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Home My WebLink AboutRE: 2023-2024 ICRMP Renewal Mike Plane From:Gretchen Scott Sent:Wednesday, May 17, 2023 09:46 To:Justin Nyquist Cc:Mary Kummer; Travis Rothweiler; Ida Clark Subject:RE: 2023-2024 ICRMP Renewal Good morning, Thank you for the response that you have provided. I think the discouraging part is that there has not been considera?on from ICRMP for the excellent partner we have been for decades. We have voiced this for the past few years and yet we con?nue to receive blanket increases along with the pool and en??es with high-risk claims. In fact, given your comments below we can expect high renewals for the next few years to “catch up”. It seems that the alterna?ve is turning to the market for compe??ve bids. Since leaving HUB and going direct insured last year, HUB has been pursuing alterna?ves and are ready to meet with us. I haven’t seen a proposal yet, but I do think we have been appropriately mo?vated to consider an alterna?ve provider. Thank you for the renewal proposal you have provided we will communicate our decision. Sincerely, Gretchen Gretchen G. Scott Deputy City Manager gscott@tfid.org Phone: 208-735-7228 Cell: 208-358-1016 www.tfid.org From: Justin Nyquist <JNyquist@icrmp.org> Sent: Monday, May 15, 2023 11:36 AM To: Gretchen Scott <Gscott@tfid.org> Cc: Mary Kummer <MKummer@icrmp.org> Subject: 2023-2024 ICRMP Renewal \[EXTERNAL SENDER\] 1 Good morning/afternoon (depending on when you see this) Gretchen, Mary relayed to me that you have some concerns over the 23-24 renewal premium, so I wanted to provide you with some more information and “behind the scenes” information via email, so you can see it and share it with the council, or whoever at the city needs to receive it. This email may be a little lengthy, but just know I’m trying my best to describe and convey a bigger picture and the underlying factors that have contributed to this very difﬁcult renewal. I’ve attached the renewal premium letter from out Executive Director to this email as well. First, I just want to present a brief historical premium summary. 2019-2020: $436,455. This was a 3% increase over the prior year. Had the city not achieved any discounts, the increase would have been around 8% overall. 2020-2021: $452,996. This is a 4% increase over the previous year. Had the city not achieved any discounts, the increase would have been around 9% overall. 2021-2022: $460,420. This includes risk discounts. This was a 2% overall increase from the 2020- 2021 year. If the city had not achieved the discounts, it would have been about an 6% increase overall. 2022-2023: $440,855. This is a decrease from the previous year and is attributed to the city coming direct to ICRMP without an agent, combined with the discounts. 2023-2024: $509,906. This is a 16% increase. Without the risk discounts completed by the police department, it would have been a 20% increase from the 22-23 premium. One thing that’s important to keep in mind is that ICRMP’s Board of Trustees sets premium caps every year. The premium increases have to stay within those caps. The 23-24 premium caps set by the board were 15%-20% for public entities. That means every single public entity’s premium is going up a minimum of 15%. Next, a beneﬁt/result from the Board-set premium caps is that we don’t catch-up to premium we need from members all in one year; instead, we grow premium within the board-set caps, even if that means we are not collecting all the premium our model says that we need to collect from a member. The City of Twin Falls is in this category – we still haven’t caught up with the city’s growth in property values and payroll, but we don’t charge everything at once, we grow the premium a little bit each year. This stability is a core standard that the ICRMP program operates under. This year’s premium caps are higher than previous years’ caps, and I’ll explain more about “why” below. We still have the caps in place though, which helps premiums like Twin Falls’ stay moderated. Without those caps, the premium increases could have potentially been much higher. This year is one of the hardest years on record, since the mid 1980’s when commercial carriers just dropped all public entities in one swift motion, due to the risks and the market conditions. We are in what’s called a hard market, and we have been for a handful of years. This year is much worse than previous years. A hard market is when the available capacity of insurers and reinsurers is diminished, yet it’s more expensive to get the limits of insurance and the coverages. In other words, there are fewer dollars to go around, so it’s more expensive to get the insurance limits and coverages. 2 ICRMP purchases reinsurance, which is insurance for insurance companies, to back us up in the large losses. Without reinsurance, an insurance company would not last very long at all. The reinsurance market is subject to external factors, which have all descended and struck together at once this year. Those factors include:  Ongoing war in Ukraine  Inﬂation  Natural Disasters – more often and more expensive  Climate Change anxiety  Investment markets – to be frank, investors can now receive higher returns on bonds and CD’s than they can by investing in an insurance company (commercial and global carriers are public companies, and they have to make a proﬁt for their investors, otherwise investors leave…that’s what we’re seeing)  Construction market for property repairs – increased cost of labor and materials, supply chain issues. Makes property claims more expensive to resolve.  In addition to above global and national trends, ICRMP members have turned in claims that have breached the reinsurance layers more frequently, which affects renewal pricing for our reinsurance.  We also know that everyone is facing increased costs for all services – from price of new vehicles, cost of medical insurance, cost of utility services, etc. Insurance is no different in that it’s just more expensive.  Aging infrastructure  Under-valued buildings (not just speciﬁc to ICMRP, it’s an industry-wide issue). When premium is collected on building and property values, and the cost to repair or replace those in the event of a loss are higher than recorded on the schedule of values, it creates conﬂict with reinsurers. Though we do regular appraisals, the market has gone crazy and true replacement values are all over the place. What all this means is that there is less capacity (fewer dollars) from reinsurers, at higher premiums. Reinsurers can pick and choose who they want to provide limits to, and they can charge whatever they want/can. In the general market, we are seeing indications of rate increases between 50%-100%+. Public entities seem to be on the higher end of that scale. The ICRMP Board of Trustees deliberated at great length this year, and the decisions were not easy. Premium increases are higher than normal this year, but thankfully are still moderated per the Board’s premium caps. The next tough decision was how much to raise premiums. They decided that in order to raise premiums as little as possible, an increase to property deductibles would also take place. It’s a tough renewal year for everyone, ICRMP included. Please let me know if you or anyone at the city has any questions and if you’d like to hop on a call with Mary to discuss further. Justin Nyquist, ARM Underwriting Coordinator Direct: (208) 246-8216 www.icrmp.org NOTICE: This email, and any files transmitted with it, is the property of the ICRMP and may contain information 3 considered privileged or confidential and legally exempt from disclosure. If you have received this email in error, please notify the sender immediately by calling 208-336-3100 or toll free 800-336-1985 4