LWMMI Property Insurance Update

LWMMI Property Insurance Update

5th May 2015

Faith Elford

April 27, 2015


TO: LWMMI I LGPIF Insureds FROM: Dennis Tweedale

RE: PROPERTY INSURANCE UPDATE #3


What has changed since the last update?

First, LWMMI has joined with two other Municipal Mutuals -Cities and Villages Mutual Insurance Company (CVMIC) and Wisconsin Municipal Mutual Insurance Company (WMMIC) -to create a Wisconsin municipal property insurance carrier. Combined the 340 LWMMI, CVMIC and WMMIC insureds in the Local Government Property Insurance Fund (LGPIF) have current premiums of $9.3 million and insured values of $16 billion.

This combined size makes the shared cost of creating and operating a property insurance carrier reasonable.

Second, the incorporation papers to create the new company, tentatively named Municipal Property Insurance Company (MPIC), will be filed with the Office of the Commissioner of Insurance within two weeks. If the approval process goes smoothly, we expect to issue insurance policies by October 1, 2015.

Third, the Legislative Joint Finance Committee recommended extending the renewal of LGPIF policies through December 31, 2017, meaning the fund will cease to do business other than paying claims as of January 1, 2019.

Fourth, estimated rate increases recommended by the LGPIF advisory committee are in excess of 60% for renewal policies as of July 1, 2015. Hence, we are moving as fast as possible to create a competitively priced alternative to LGPIF.

Fifth, if you have a LGPIF policy that renews between July 1 and October 1, 2015, we recommend you take a larger deductible to reduce the effects of the premium increase. We expect the MPIC rates will be substantially less than the July 1 LGPIF rates. When licensed to write coverage MPIC will help you change coverage from LGPIF to our new Wisconsin municipal property insurer.

Key Concepts and Goals
- Municipalities will be provided with a stable, long-term solution for their property insurance
- Broad coverages will be available that are specifically designed to address the property insurance needs of municipalities in our state
- This newly formed commercial carrier will be 100% owned and managed by three companies that understand and exist only to serve the needs of Wisconsin Municipalities
- By combining resources and utilizing a cost-effective structure, MPIC's expense ratio will create a lasting competitive advantage
- Municipalities currently insured by the Fund will be provided with a commercial option that closely resembles the very positive aspects of the Fund in terms of coverages and service level, and will create the least disruption for municipalities as they transition out of the Fund

As always call or send an E-Mail to me with questions you may have.

Dennis Tweedale, CEO


CC: Mike DeMoss, Executive Director, CVMIC Dean Boes, Executive Director, WMMIC LWMMI Directors