City scrambling to pay for $2M increase in property insurance premium

JACKSON, Miss. (WLBT) – Members of the Jackson City Council are unsure where they’re going to come up with more than $2 million to help cover rising property insurance premiums for the city.

At a special called meeting on Tuesday, the council voted 4-1 to approve a proposal from Lexington Insurance Et al. Group to provide commercial property, and boiler and machinery insurance for the next year.

Council members say they were blind-sided by the request, which was brought to them Monday by the administration, the same day the city’s previous insurance policy expired.

“I am definitely feeling like this is not satisfactory,” Council Vice President Angelique Lee said. “And I’m feeling like we are just doing a piss-poor job in every department. I don’t feel like any department is being properly managed… I just think we need to do a complete overhaul.”

Sources say the adminstration learned their property insurance policy was not being renewed earlier this year. In May, the city received a quote from Lexington which would be about $2 million more a year than the previous policy.

Reasons why the previous policy was canceled include conditions of city-owned buildings, as well as the city’s multiple water issues in 2022.

Brain Johnson, executive vice president of FBB Insurance said the city also failed to implement several recommendations from Liberty Mutual, its previous insurance providers, back in June 2021.

“When an insurance company does loss control recommendations, and this is any property insurance company, they’re going to come out and inspect, and make sure what they’re insuring is in good condition,” he said.

Among recommendations, Liberty recommending bringing on a hot work program to address the hazards with welding and cutting and that Savanna Street Wastewater Treatment Plant.

“The response provided, you know, was the recommendation will be forwarded to Public Works’ safety training coordinator,” he said. “Another recommendation was … making sure your sprinklers work and doing a test, also establishing an emergency action plan for all plants and buildings.”

“But the response for that, ‘the risk management safety coordinator will follow up,’” Johnson said. “There was another recommendation that was responded, ‘the recommendation will be forwarded to the facilities and fire chief.’”

“So, there were responses provided, but Liberty over the course of two or three years, was saying, ‘Hey, you know, where are we on this?…’ That was one of the reasons for the non-renewal.”

Other factors also contributed to Liberty’s decision not to renew, including a $450,000 claim following a fire at juvenile court in 2019, a $148,000 water damage claim in 2020, and a $450,000 claim for a water treatment pump in 2020.

“And then, in 2021, there’s the ice storm water treatment plant claim. This prior year, the city was seeking to be reimbursed for expenses that were incurred from that event,” Johnson added.

“And, I guess through a lot of correspondence, the adjuster at Liberty Mutual was saying, ‘Hey, you know, we received two invoices with the same numbers, but the scope of work has been altered on the invoice. Can you please verify that?’” Johnson continued. “I think that claim still may be open.”

Deputy City Attorney Terry Williamson said a letter from Liberty listed two reasons why the company would not renew its policy with the city.

“One was Liberty Mutual was in the process of readjusting… their municipal property insurance book. Now, I’m not sure exactly what that means,” he said. “Me, reading between the lines, they were looking at all their municipal insurance, and… those that were a higher risk they probably didn’t renew those, and the city of Jackson fell into that group.”

“The second reason they gave was because of the failure to implement the risk control measures.”

[READ: Appraiser could determine damages as part of city’s settlment with Zurich American]

Council President Aaron Banks said he was troubled by the news.

“This is a problem, something that can affect the financial future of the city,” he said. “At no point did anybody communicate anything to the council and we control the purse. That’s problematic.”

Most council members held their nose in voting for the item, with Ward Seven Councilwoman Virgi Lindsay saying the city couldn’t risk not having property insurance.

Ward One Councilman Ashby Foote were concerned how the city would find the money to cover the costs.

“That is a good question,” he said. “Nobody knows at this point and time. We’re going to have to come up with the money by cutting elsewhere.”

Mayor Chokwe Antar Lumumba could not be reached after hours.

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