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09-22-1986 - Special , .' ~.. o o CITY COUNCIL OF EDGEWATER SPECIAL MEETING SEPTEMBER 22, 1986 MINUTES Mayor Baugh called the meeting to order at 3:00 P.M. in the Community Center. He stated the purpose of the meeting was to take action on institution of the self-insurance program. ROLL CALL Mayor Earl Baugh Councilman Louis Rotundo Councilman Russell Prater Councilman Neil Asting Present Present Present Present Councilman James Inman City Attorney Jose'Alvarez City Clerk Connie Martinez Chief Lawrence Schumaker Deputy City Clerk Susan Wadsworth Present Present Excused Excused Present Also present was Mr. Gary Schad, the City's insurance agent with Town and Country Insurance Agency. Mayor Baugh requested a short recess for the City Attorney to take care of some business in the Police Department. Councilman Rotundo so moved. Councilman Inman seconded the motion. Meeting was recessed at 3:01 P.M. The meeting was called back to order by Mayor Baugh at 3:09 P.M. Mayor Baugh stated that he'd read the ordinance and had talked with the City Attorney on Friday about the workshop held last week. Councilman Asting asked that City Attorney Alvarez again depict on the chalk board the organizational structure for this program. City Attorney Alvarez showed the self-insurance administrator, with claims on one side and risk management on the other. He pointed out that claims would be every time there is an accident involving City personnel or property it's handled by the claims section and the self-insurance committee. He noted the self-insurance committee would consist of the City Administrator, City Attorney, and the insurance manager. He stated that on the other side is risk management where management of risks takes place to eliminate their risk exposure for possible claims, and that's where the safety committee is located with department heads plus whoever else is going to be involved in that committee. He said when an accident occurs, there's an initial determination of liability, ascertainment of exposure we might have in terms of damages, and that determines the reserves that will be placed on pap~r for future claims, if any, and then the settlement or denial of the claim and if it goes to litigation, then it stays with the claims section. City Attorney Alvarez explained that claims up to $l,OOOare settled by the committee, and anything over that goes to the City Council. City Attorney Avlarez stated that the safety committee causes implementation of rules as well as employee conduct to minimize the activities of those departments and employees who are producing the accidents that create the claims. He said the idea is to have no claims at all. City Attorney Alvarez reviewed the information received from Tallahassee regarding the Claims Bills and noted that it looks good. Councilman Asting asked the estimated savings in premiums by going self- insured and City Attorney Alvarez replied it would be the entire premium, and based on the past three years' experience, they should save about $180,000. Mr. Schad said it will be $200,000 this year and with about a 20% loss ratio plus administration costs of about $40,000 to $45,000, they should have about $150,000 in savings if all goes well. Mr. Schad reminded the Council that now the City is taking the risk. Mayor Baugh noted that it's still a plus figure. , o o Action on self-insurance program (Continued) - There was a brief discussion about hurricanes and their effects being an act of God. City Attorney Alvarez noted they'll have insurance for buildings and contents. Councilman Rotundo asked if we'll carry it with the same company and City Attorney Alvarez replied yes. City Attorney Alvarez pointed out there's no problem getting that because the buildings won't hurt anyone, and the coverage they can't get is liability. Mr. Schad noted that public officials was cancelled and Police is hard to get. Councilman Rotundo asked about trees falling down on Riverside Drive during a hurricane. Mr. Schad replied that it's an act of God and they don't have a flood policy against rising water and that will be covered by a policy with a deductible. Councilman Rotundo asked about City roads and Mr. Schad replied that they aren't covered. City Attorney Alvarez noted that it will go under liability, but if two civilians are involved, we don't enter into that unless they maintain the fault is with City stop signs or City trees, etc. He added that the biggest exposure is the fleet, or operation of motor vehicles, and the Police Department, with training and supervision, can be controlled. Councilman Asting stated he thinks it will be worthwhile to embark on the self-insurance program for the money they will save in the future to use for other purposes in the City. He asked the next step. Councilman Inman stated they should consider the money expended against claims should be replaced plus building the fund to a certain amount. He added that when they reach the cap, then ~hey only replace what ~hey use or change the cap. Mr. Schad suggested they go to a cap of about one million dollars and then look for someone to buy insurance from because the market isn't good now and they might want to insure everything over one million. Councilman Asting noted they'll add the premiums they're saving to the principal to build it up. City Attorney Alvarez noted that the decision was first made about a year ago in November of 1985 when the City Administrator informed the City Council of the increased premiums and they decided to go self-insured. He added that it took this long to put it together in terms of analysis and pro- cedures. He noted that the policies that were cancelled were not the fault of Edgewater but the nature of the insurance market today. Mr. Schad pointed out the payment is made until October 1st. City Attorney Alvarez pointed out this could have been done by resolution and some cities don't even do that but he prefers an ordinance. Mayor Baugh agreed he feels more comfortable with an ordinance. City Attorney Alvarez stated it's a big step and it's been thoroughly considered and Council has talked to other muncipalities about it. Mayor Baugh stated that he went to the insurance meeting this year and more and more cities are going self- insured because they can't afford the big premiums. City Attorney Alvarez then read Ordinance 86-0-30 for first reading. ORD. 86-0-30 - AN EMERGENCY ORDINANCE OF THE CITY COUNCIL OF THE CITY OF EDGEWATER, FLORIDA, CREATING THE CITY OF EDGEWATER SELF-INSURANCE FUND; PROVIDING FOR THE APPROPRIATION AND ACCUMULATION OF FUNDS; APPROPRIATING SUCH FUNDS FOR THE PURPOSES DESIGNATED; STATING THE INTENTION FOR THE SELF-INSURANCE AND INSURANCE PROGRAM TO OPERATE AND FUNCTION IN A MANNER SIMILAR TO A COMMERCIAL INSURANCE COMPANY; PROVIDING FOR THE APPOINTMENT OF THE CITY OF EDGEWATER SELF-INSURANCE AND INSURANCE COMMITTEE TO ADMINISTER THE PROGRAM; PROVIDING FOR THE DUTIES, AUTHORITY AND RESPONSIBILITY OF THE COMMITTEE;PROVIDING FOR THE CITY ATTORNEY TO PROVIDE ALL LEGAL SERVICES REQUIRED TO ACCOMPLISH THE PURPOSES OF THE PROGRAM; PROVIDING AUTHORITY FOR THE SETTLEMENT OF CLAIMS NOT EXCEEDING ONE THOUSAND DOLLARS BY THE SELF-INSURANCE COMMITTEE AND FOR THE SETTLEMENT OF CLAIMS IN EXCESS OF ONE THOUSAND DOLLARS UPON THE APPROVAL OF THE CITY COUNCIL; CONTAINING A REPEALER PROVISION, A SEVERABILITY CLAUSE; DECLARING THIS ORDINANCE TO BE AN EMERGENCY ORDINANCE AND DISPENSING WITH THE REQUIREMENT OF READING SAME ON TWO SEPARATE DAYS BY A THREE-FIFTHS VOTE OF THE CITY COUNCIL AND PROVIDING FOR AN EFFECTIVE DATE. Councilman Inman moved to accept this Ordinance 86-0-30. Councilman Asting seconded the motion. Motion CARRIED 5-0. -2- Council Special Meeting Minutes September 22, 1986 .~ ~ o o Action on self-insurance program (Continued) - City Attorney Alvarez then read the Ordinance 86-0-30 for a second time. Mayor Baugh asked for public input or for any questions. Elizabeth M. Taylor, 119 Park Place, asked if this is liability only and City Attorney Alvarez replied at this time. Mr. Schad added they're looking at liability and vehicles and probably a high deductible on the property. Ms. Taylor asked if they're going to pick an administrator and Mayor Baugh said it will be the City Administrator and she's doing it now. Councilman Asting pointed out that the self-insurance committee will assist. City Attorney Alvarez explained that the role is liaison supervisor and as personnel officer the administrator,under the rules and regulations, has that authority, and the City Attorney and insurance agent will work with her. Mayor Baugh stated she's on the claims end of it. Councilman Rotundo pointed out they do all the paper work for that now. Tom Sheridan, Florida Shores, asked what part the prevention and safety program plays in this. City Attorney Alvarez replied it's the most important part. Mr. Sheridan asked why it's not being executed properly as some departments have not contributed to the program at all or done the paper work. City Attorney Alvarez explained that the City Administrator is in charge of that section. Mr. Sheridan then asked why it has taken a year and half to bring this out as it should have been done at that time. Mayor Baugh replied that it's taken that long to get the packet together for self-insurance. Mr. Sheridan stated that he talked with the Mayor and individual Councilmen several times and told them that it wasn't going right and the work wasn't being done as it should be. He added that the risk manager from Adjustco was here and he couldn't say anything to him because he was a contractual employee. He said he picked up 12 to 18 things and was given a copy of the letter and he told the Administrator he'd do a follow up inspection but he never heard any more about it. City Attorney Alvarez noted that the City Administrator is not at this meeting and there will be a lot of internal procedures that will be implemented including a personnel policy regarding offenders in different departments. Mr. Sheridan stated that he stressed that for three years and that they should have enforcement and corrective action. City Attorney Alvarez said they discussed this thoroughly last Thursday and the role that the City will have to take to make sure safety rules are carried out regarding implementation and the training aspect of it. Mr. Sheridan referred to documentation on file, and stated that all they need is an audit of the safety program and it will show where it goes wrong. City Attorney Alvarez pointed out that he and the insurance agent have no jurisdiction on that side and it's under the City Administrator's side. He suggested another meeting with the City Administrator and bring the records out. Mayor Baugh stated they have to implement the program that Tom Sheridan started. Mr. Sheridan stated that it's to prevent accidents and the procedures have not been followed. He added that they sent memos to Council and department heads advising them the responsibility for safety lies with the supervisors in the field. Councilman Rotundo stated they have department head meetings now and each department head is chairman of the safety committee for one month. Councilman Asting noted that monthly meetings were established by Tom Sheridan. Mr. Sheridan asked if they're following the safety manual. Councilman Asting stated that Tom Sheridan wrote the program for the City and it was excellent. Councilman Rotundo said that's what they're following now. Mr. Sheridan stated that the program will not work unless the whole concept is used. Mayor Baugh noted that all employees have the safety rules and Mr. Sheridan explained that only supervisors and Council have the safety manual. -3- Council Special Meeting Minutes September 22, 1986 " . . . . - o o Action on self-insurance program (Continued) - City Attorney Alvarez suggested that if the ordinance is adopted and as of October 1st they're self-insured, that they set a date for a workshop to bring all the records in and invite Tom Sheridan, all department heads, the City Administrator and Gary Schad. He added that they have to work with the safety aspect. Mr. Sheridan stated it's a good program and it's a shame it's not being utilized the way it was written, because~ if followed, they would be on top of every accident. He added that if they wait the evidence is destroyed, and even non-injuries should be investigated because that's a sign something is wrong. Councilman Rotundo asked how he is being compensated for these meetings and Mayor Baugh replied that he isn't now. Councilman Asting moved to adopt the ordinance. Councilman Rotundo seconded the motion. Motion CARRIED 5-0. City Attorney Alvarez stated that he, Gary Schad, and the City Clerk will meet with all department heads to cover all bases and they could combine it with the meeting referred to previously with City Council so that department heads will realize Council's feelings about the importance of their role in the program. There was a discussion about available meeting dates and it was determined to meet on Thursday, October 2nd, at 3:00 P.M. Mayor Baugh asked about compensation and Councilman Asting suggested they talk about it next time. Councilman Asting asked if they still carry some insurance with Town and Country and Mr. Schad replied yes. Mayor Baugh asked Mr. Schad his thoughts about compensation. Councilman Asting suggested it be on an as needed basis. Councilman Rotundo suggested a retainer of some type. City Attorney Alvarez commented on the large amount of paper work involved and the fact that Gary Schad is familiar with setting this up and carrying it out, plus he will work on claims evaluation because of his experience and ability to predict for reserves. He added that Gary Schad also can make an ongoing effort to secure insurance in another area as the fund builds up, and he's done a lot of work already by telephone with other agencies. Mayor Baugh noted the majority of cities seem to be going self-insured. Mr. Schad said he talked to several and safety is the key to success of this program and setting it up so it works together. There was a discussion about the financial aspect of Ormond Beach's program. Mayor Baugh requested a motion to adjourn. Councilman Asting so moved. Councilman Inman seconded the motion. Meeting was adjourned at 3:58 P.M. Minutes submitted by: p -F Lura Sue Koser ONE ATTEST: Excused COUNCILMAN - ZONE TWO 'k~k~ COUNCILMAN - NE THR E ./ 7~ /'--7- OUNCILMAN - ZONE FOUR 7~ (/~ CITY CLERK/AD Approved this 6th d ozr~ (?;:~. MAYOR -4- Council Special Meeting Minutes September 22, 1986