Iowa County weighs premiums against risks

MARENGO — Dan Lillis of Lillis insurance Agency in Williamsburg discussed insurance options with the Iowa County Board of Supervisors last week after ICAP contributions rose by 30%.

ICAP, the group self-insurance for Iowa public entities, has been providing property and casualty coverage to Iowa’s public entities since 1986, its website says.

About 75 of Iowa’s 99 counties, including Iowa County, are members.

“It’s done a good job,” said Lillis.

But with a 30% increase in the cost this year, Iowa County Supervisors pursued information about other options.

Lillis and Joe Benz, who specializes in municipal and school insurance, talked with a lot of carriers, but only Travelers Insurance showed any interest, said Lillis. They’ve worked on a quote for the last six months.

ICAP would continue to cover the Iowa County landfill, said Lillis. But he received a quote from Travelers to cover Emergency Management, Iowa County and E-911.

The quote from Travelers was less, “with asterisks,” said Lillis. He took time to make sure the coverage from ICAP and Travelers were equivalent for buildings and equipments, he said, but “nothing is apples-to-apples.”

Benz compared both property and casualty, or liability, insurance rates. Liability is the biggest difference, Benz said. It’s not better or worse. Just different.

ICAP has $2 million limits on liability, said Benz. That’s $2 million underlying and $6 million on top of that for a total of $8 million. Because it’s non-aggregate in nature, it amounts to $8 million per incident, Benz said.

Travelers has a $1 million underlying cap and a $10 million umbrella. “For one claim, you’re better off with Travelers,” said Benz, but those amounts are exhaustive. The county would be on the hook for costs above that amount as a result of subsequent events.

Iowa County “has a pretty good track record,” said Lillis.

Over the past five years, the county has not had more than $1 million a year in claims, said Benz. Iowa County doesn’t usually have much liability.

If that trend continued, Iowa County would be better off with Travelers, Benz said. But he can’t see the future.

Both ICAP and Travelers have a deductible of 2% of the property value for wind and hail damage. A $1 million building would have a $20,000 deductible.

“That’s the way it’s going,” said Benz.

Insurance companies have paid out so much in wind and hail damage recently that they are increasing deductibles to cover expenses.

Travelers has a $100,000 minimum on windstorms, said Lillis, which ICAP doesn’t have. The county has to pay for the first $100,000 of every event that causes property damage.

“That scares the heck out of me” said Iowa County Supervisor Kevin Heitshusen. Most of the county’s property damage comes from wind, he said.

“You are taking on more risk with Travelers,” said Benz. Historically, what the county pays out for property damage doesn’t come close to making up $175,000 difference in premiums. But that could change.

The $100,000 minimum would be moot for the courthouse as far as wind and hail damage, said Benz. The 2% deductible would be $250,000 with both ICAP and Travelers.

Other buildings would be affected. The county would be responsible for only the first $20,000 for hail damage on a $1 million building with ICAP, while Travelers wouldn’t pay anything if the damage wasn’t more than $100,000.

Iowa County has no open liability claims with ICAP, so if it wants to switch to market insurance, now is the time. If a county leaves ICAP, its liabilities go with it, Lillis said.

Each plan has pros and cons, said Benz. ICAP has no share holders. It’s member owned.

The ICAP, contribution is going up 30% this year, said Lillis, and there haven’t been any dividends paid out of that the last three years due to weather events.

Travelers is a big insurance company. It needs to make money for its shareholders. But it’s on the hook for claims started with the company, Benz said.

“You can spin either side as this is the better setup,” said Benz.

July 1 is the effective date for each insurance premium, said Lillis, but he’ll have time to make that date if the Board of Supervisors makes a decision during its June 28 meeting.

“The liability scares the hell out of me,” said Supervisor Alan Schumacher. He doesn’t see how the county can go with Travelers.

It won’t take long to eat up the deductible for wind and hail damage, said Heitshusen.

“I’d like to run some numbers,” said Supervisor Abby Maas. The board will make a decision during Friday’s meeting.

The Iowa County Board of Supervisors meets every Friday at 9 a.m. at the Iowa County East Annex, 970 Court Ave. in Marengo.