Cape Girardeau County Commission declines coverage for earthquakes caused by terrorists

Routine business strayed into the unusual Thursday when the Cape Girardeau County Commission had to formally decline coverage for terrorism-related earthquakes while renewing its property insurance.

Doug Mueller of W.E. Walker-Lakenan Inc. proposed that the county continue to contract with Cincinnati Insurance Co. for the bulk of its insurance needs. Mueller selected companies for bid that provided reasonable proposals last year. Trident, America First Insurance Company, the Chubb Corp. and The Travelers Indemnity Co. all declined to provide a bid this year for various reasons, including the age of county buildings or requirements that the provider handle all client policies.

Cincinnati Insurance was the only company to provide a quote in time for Mueller's proposal.

The plan with Cincinnati Insurance includes $5 million of earthquake coverage. Since the county has a total insured value of more than $28 million in buildings, vehicles, equipment, computers and the contents of each office, a supplemental policy will be taken out to cover the balance. Insurance Company of the West provides supplemental earthquake policies, which include federally required provisions to insure commercial customers if an earthquake were caused by terrorists.

As a response to the events of Sept. 11, 2001, President George W. Bush signed into law the Terrorism Risk Insurance Act of 2002.

"Since that date," Mueller said, "every new business policy has to offer terrorism coverage."

The act provides reimbursement for events certified by the federal government as "acts of terrorism" and requires that insurers receive written acceptance or refusal from commercial consumers.

Although the supplemental policy by ICW is only for earthquake coverage, they are subject to the act and must offer terrorism provisions along with it.

Commissioner Paul Koeper questioned the ability of terrorists to control earthquakes, and the commission declined the special coverage in a formal motion.

Aside from that, the commission accepted Mueller's proposal. Commissioner Jay Purcell abstained, as Mueller has provided insurance services to him in the past.

The yearly premium will be $80,042, about $1,000 less than last year's cost.

"I think the county has been very responsible to the taxpayers and taxpayer interests from a risk management perspective," Mueller said.

Aside from general property loss, the proposal includes inland marine coverage, which insures equipment while in transit or on a remote job site, commercial crime coverage, which insures against employee dishonesty, and general terrorism coverage.

Other business

No budget discussions were held Thursday. A public hearing will take place at 9:30 a.m. Monday. Auditor Pete Frazier said that following the hearing, the commission will adopt a working budget document that will be approved in January once final yearly numbers are submitted.

When asked about salary adjustments for 2012, Frazier said the decision would be made by the commission, but "it appears that it will be the 1.5 percent and $500."

On Monday, the commission discussed a new structure for raises in an effort to slow salary growth for elected officials. Rather than a flat percentage raise for elected officials and employees, employees would be given a "step increase" that would be added to their base salary as well as a percentage increase while elected officials would receive only the percentage.

salderman@semissourian.com

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