HomeMy WebLinkAboutSmall Claims Strategy.PDFOlver & Associates, Inc.
ltpril26,2005
May>r Walter Lynn and Trustees
Village of Cayuga Heights
836l{anshaw Road
Ithaca NY 14850
Re: Small Claims Strategy
Dear Itrlaycr LSmn and Tr'-',stees:
Per your visit to my office today, please accept this letter as confirmation of our
discussions with regard to the Village's strategy on small, General Liability claims.
As you know, our current NYMIR policy has a $0 deductible for claims where the
Village is deemed to be legally liable. Legal liability is a result of your prior knowledge
of a road hazard or damage that is caused by a dangerous condition that the Village had
prior notice, or had been notified in advance. NYMIR would certainly respond, in any
event, if the Village were to be sued for a negligent act.
As I mentioned, claims frequency as a determinant in renewal pricing is a very important
issue. Often, insurance carriers rely on frequency, and actually weight the frequency
aspect of claims as heavily if not more so, than they do the claims severity. I believe our
job of keeping a competitively priced product for the Village's insurance will be a much
easier task with all small claims eliminated from any of the calculations.
Of course, market conditions can make the pricing move in an upward direction without
consideratiorl for the claims activity, however. eliminating small claims makes the entire
risk that much more desirabie to any underwriter.
My fiirm handles some of the largest commercial insurance risks in Tompkins County,
and we typically suggest that due consideration be given to looking at deductibles in an
efforl to reduce overall costs. Most clients adopt a strategy or policy toward small
clairns, where they pay any claims under a certainthreshold of say, $1,000. By the way,
our NYMIR policy would generate an annual credit in premium of approximately $900.
should you choose to bump the deductible from $0 to $1,000. After that,it would be
advisable to supplement that $900 savings with additional dollars that would be available
to pay small claims, to deserving, legitimate claimants. You could possibly use an
additional $1,100 to bring the totai fund to $2,000. This number will have to be
deterrnined by the Village and its Trustees.
tCommunity Corners ' 412 East Upland Road . lthaca, New York 14850 . Phone 607 -257 -97 60 . Fax 607 -257 -97 61
www.olverinsurance.com . e-mail: neil@,olverinsurance.com
My recommendation, therefore, would be to adopt a policy where any claimant with
damages under $1,000. is advised that the Village's deductible is $1,000. and it is the
Village's suggestion that the claimant recover under their own homeowner's and/or
automobile policy. I still believe that if there is a case of prior knowledge, the Village
should write a check to make the claimant whole.
I hope this information is helpful. Please keep in mind that these are our opinions only
and are based upon our experiences. Either Debbie or I would be available to discuss
these strategies with any employee or Trustee who would like that opportunity.
Please let me know how you would like to proceed with any adjustments to ourNyMIR
pclicy.
Best wishes.
2tAMppdc'
Neil R. Olver CPCU CIC Debbie Kippola CISR