
municipalities. This entity, therefore, formed a risk retention group for Montana cities
and now has $116,000,000 in assets in the pool. The pool now consists of 105 cities and
towns which now fund for the risk transfers to the pool which, in tum, purchases
catastrophic limits of liability.
B. PROPERTY COVERAGES.
This section of the coverages provides physical damage protection for the City's
buildings and personal property for the Total Insured Value of$196,603,187.00. This
current value represents a $58,408,182 increase in the TIV. This section is written with a
$5,000 Deductible Per Occurrence and covers real and personal property the City owns,
and, in addition, the property of others in the care, custody or control of the City. The
TIV includes all the City vehicles and contractor equipment.
The Extension of Coverage provisions extends protection to the personal effects and
wearing apparel of any official and employee. It also protects real property for property
under construction, except for dams, piers, roads and bridges which need specific
coverage only if their values are higher than $500,000. Projects under construction have
their soft costs protected up to 25% of the completed value ofthe project including
additional interest charges, rental value, additional real estate taxes or other assessments,
additional architect/engineer fees, and legal/accounting expenses. The Builder's Risk
portion has a sub limit of $25,000,000 per project if higher limits are not required.
The Extension of Coverage also includes expediting expenses, those extra costs to
minimize the shut down time after a loss. Debris removal, demolition costs, increased
cost of construction, and building law compliance are included. There is a $100,000,000
sub-limit for Business Interruption and a $50,000,000 sub-limit for Extra Expense losses.
The Business Interruption/Extra Expense provisions also include coverage for loss of
ingress and egress for up to 30 days. Interruption by civil authority is included again for a
3 0 day period if access to covered property is prohibited by a civil authority. Contingent
Tax Revenue Interruption is also included which insures against loss of sales, property or
other tax revenues due the City because of damage or destruction to property which
prevents the generation of revenue to the City.
The property insured is protected against "all risk of direct loss or damage that occurs
during the period of this Memorandum." The perils of earthquake ($1 00,000,000) and
flood ($50,000,000 or $25,000,000 depending on specific flood zones) are included in the
contract. However, not all losses are covered. There are 17 exclusions comparable to the
exclusions in commercial property forms issued by traditional insurance carriers. Loss or
damage caused by moths, vermin, termites, wear, tear, gradual deterioration, wet rot, dry
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rot, normal settling, shrinkage, or expansion in buildings or foundations, artificially-
generated electrical damage, war and nuclear contamination are samples of common
property exclusions. The MMIA form does, however, exclude mold, while standard
commercial property forms grant a $15,000 limit for damage caused by mold.
The Territorial Limits in the contract are the United States and Canada, the latter with a
$500,000 limit. Personal Property while in Transit is covered under a worldwide basis.
The contract does not contain a co-insurance provision which is an advantage to the City.
At the time of an insured property loss, the claims adjustment will be made on a
replacement cost basis without deduction for depreciation. The City's vehicles and
contractors/mobile equipment are covered for a stated amount value per the
vehicle/equipment list, dated July, 1, 2014. If cash payment is elected in lieu of physical
replacement or substitution, the recovery will be based on an actual cash value basis.
Under the Boiler and Machinery section, a limit of $100,000,000 is available for boiler
explosion and mechanical breakdown. This section also covers computers and electronic
data processing equipment along with the electronic data media and data restoration. A
$2,500 deductible is applicable to these provisions.
Under the Fine Arts Floater, a $2,500,000 limit of liability is available for objects of art
owned by the City or in the care, custody and control of the City including transit
exposures. Loss adjustment to City-owned art objects is at the current fair market value
established by the City prior to loss. Art objects of others are adjusted at the values
agreed upon between the owners and the City prior to loss.
C. GOVERNMENT CRIME COVERAGES
A specific crime insurance policy written in National Union Fire Insurance Company is
effective from July 1, 2014 to July 1, 2015. This insurance policy covers the following
crime exposures:
1. Employee Theft-Per Loss
2. Forgery or Alteration
3. Computer Fraud
4. Theft of Money-Inside
5. Theft ofMoney-Outside
6. Funds Transfer Fraud
$5,000,000 with a $15,000 Deductible
$2,500,000 with a $ 5,000 Deductible
$5,000,000 with a$ 5,000 Deductible
$ 100,000 with a $ 5,000 Deductible
$ 100,000 with a$ 5,000 Deductible
$5,000,000 with a $ 5,000 Deductible
This policy has also been endorsed to cover any credit, debit or charge card issued to the
City or any employee for business purposes with a $2,500,000 limit ofliability. Coverage
is extended to any director or trustee, any volunteer, and any treasurer or tax collection
Also attached to this coverage is an endorsement adding faithful performance of duty.
This endorsement covers not only malfeasance in office, but also misfeasance and
nonfeasance.
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D. CYBERLIABILITY COVERAGE
This insurance is provided through Lloyd's of London providing the City with the
following coverages.
1. Information Security & Privacy Liability
2. Privacy Notification Costs
3. Penalty for Regulatory Defense
4. Website Media Content Liability
$2,000,000 Annual Aggregate
$ 500,000 Annual Aggregate
$2,000,000 Annual Aggregate
$2,000,000 Annual Aggregate
These first four coverages are third party liability coverages and are written on a • claims-
made and reported' basis. Coverages under these insuring agreements apply only to
claims first made against the City and reported to the underwriters during the policy
period, 7-1-2014 to 7-1-2015. If a claim is made in the last 30 days of the policy period,
an additional 30 day extension is available for reporting the claim.
5. Cyber Extortion
6. First Party Data Protection
7. First Party Network Business Interruption
$2,000,000 Annual Aggregate
$2,000,000 Annual Aggregate
$2,000,000 Annual Aggregate
These last three coverages are first party protections, and a $50,000 retention applies
against each claim. This insurance, all seven provisions, applies to claims made, acts
committed, or loss occurring anywhere in the world.
E. LIABILITY COVERAGES
The liability section of the MMIA program encompasses seven areas of exposure of
concern to a municipality. Each of the following coverage sections has its own insuring
agreement, exclusions, and conditions.
1. General Liability including Auto
2. Public Officials Errors and Omissions
3. Employment Practices
4. Employee Benefits Liability
5. Land Use Practices
6. Defense ofNon-Monetary Claims
7. No Fault Sewer Backup/Water Main Breaks
Various limits of liability apply separately for each coverage section. General Liability
and Public Officials Errors and Omissions are written with limits of $750,000 Each
Claim/$1 ,5 00,000 Each Occurrence. Employment Practices, Employee Benefits, and
Land Use Practices are written with $500,000 Each Occurrence. Defense ofNon-
Monetary Claims are written with $100,000 Each Occurrence/$200,000 Annual
Aggregate. The No Fault Sewer Backup has a $1,000 Each Claimant limit.
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Should a claim for any damages which is not subject to the Montana Statutory Limits
occur, an additional $12,500,000 is available. Defense Costs are in addition to the limits
of liability for coverages 1 through 5 above. However, defense costs are included inside
the liability limit for Non-Monetary claims and the $12,500,000 limit for claims outside
the Montana Statutory Limits. By endorsement, liability for skateboard parks has been
included under the general liability section
A deductible of$11,250 applies per occurrence. This deductible is based on the City's
annual payroll.
The covered insureds under the MMIA program are extremely broad. The City of
Bozeman is the prime entity covered. The program covers individuals who were, or are
now, elected or appointed officials, whether compensated or not, members of
committees, boards, commissions, or special districts of the City. The program covers
past or present employees whether or not compensated all while acting on behalf of the
City. This also includes volunteers working under the direction and control of the City.
By defmition, all law enforcement personnel and any firefighters are covered as well as
other law enforcement agencies and firefighting entities which render assistance to the
City through a mutual aid agreement.
The program also has the ability through the Additional Covered Party Endorsement to
add other entities to the insurance program. However the underwriting for any such
request for additional insured status originates at MMIA' s Helena office.
The liability coverage territory is worldwide. However a claim against the City must be
brought back within the United States, its territories and possessions, and Canada
Note that the auto liability section does not cover Uninsured or Underinsured Motorists
protection, per 1 0.2.29. After querying MMIA why these coverages were not in the
program, I was told that, since workers compensation was the sole remedy for a City
employee injured in an auto accident, these coverages were not needed. I asked about a
non-City employee, riding in a City-owned vehicle and was told that person's personal
auto policy would have to respond.
The program has an Authority to Settle provision (Section 17.9) which states that, should
MMIA recommend a settlement that is acceptable to a claimant and the City does not
agree to such settlement, then the limits ofliability will be reduced to the sum that could
have been settled plus reasonable defense costs. The City is then obligated to pay any
settlement over these amounts without the benefit of remaining liability limits.
F. POLLUTION LIABILITY
A stand-alone pollution policy, effective 7-1-2012 to 7-1-2015, is in place in Indian
Harbor Insurance Company. This insurance company is A Rated by A.M.Best and is part
of the XL Insurance Group.
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The policy is written with a $2,000,000 Each Pollution Condition and a $10,000,000
Aggregate Liability Limit. The Self-Insured Retention is $50,000, and the Retroactive
Date is July 1, 2001.
This policy is written an a "'claims made and reported" basis which is more restrictive
than the familiar "claims-made" policies. This policy requires that a claim be made
against the City during the policy period and reported to the company during that policy
period.
The policy has three coverage sections:
A. Pollution Legal Liability
B. Remediation Legal Liability
C. Contingent Transportation Coverage.
This policy covers, by definition, pollutants that are solid, liquid or gaseous, including
smoke, vapors, odors, soot, fumes acids, and mold. However, lead-based paint, mold, and
asbestos are the three pollutants specifically excluded from coverage.
The insuring agreement states that the Company will pay on behalf of the City a loss and
legal expense resulting from a pollution condition. Loss refers to Bodily Injury and
Property Damage. By specific definition in the policy, Property Damage means physical
injury to or destruction of tangible property, including loss of use, loss of use of third
party property that has not been physically injured or destroyed, and ,lastly, diminished
third party property value.
The policy contains an automatic extended reporting period of90 days at no cost. A 365-
day optional reporting period is available to the City should the policy be non-renewed by
the company. This additional period will bear a premium of 100% the annual premium
for the City.
The policy also has coverage for business interruption and extra expense with a
$1,000,000 per claim limit.
G. The entire program through MMIA is subject to retrospective rating calculations. The
program looks backwards at loss experience and claims paid to each city in the programs.
Those cities with favorable experience receive a reduction in their premiums. Those with
unfavorable experience do not receive any refunds. This year the program is refunding
$3,000,000 in surplus from unencumbered reserves. The City of Bozeman is receiving a
$134,733.00 Risk Assessment Adjustment for its favorable claim history.
H. CONCLUSION
In addition to the review of the existing contracts, I also reviewed the five year loss
history for the City. I also received from MMIA the property, vehicle and equipment
schedules. My opinion is that the City ofBozeman's property and casualty insurance
program is comprehensive and complete, subject to the terms, conditions, and exclusions.
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I am concerned that Uninsured Motorists and Underinsured Motorists Liability are
specifically excluded from the MMIA program. It is my intention with City approval to
broach the subject again with the underwriters in Helena.
Respectlll:~l7t
Jam s . Smith, CPCU, CIC, AFSB
Con u tant's License #44
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