Insurance rates for municipalities covered by the Iowa Communities Assurance Pool (ICAP) are going up across the board by an average of 30 percent, but in Marshalltown, where two major natural disasters have hit in the last six years, that figure will likely be even higher.

Such was the assessment of City Consultant Cindy Kendall during Monday night’s regular council meeting as she dove into the details of changes ICAP has proposed. One catastrophic event, she said, could cost the city as much as $500,000 just to hit the deductible.

“I do not feel that we are currently preparing for such a change, and I’m recommending that over at least the next five years, that the council designate a certain amount to go back towards a reserve. The reserve would, when it’s not needed, of course be invested and reinvested to increase the reserve amount,” she said.

Kendall hoped to formulate a plan that she could bring in the form of a resolution at a future meeting, and Mayor/Acting City Administrator Joel Greer then opened the floor up for comments from the council. Councilor Jeff Schneider asked Kendall for her recommendations, and she said she would suggest building up at least $500,000 in reserves spread across different funds.

Councilor Gary Thompson asked Kendall what would happen if a catastrophe occurred before the $500,000 was built up, and she said the reserves could be pulled from as long as the council held a public hearing first. He then sought more clarification on how such a fund might be seeded, and Kendall said she would bring a final recommendation back at the next meeting.

Councilor Barry Kell then asked if the city should explore moving away from self-funded insurance due to the premium and deductible increase, a question Kendall anticipated hearing. Currently, she said, there are only three insurance companies able to cover municipalities because they are so “nuanced,” and she didn’t believe that going independent would provide the same depth of coverage.

Nonetheless, she promised to do due diligence on what the best option would be. Greer commented on rising rates in the private sector, and Thompson asked Kendall if ICAP was shying away from natural disasters — she said the company wasn’t.

Councilor Mike Ladehoff said he favored going with whatever Kendall’s recommendation ended up being, and he didn’t have a problem with using a combination of funds to build up the reserve. Thompson echoed that suggestion, and Kell felt it would be a good time to evaluate best practices with vehicles and equipment to minimize the city’s risk.

During the public comment period, Leigh Bauder, who has a professional background in insurance, encouraged the council to review best practices as Kell had suggested and cover vehicles if possible. She also suggested looking at contributing more than $100,000 annually.

“We will have catastrophic events again. Not only did we have the tornado, we had a major hailstorm and then a derecho in the past five years,” she said. “So I would encourage you to do so, keep up the good work on that and build your reserves.”

Jim Shaw said he was surprised he hadn’t heard any mention of the Local Option Sales Tax (LOST) fund, and Tim Bradbury asked if floods would be covered under the policies — Kendall said it was in the packet. Finally, Linda Clark commented on the hard economic times all around and how financial outlooks can change suddenly due to unforeseen circumstances.

With no official motion, Greer felt that the city staff had sufficient direction to move forward.

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Contact Robert Maharry at 641-753-6611 ext. 255 or

rmaharry@timesrepublican.com.