DEPARTMENT: Office Of Risk Management
FILE TYPE: Consent Action
TITLE
title
Authorization To Renew Commercial Automobile Insurance Contract with Travelers Insurance
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PURPOSE/ACTION REQUESTED
Authorize the Risk Manager to renew the commercial automobile insurance contract with Travelers Insurance.
SUMMARY
While Dakota County is self-insured for general liability exposures, the County purchases several types of commercial insurance (property, crime, and auto) where it makes financial sense. The County’s auto insurance policy with Travelers Insurance is up for renewal on July 1, 2025. Marketing of the auto insurance and benchmarking with other metro counties confirms that Travelers Insurance pricing for the County is still competitive.
The auto insurance market for both public and private sector has recognized significant hardening due to large increases in the frequency and severity of natural disasters, higher repair costs and a large increase in more severe accidents. The public sector insurance market continues to face adversity due to insuring the risks associated with law enforcement vehicle liability. The County’s options for vehicle insurance have been dramatically impacted by these factors. To manage these challenges, Risk Management worked with our insurance broker to pursue quotes that reflected higher/additional deductibles to obtain the most cost-effective options. Our insurance broker was unable to solicit any comparison bids and Travelers Insurance, our long-standing insurer, has indicated that if the County does not elect to renew coverage with Travelers Insurance, they would no longer quote our line of business for coverage in the future.
Travelers Insurance provided an all-inclusive auto quote of $547,977 (Attachment) providing first party physical damage coverage as well as third party liability coverage. The coverage includes a $25,000 liability deductible and a $5,000 deductible for comprehensive and collision. This quote reflects a 16.46 percent increase from last year’s premium and equates to an increase of $63.29 per unit.
As an alternative to escalating premium costs, Risk Management analyzed first party physical damage (damage to County owned vehicles) premium and claim costs for the past three years. The financial analysis supports a cost savings by self -insuring our licensed vehicle fleet for physical damage. Accordingly, a liability coverage only quote was also solicited from Travelers. The quote for auto liability only is $439,425. The Travelers Insurance policy provides a per claimant limit of $500,000 and a per accident limit of $1,500,000 consistent with the County’s liability limits under Minn. Stat. § 466.04. The coverage continues to include a $25,000 liability deductible.
Risk Management has a long-standing practice of identifying preventable losses and working with departments to implement corrective action to prevent reoccurrence. Staff will continue to work with departments that have experienced the most frequent losses to improve driver performance and reduce physical damage claims. Risk Management also tracks claim trending and there has been a notable reduction in the frequency and severity of losses over the last two years.
RECOMMENDATION
recommendation
Staff recommends the County Board authorize the Risk Manager to renew the commercial automobile insurance contract with Travelers Insurance for auto liability for the policy year July 1, 2025-July 1, 2026, for $439,425.
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EXPLANATION OF FISCAL/FTE IMPACTS
The required funds of $439,425 are contained in the Office of Risk Management 2025 insurance budget.
☐ None ☒ Current budget ☐ Other
☐ Amendment Requested ☐ New FTE(s) requested
RESOLUTION
body
WHEREAS, Dakota County purchases insurance for automobile physical damage and liability coverage; and
WHEREAS, the current policy on automobile insurance will expire on July 1, 2025; and
WHEREAS, an evaluation of the marketplace for competitive pricing was completed; and
WHEREAS, based on the evaluation of the marketplace, staff is recommending renewal of the automobile insurance coverage with Travelers Insurance.
NOW, THEREFORE, BE IT RESOLVED, That the Dakota County Board of Commissioners hereby authorizes the Risk Manager to purchase the following insurance to be paid at current rates from the Office of Risk Management insurance budget:
Automobile Insurance
Travelers Insurance July 1, 2025 - July 1, 2026 Premium $439,425
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PREVIOUS BOARD ACTION
24-294; 06/4/24
ATTACHMENTS
Attachment: Auto Insurance Premium Renewal Summary
BOARD GOALS
☐ Thriving People ☐ A Healthy Environment with Quality Natural Resources
☐ A Successful Place for Business and Jobs ☒ Excellence in Public Service
CONTACT
Department Head: Jenny Groskopf
Author: Jenny Groskopf