TRUMBULL COUNTY $50,000 deductible for insurance raises several questions

Two commissioners say the county has been saving money.
WARREN -- Trumbull County commissioners looked at only one quote before renewing a $520,000-a-year insurance contract this year that would not pay a dime if a deputy wrecked a brand-new car.
However, a nonprofit insurance authority used by most counties in Ohio was discouraged from providing a quote, its administrator said, in part by the county's insistence on iron-clad coverage -- despite the fact that the county's current policy provides much less coverage.
As a result, taxpayers bought an insurance policy that would be unlikely to cover damages if a tree fell on a county building or a courthouse customer tripped and fell. Nothing under $50,000 is covered.
And the county may be paying more for less. Its bare-bones policy is becoming more expensive faster than coverage through the nonprofit authority, which the county left three years ago against the advice of its paid consultant.
Vote to continue
In May, county commissioners unanimously voted to continue buying liability insurance from Gallagher Pipino, a branch of Arthur J. Gallagher and Co., for a fourth year, despite an ongoing dispute over a $1.5 million claim and annual fees that had risen by 44 percent over three years.
The policy covers about 300 vehicles used by various departments and agencies, all county buildings, boilers and police liability -- basically everything but health and life insurance.
"No one else submitted a bid," said county Administrator Tony Carson. He said he would have preferred that there be more quotes from insurance companies, but commissioners needed to sign on with a company quickly to avoid a lapse in coverage. Commissioners decided to use a private consultant to seek quotes for insurance coverage rather than advertise for bids.
"We are the only agency from which the county could procure coverage," said Sam Pipino of Gallagher Pipino. "If anything, we should be given credit for getting coverage for the county when nobody else could come through."
At least one other organization tried.
Other option
In March, officials from CORSA, an insurance pool established by the Ohio County Commissioners Association that insures 60 of Ohio's 88 counties, met with Trumbull commissioners and department heads to discuss submitting a quote.
"From some of the feedback we got from a couple of the commissioners, they might not be supportive of CORSA," said CORSA Administrator David Brooks. "It seemed to us there was not enough buy-in to the program, and we felt it would be better if we did not extend them an invitation to join."
One stumbling block was that Commissioners James Tsagaris and Joseph Angelo insisted on a policy with a low, $1,000 deductible, as opposed to the $5,000 deductible CORSA generally offers.
This despite the fact the policy the county had then, and the one it ultimately accepted in May, carried a $50,000 deductible. That means the county has to pay the first $50,000 in expenses resulting from each accident or claim.
"I don't remember the particulars of that meeting and what was said," Tsagaris said. "I remember about $1,000, and that was what we were asking for."
Tsagaris and several other county officials, including human resources director Jim Keating, said they believed the deductible with Gallagher was $1,000. Keating said his staff is compiling a file of claims where the low deductible was applied.
However, in at least one case, what appeared to be an insurance claim check was actually billed directly back to the county, plus an $89 service fee, the company says.
The claim was filed in 2003, for a sheriff's car that slid into a ditch and hit a mailbox. Mechanics in the county maintenance garage determined that it wasn't worth fixing the older, high-mileage car, which was valued at $2,450. Keating said he submitted a claim for that amount and received a $1,450 check.
When asked about the transaction last week, James Howell, Gallagher Co.'s senior area vice president in Cleveland, said the company did send a check for $1,450 but billed the county to get the money back, along with an $89 appraisal charge.
The purpose of this type of transaction, he said, is to allow the county to pay for damage to vehicles from a single fund, rather than make each department pick up the bill for its own accidents. The fee was for determining how much the department should be compensated, he said.
In this particular case, because the sheriff's department is within the county's general fund, the money went in and out of the same part of the county budget.
He confirmed that Gallagher does not pay anything on claims less than $50,000.
"Any deductible in the policy we had in place in writing," said Pipino. "This year and every year, what they are getting is documented carefully and in detail."
The switch
Commissioners switched insurance coverage from CORSA to the Gallagher policy sold by Gallagher Pipino in 2001, against the advice of their paid insurance consultant. The new policy was $343,702 a year, compared with $361,830 for CORSA.
"The policy adopted was engineered to save the county money," Angelo said. He would not comment on the amount of the deductible until checking with Pipino. Commissioners were forced to borrow $1.5 million last year to replace radio, telephone and computer equipment damaged in flooding because of problems persuading Gallagher Pipino to pay on the claim. That claim appears to be headed to arbitration, Carson said.
Commissioners' support
But Angelo said the Gallagher policy has been good overall. He said the company covered most of the $3 million damage to county property during the floods of 2003.
Tsagaris said he was also pleased with the policy.
"We have saved a lot of money over the last couple of years compared to CORSA," Tsagaris said.
Gallagher's low prices could have been the reason no other companies submitted a quote for the county contract in May, Howell said.
"I assume they saw we had a competitive price and walked away from it," he said.
Since Trumbull County switched to Gallagher Pipino in 2001, the annual premium increased by 44 percent, while over the same period the average increase for counties in CORSA was 21 percent, Brooks said.
At that rate, coverage through the insurance pool would have been about $57,000 cheaper this year.

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