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Claims cause hike in liability

Wisconsin Municipal Mutual Insurance Company's motto is "Strength in Members," but other members see St. Croix County as the weak link and the county will pay a price.

St. Croix has been notified that its liability premium for 2010 may be increased over 25 percent and that its self-insured retention, roughly comparable to a deductible, will be increased from $250,000 to at least $500,000 per loss. Actual costs will be determined in December.

"From the other members' perspective, we are not a good risk," summarized Kristin Ziliak, St. Croix's risk manager. The most recent settlements involve a death in the county jail and a class action strip search lawsuit.

WMMIC members include the cities of Eau Claire and Madison and 15 of the state's largest counties.

Close to half the losses paid by the 17-member company in the last 20 years are for St. Croix County claims. WMMIC losses paid since the company was founded in 1988 are $13 million. Losses for St. Croix claims account for $6.5 million of that total.

The only other county with significant losses is Brown with total WMMIC-paid claims of $2.2 million.

In late 2003, St. Croix County and WMMIC agreed to pay nearly $7 million to settle a class action lawsuit involving about 2,000 people who were illegally strip searched in the county jail. The county paid $2.5 million and WMMIC paid the balance.

Last May the county, WMMIC and a company that provided medical services to inmates paid $1 million to the family of a 28-year-old man who died in jail. That settlement cost the county and WMMIC $812,500.

In 2005, right after the strip search settlement, St. Croix's premium would have jumped by $455,000, but WMMIC members gave the county a $250,000 break and only increased the annual charge to $398,789.

As time passed, the county's premium declined. The 2009 premium for general liability coverage was $172,279.

The $1 million settlement with the family of Brandon Hessler, who died while in custody, was reached in May.

Towers Perrin, an international firm specializing in risk management and actuarial consulting, recommended a premium pricing model that would reduce premiums for most WMMIC members, including St. Croix. But other members balked.

In October the WMMIC underwriting committee discussed the decrease in St. Croix's projected premium at length, according to committee minutes.

In the end, the committee agreed to implement a premium surcharge when a county's losses comprise a high percentage of the company's total losses. Members decided to spend more time deciding how to evaluate whether a municipality is taking necessary steps to reduce loss exposures.

"The consensus is shifting to whatever problems you have are your problems," said St. Croix County Corporation Counsel Greg Timmerman. His staff is reviewing jail policies and procedures with the jail captain and staff and the chief deputy, but the process has been slow.

Basically other WMMIC members don't feel St. Croix deserves to have its premiums reduced, said Ziliak.

Any other insurance company would see things the same way, commented Administrative Coordinator Chuck Whiting.

In the early years of the company, St. Croix had five big claims related to the Highway Department, said Ziliak.

"Highway kind of figured out what they were doing wrong," she said, and those claims stopped.

Now other WMMIC members are saying, "You obviously haven't figured out what is going wrong in your jail," reported Ziliak.

The company is no longer concerned with "rehabilitating" St. Croix County, but is instead going to raise rates, said Ziliak.

"Some of the members acknowledged that it could have been them too," said Timmerman. He said the new policy, when it's developed, would apply to any member with high losses.

The silver lining, said Timmerman, is that WMMIC members receive dividends. A companywide good claim history will mean some the premium money will come back to St. Croix.

The county borrowed money to pay its share of the strip search settlement. The final payments of roughly $390,000 each will be made in 2010 and 2011.