TRUMBULL COUNTY Switching insurers comes at a premium

Commissioner Angelo sites $261,000 savings.
WARREN -- Trumbull County commissioners' decision to switch insurance companies to save an estimated $18,000 on an insurance premium in 2001 has cost taxpayers about 10 times that in fees, legal expenses and uninsured losses in the years since, county records show.
Commissioners Joseph J. Angelo and James Tsagaris say they were trying to save money when they moved the county's business -- then worth about $350,000 a year -- from a nonprofit insurance pool to a company with a local agent whom Tsagaris describes as a lifelong friend. The private company bid $18,000 less.
However, the savings did not materialize in the first year of the new policy, once other expenses are factored in. And each subsequent year taxpayers have paid more and more for less coverage.
Since 2001, commissioners have spent $1.8 million on premiums for an insurance policy that has paid out only $135,900 in claims, according to records at the county human resources office.
Going up
The quoted premium price for the new policy, with Arthur Gallagher & amp; Co., has gone up 44 percent since 2001, more than twice the average rate for the 61 counties that participated in CORSA during the same period, CORSA officials say.
CORSA is the County Risk Sharing Authority, created by the Ohio County Commissioners Association to insure Ohio counties.
The Gallagher policy is also more risky, with a per-claim fee, no coverage for claims under $50,000, and no coverage for legal bills generated to defend the county against claims and lawsuits.
"I don't think it was a wise decision," said Bill Shapiro, president of the Trumbull County Independent Insurance Agents Association. "You just see these things, and as a taxpayer it disturbs you."
Defending decision
Commissioners James Tsagaris and Joseph J. Angelo Jr. stand by their decision to overrule the advice of a paid consultant and buy insurance from Gallagher, through Austintown agent Sam Pipino.
A committee of the Trumbull County Independent Insurance Agents Association served as agent on the CORSA policy. The group had filled that function as a public service for 53 years, said agent Gene Rossi, a member of the committee. He said the agents and the agents' association did not profit from the arrangement.
"We are confident we got the best insurance for the best possible cost for the county," Angelo said. He cited a county employee's report that compared premiums charged by Gallagher for automobile coverage with an estimate of what auto coverage would have cost with CORSA.
"We've saved the county over $261,000," he said.
Tsagaris said he believed the savings could be even more.
"I think we saved a lot on this," he said.
All the factors
However, a look at the county's complete insurance package -- not just automobile coverage -- shows several areas where taxpayers paid more. The Gallagher policy does not cover the wages of outside lawyers who work to defend the county against claims. The CORSA policy did, said James Keating, county human resources director .
The Gallagher policy also charged a fee for each claim that was filed, something that CORSA does not do.
And because the Gallagher policy covers only damage in excess of $50,000, as opposed to $5,000 with CORSA, the county paid more out of pocket each time something went wrong.
"No matter what you do, it's a crap shoot," Keating said. "You hope you have a good year and it will affect you in a positive manner. Insurance is nothing but a gamble."
Expenses not covered
Expenses incurred by taxpayers under the new policy -- and which would have been covered under the old one -- include $81,468 in legal fees, for everything from employment discrimination suits to car accidents, and about $100,000 in uninsured losses that would have been covered under the lower deductible.
In fact, Gallagher has paid on only two claims in more than three years, even while increasing the county's annual premium 44 percent.
And one of those claims, for about $1.3 million in flood damage to the county 911 center, is heading toward mediation because the company has so far agreed to pay only $138,000, minus the $50,000 deductible. The county borrowed money to pay for the rest. The other claim was $97,900, minus $50,000 to settle an employment discrimination lawsuit.
"I'm going on 24 years in public service and public safety, and I've never seen this poor a service," said 911 director Tim Gladis. "We might as well be self-insured for all they do and save the $500,000 premium."
Tsagaris said the dispute over the 911 claim is not the fault of the insurance company, but rather the county. County officials should have gone to the Federal Emergency Management Agency first after the damage struck, rather than their insurer.
"I don't think they did it the right way from the beginning," he said.
However, that is not how the process works, those directly involved say.
"You can't go to FEMA until the insurance company gets into play," said county EMA director Linda Beil. "FEMA only covers uninsured costs."
Commissioners renewed the policy with Gallagher despite the ongoing dispute.
"Not that CORSA is bad insurance," Tsagaris said. "They didn't want to bid on it."
The administrator of CORSA has said he decided not to submit a bid in May because he thought commissioners "might not be supportive" of CORSA.
Too late
In 2002, agent Elizabeth Kuzmicki of Rossi Insurance in Warren said she was involved with another private insurance company interested in bidding for the county's business, but she was stymied because commissioners released bid specifications too late.
The same thing happened in 2004, she said.
"There is no way an insurance company is going to be able to quote this amount of insurance and this complex a policy in three weeks' time," she said.
Tsagaris said that one barrier to working with CORSA is that the company writes only three-year policies, and that prosecutors told him it is against the law for the county to enter a contract for that long.
"That is not an accurate statement," said First Assistant Prosecutor James Misocky, who represents commissioners. He said state law prohibits counties from entering insurance contracts longer than three years.
Angelo mentioned another reason he thinks CORSA wasn't a good choice.
"Trumbull County was the largest county in the pool," he said. "The smaller counties were subsidized on the back of Trumbull County."
It was a good thing the switch was made, Angelo said, because otherwise this year Trumbull could get stuck paying higher rates because of flood-damaged counties in southern Ohio.
However, that is not how the program works, CORSA Administrator David Brooks said. Losses to one member of the group are experienced only by that member, he said.
Brooks also listed four counties larger than Trumbull that are members of the pool: Mahoning, Butler, Lorain and Lake.

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