Friday, June 26–Juggling Act Saves Berlin $70K In Insurance Costs

BERLIN – Changing some job categories under standard workmen’s compensation insurance codes has saved the town of Berlin a total of $70,000 in insurance premiums.

A reclassification of some positions under national insurance codes resulted in a $35,000 to $37,000 refund in workmen’s compensation insurance premiums for fiscal year 2009 premiums from the current provider, with roughly the same refund expected from fiscal year 2008.

Some employees in the electric line crew were designated under the wrong insurance code, said Berlin Human Resources Director Rachel Bomar, and changing that designation changed the amount of premium paid on those workers.

Town staff worked out the savings through making sure the correct salary amounts were used to calculate the premium.

The town should also save the same amount on fiscal year 2008 premiums after the annual audit, Bomar said, since the town is allowed to apply the job reclassifications for the last two fiscal years.

The fiscal year 2009 refund will be reflected as a credit in Berlin’s fiscal year 2010 workmen’s compensation insurance contract that will begin on July 1 for the new fiscal year.

“This contract is considerably less than what we approved last year at this time,” said Bomar.

Several insurance providers declined to quote their services to the town because of the electric operation, she said, but with only two quotes submitted, the town still saves money.

Berlin will continue to purchase liability insurance from the Local Government Insurance Trust (LGIT), which the town has done since 2001.  After soliciting quotes, staff concluded that LGIT still offered the best value for cost for the town’s liability insurance. The LGIT liability coverage is comprehensive and not scattered between different lines of insurance, Bomar said.

The town could achieve additional savings by creating a plan to contain any environmental exposure from fuel tanks at the electric plant, which would reduce premiums.

Bomar said that the town has some direct exposure to liability because of the lack of such a plan.

Dave Thomas, electric manager, said an environmental exposure policy could be pulled together quickly.

The town has a year to create this policy, Bomar said, since it would not see a premium reduction until fiscal year 2011. She suggested that the environmental exposure policy be completed by December 2009.

The electric operation is already undertaking most of the practices outlined in an environmental exposure policy, but has not codified or documented those practices formally.

A spill containment policy could reduce the premium by a third, said Rick Martelo, risk management representative with the town’s new insurance broker, Atlantic, Smith, Cropper and Deeley, because the town would have options with other insurance carriers with that plan in place.

Councilman Dean Burrell questioned whether the town had any liability exposure over chemicals used at the wastewater treatment plant.

That premium is built into the insurance on the wastewater treatment plant property, Bomar said.

Staff will continue to look at ways to save on insurance by reducing exposure and the frequency of incidents.

“We are spending our money much more wisely than in the past,” said Bomar.

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