The costs of doing business are going up and Clarksdale Public Utilities’ is not immune to rising expenses or the risks of providing a service to the public.
David Huggins represented Fiser Insurance Agency at the Tuesday, Jan. 14 CPU meeting where he broke down the costs of new insurance rates in different categories. The insurance renewal quote for 2020 was $602,802 and it was $514,804 in 2019.
Property insurance, automobile insurance, general liability, directors and officers and employer practices liability, workers compensation and umbrella were the different categories. Evergy, which takes all power within the city generating plant and, in return, pays all cost associated with plant including insurance overpay, will pay an additional $49,744 in insurance in 2020 to cover the cost. Evergy paid $38,301 in 2019.
“Obviously, we’re facing an increase from the premium from last year,” Huggins said. “This is being caused in two different areas of which neither actually is being affected by rate per thousand dollars worth of coverage or per hundred dollars worth of payroll. The rates have remained very steady.”
Huggins said the workers compensation has been bad the past two-to-three years causing CPU’s cost in that category to jump from $108,690 to $144,802. Evergy will pay $22,021 for workers compensation, which is an increase from $16,529 in 2019.
The increased payroll caused CPU’s general liability insurance cost to increase from $153,510 to $177,154 and the umbrella cost to increase from $45,028 to $54,586. Evergy’s general liability cost is $21,320 and increased from $16,490 in 2019. Evergy’s umbrella cost increased from $5,282 in 2019 to $6,403 in 2020.
Huggins said the payroll figures are based on claims of a 36-month period. However, the past 12 months were not figured into the equation. He noted it was figured by the government, not an insurance company.
Huggins said payroll updates are not checked on an annual basis. They are examined every two-to-three years.
“Once we discovered that it was up a fair amount, we checked again just to make sure it wasn’t some type of mistake and got the payroll straight out of your current budget,” Huggins said.
The CPU board rejected a terrorism coverage election form.
Huggins said he accidentally put the terrorism coverage on CPU’s renewal form, so he had to bring it to the board and recommended rejecting it.
Huggins explained what would have to occur for CPU to receive terrorism insurance coverage.
“It has to be like $25 plus million in losses caused by either an external enemy of the government or an internal terrorist organization,” Huggins said. “If it could happen to anybody, I guess it would be a utility for it to happen.”
However, Huggins said nobody in a small community like Clarksdale carries terrorism coverage insurance.