Shoreline’s insurance status was recently questioned – and answered in two distinctly different letters – from the city’s risk pool administrator.
Council member Maggie Fimia said she asked Lewis Leigh, executive director of Washington Cities Insurance Authority (WCIA), about the city’s risk profile. Fimia said that due to hearing continuous concern from the public about crosswalk and flooding issues, she felt compelled to contact the WCIA.
“The concern stemmed from reading through the profile again and then I called Mr. Leigh to see whether I was reading this correct,” Fimia said. “He confirmed that yes, there were issues.”
WCIA has 110 members, generally cities too small to self-insure. Members pay fees to WCIA, which then handles claim defense and settlement issues.
In response to Fimia’s inquiry, Leigh wrote an Oct. 13 letter addressed to Mayor Ron Hansen, stating the city was in poor standing with WCIA. However, a second letter dated Nov. 30, said the city was in good standing.
The discrepancy in letters, Leigh said, was due to improvements made by city staff between Oct. 13 and Nov. 30.
“There is a greater appreciation for risk management and litigation coordination and I think they understand pooling versus insurance concepts,” Leigh said. “We care a lot about attitude.”
In the Oct. 13 letter, Leigh stressed that the city’s risk profile was much worse than other cities. The letter also indicated that the city was a candidate for sanctions, due to “poor performance.”
“Shoreline had the worst profile of its 18-member peer group. In many cases by at least a 200 percent margin,” Leigh wrote. “The profile was dominated by several multi-million dollar wrongful death crosswalk lawsuits and repetitive storm drainage losses originally inherited form County infrastructure.”
In the Nov. 30 letter, also addressed to Hansen, Leigh stated that the city was in good standing with WCIA.
“Shoreline has been challenged with the assumption of several infrastructure issues remaining from County management and we appreciate the city’s strategy for resolution,” Leigh wrote. “We are content to fully support the City in future losses or litigation until all risk profile issues are corrected.”
The Nov. 30 letter also indicated that it was one of WCIA’s 2005 goals to review the entire membership in order to strengthen each city’s risk profile, and that there had been “a misconception that this applied solely to Shoreline.”
Hansen said an attorney has been hired, to be paid for out of city funds rather than the risk-pool, to investigate the matter.
“I looked at the letter and said ‘Wow, why haven’t we been looking at this,’” Hansen said. “But a lot seems to have been refuted so we will have an investigation; there is now an indication that all was not meaningful.”
Hansen said a February assessment by the risk pool emphasized nothing in particular or seemed alarming.
“I think our relationship with WCIA and their risk pool is far better than either of those letters would lead an uninformed reader,” Hansen said.
A summary of the city’s cases from 2000-2004, compiled by finance director Debbie Tarry, shows 114 claims filed against the city with 27 open. Of the 87 closed cases, WCIA paid out indemnity costs on 21, and 10 cases included legal costs paid by WCIA.
Since 2000, WCIA paid $704,000 in indemnity and $667,000 in legal costs in city cases. However, $650,000 of the indemnity payments were in one case related to a woman injured while walking across 15th Avenue NE.
Fimia agreed the topic is a sensitive issue, since there was “disconcerting” information.
“We are trying to figure out what exactly is going on,” Fimia said. “The main thing is looking at the risk profile for that period and just focusing on that; it can’t be changed.”
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