Claims, mines hike O'Fallon insurance cost: $80,000 increase is projected

The price of the city's insurance package is expected to increase about $80,000 in 2010 following a spike in workers compensation claims, mine subsidence problems and increase in debt load on city owned buildings, according to city Finance Director Dean Rich.

"The increase in earthquake (and) mine subsidence coverage from $5 million to $15 million cost $15,539 and workers comp went up $62,737 for a total increase of $78,276," Rich said of the increase. "Last year our cost was $662,083 and this year will $740,359."

Rich said the increase in earthquake and mine subsidence was a firm number. But he said the worker's compensation premium is an estimate and that it may come in a little bit lower.

The city tripled its disaster coverage from $5 million to $15 million because of the addition of several city-owned structures, including the Regency Conference center, for which O'Fallon has financed $6 million, and improvements to the Family Sports complex.

"If we got completely wiped out by a disaster, $15 million would just about cover it," Rich said.

"But we wouldn't have any buildings," Ward 3 Alderman Rick Reckamp interjected.

"We wouldn't have any buildings," Dean replied. "But at least we wouldn't owe a bunch of money for a hole in the ground."

The city's policy includes a $1 million deductible, which saves it about $100,000 a year on premiums, Rich said.

O'Fallon had a pretty good record with workers compensation claims in the past, according to the city's insurance agent, John Kreisler.

"Claims have been pretty good in most areas, but workers comp is where the rub is," Kreisler said. "Last year you had a spike in the number of claims there."

The city has a $25,000 deductible on its workers compensation claims, and in 2009 it has had three cases that have surpassed that threshold, including one in which a city worker was seriously injured when he struck an underground stump while driving a grader. The stump caused the machine to suddenly stop, heaving the operator forward out of his seat and causing injuries to his face and shoulder.

Rich said he hopes the insurance increase won't result in an increase of residents' tax bills.

"On a $45 million budget, this is not a huge increase and it could be offset by other decreases when we get into the next year's budget," Rich said. "We have a potential electricity saving that would cover this increase. This is just a small first step in a six-month process for the 2010-2011 budget."