HomeMy WebLinkAbout10-392DECEMBER 14, 2010 10 -392 RESOLUTION
(CARRIED 7 -0 LOST LAID OVER WITHDRAWN )
PURPOSE: NOTICE OF INTENT TO WITHDRAW FROM TRANSIT MUTUAL
INSURANCE CORPORATION OF WISCONSIN
INITIATED BY: TRANSPORTATION DEPARTMENT
WHEREAS, the City of Oshkosh secures insurance for its transit fleet through the
Transit Mutual Insurance Corporation of Wisconsin (TMi), and
WHEREAS, the City became a member of this corporation pursuant to a resolution
passed by the Oshkosh Common Council on October 3, 1985, and
WHEREAS, membership in the corporation offered the promise of lower costs than
conventional insurers but insurance premiums charged by TMi have increased significantly
in recent years, and
WHEREAS, the City must send notice of intent to withdraw from TMi at least 12
months in advance to avoid forfeiture of the City's investment in the corporation, and
WHEREAS, the TMi by -laws allow the City to rescind its intent to withdraw without
any penalty to the City, provided that this rescission letter is received at least seven months
prior to the planned withdrawal date;
NOW, THEREFORE, BE IT RESOLVED BY the Common Council of the City of
Oshkosh
1) That the City Manager is hereby directed to send a copy of this Resolution
notifying TMi of the City's intent to withdraw from TMi, effective January 1,
2012.
2) That the City Manager shall solicit quotes for comparable insurance
coverage that can quantify the potential financial benefits of switching to a
different insurance carrier.
� of Oshkosh - Transportation
926 Dempsey Trail,
54902 (92
MEMORANDUM
4
Of HKO H
ON THE WATER
(920)232 -5343 fax
TO: Honorable Mayor and Members of the Common Council
FROM: Christopher Strong, P.E., Director of Transportation
DATE: December 9, 2010
RE: NOTIFICATION OF INTENT TO WITHDRAW FROM TRANSIT
MUTUAL INSURANCE CORPORATION OF WISCONSIN
Background
The Oshkosh Transit System has been a member of the Transit Mutual Insurance Corporation of
Wisconsin (TMi) since its inception in the mid- 1980s. The auto liability and physical damage
policies we have through TMi cover the City's transit fleet. The City entered into this mutual
insurance corporation with the intent of reducing volatility and realizing savings in insurance
premiums. During the City's participation in TMi, we have seen growth in insurance premiums
and believe that it is prudent to explore different options for insuring the transit fleet.
Analysis
As a member in the mutual corporation, the City has a financial stake in TMi. Per TMi by -laws,
if the City wished to exit TMi without forfeiting its investment, the City must notify TMi of its
intent to withdraw by the end of this month, and the withdrawal would not be complete until the
2012 premium year. If the Council passes this resolution, it would put the City on a timeline that
would allow it to be covered by a different insurance carrier in 2012, with no financial penalty to
the City.
It is unclear at this time whether the City would be able to save money by switching to a different
insurance provider. However, TMi by -laws allow for a member to rescind a withdrawal letter
without any penalty. In this case, if the Common Council approves this letter of notification, the
TMi by -laws indicate that it could be withdrawn without penalty by June 1, 2011. The City
would be able to maintain its policy with TMi, without any loss of the City's financial investment
and without any punitive impact on premiums or coverage.
This resolution allows, but does not force, the City to pursue other options for insurance
coverage. If the resolution is approved, City staff will investigate insurance alternatives over the
next few months. If the result of the analysis is that TMi remains the preferred option, then a
City of Oshkosh — Department of Transportation
Notification of Intent to Withdraw from
Transit Mutual Insurance Corporation of Wisconsin
subsequent resolution would be presented to the Common Council in May 2011.
Fiscal Impact
As this withdrawal letter may be rescinded without penalty if done so in the next few months,
there is no fiscal impact of this resolution.
Recommendation
The Transportation Department recommends the Common Council approve this resolution,
notifying TMi of the City's intent to withdraw from TMi effective January 1, 2012. Please
contact me if you have any questions.
City of Oshkosh — Department of Transportation