By NATE KING
Salina Post
The Salina City Commission held a study session and meeting yesterday, June 24 to discuss various topics, including the renewal of the City's agreement with Travelers Insurance for property and casualty insurance.
Nancy Schuessler, director of risk management for the City of Salina presented the agreement at the meeting on Monday.
"The City purchases property and casualty insurance to cover a multitude of things like buildings, equipment, autos, law enforcement liability, cyber liability etc. Shortly after the beginning of each year," Schuessler said. "Since property/casualty insurance carriers almost exclusively utilize the agency/broker system to market and sell their policies, the City uses Iron Insurance Partners as our intermediary. Charlesworth Consulting is a contractual extension of City staff offering a wide range of resources, one of which is serving as an advisor during the renewal process."
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The City first entered into an agreement with Travelers in 2001, with the current insurance agreement set to expire on June 30, 2024. In February, Iron Insurance Partners and Charlesworth Consulting presented a study session to commissioners, preparing them for renewal. City Staff updated city commissioners on the likely increase in costs associated with property/casualty insurance.
"The February study session included considerable discussion of property and liability coverage concerns and their volatility," Schuessler said. "Inflation is impacting values, product availability, and labor rates and there has been an increase in liability claims nationwide. At the study session, it was estimated we could go from paying last year $700,000 in premium to $880,000."
Then in March, Travelers returned to commissioners saying the insurance premium could be as high as $914,000. Ultimately, it came in just shy of $908,299, with Travelers taking a 30% premium increase, which equates to $211,009.
"It is no surprise that property saw the largest increase, Schuessler said. "This year marks the fourth year in a row that global catastrophic losses have exceeded $100 billion. Of the Top 10 total economic losses in 2023, two were actually storms that hit the Midwest."
Following Schuessler's remarks, Salina Mayor Bill Longbine said he was experiencing a little bit of sticker shock. "The sticker shock here it feels like we're now California or Florida," Longbine said. "Do we pay this [$908,299] in one lump sum?"
Schuessler replied, "Yes, it is a big check."
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Salina City Manager Mike Schrage provided commissioners with further context regarding the increase.
"The dollar cost of the premium, the value of the buildings is going up and the minimum amount of coverage is going up, so it is not just the cost of the premium going up," Schrage said.
Commissioner Mike Hoppock asked whether or not city-leased vehicles that sustain minor hail damage would be required to be fixed or if minor dings could be left as they were.
"Enterprise told us that if we chose not to repair it because there were only a few dings, that would be fine. They would be okay with that, but we would not see the return on that vehicle," Schuessler said. "They would deduct that. They basically need to assess each vehicle to determine if it makes sense to repair them."
Schuessler said most vehicles are repaired, with only a few older police vehicles not being repaired. Mark Skidmore, president of Iron Street Insurance Partners, was also present at the meeting. Commissioner Mike Hoppock asked Skidmore if the City of Salina could expect to see additional increases in the future.
"I hope not. I'm only 30," Skidmore replied. "I look like I'm much older than that."
Hoppock jokingly responded, "The insurance friends I have are becoming less of a friend because of what they charge me now."
Skidmore said that in retrospect, looking at the recovery from the COVID-19 pandemic and inflation, he thinks the marketplace will catch up.
"Once they get building values appropriately insured and figure out the storm systems, they will figure out where to get their price model. I just hope it's sooner rather than later," Skidmore said.
Longbine asked Skidmore whether private industries like Great Plains and Schwans were also seeing increases in their premiums. "Exactly. There is nothing against the City of Salina here," Skidmore said. "Whether it's county government or large manufacturers, it's the same."
According to James Charlesworth, who advises the City through the renewal process, a viable replacement for Travelers was not found.
"I'm optimistic that we are nearing the end... hopefully, this will come to an end in a year or two, but this is not sustainable," Charlesworth said.
Shortly before the vote to decide whether or not to renew the agreement with travelers, Hoppock shared why it would be beneficial to stick with Travelers.
"I think it would be advantageous, depending on that price difference to stay with someone you've been with for 20 years," Hoppock said. "You've built up a reputation. If you switch to someone else and have a large claim, I could see you getting canceled... It would take a lot from me to jump ship."
Vice-Mayor Greg Lenkiewicz made the motion to renew the agreement with Travelers for property and casualty insurance, with Commissioner Trent Davis seconding it. The commissioners voted unanimously in favor of renewing, and the final vote was 5-0.