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Marion staff hears insurance-market pressures, renewal to rise about 9.9%
Summary
PDCM Insurance presented Marion City Council staff with the city's property and liability renewal outlook, citing Midwest weather losses, reinsurance cost increases and higher claim severity; the city's renewal shows a 9.9% increase year-over-year driven by property and vehicle coverage.
Chris Faraday, president and CEO of PDCM Insurance, told Marion City Council staff at the June 17 work session that the public-entity insurance market remains strained and that Marion's renewal reflects those pressures.
Faraday said the renewal for the Iowa Communities Assurance Pool (ICAP) package shows "about a 9.9% increase from last year to this year," with the largest upward pressure coming on property and physical-damage (vehicles) coverages. He said the firm averages roughly 30 claims a year for Marion and that claim severity has increased.
Why it matters: higher property and vehicle replacement costs, rising reinsurance prices and national billion-dollar weather events are increasing premiums for municipal insurers. Faraday also emphasized that the city's rising replacement values for new buildings and infrastructure are increasing insured values and therefore premiums.
Key details presented
- The city insures about $140 million in replacement cost valuation across its physical plant and infrastructure. - Marion's deductible structure: a $2,500 standard deductible plus a 2% wind-and-hail deductible applied to building value (not to the claim amount), Faraday said. - Liability structure presented: $2 million per-occurrence primary limits for several liability lines and a $9 million umbrella above those limits, which Faraday summarized as roughly $11 million in available liability protection on a single large claim. - PDCM noted that property values added for recent public works and park projects increase the base exposure and therefore the premium.
ICAP and local performance
Faraday identified Marion as a member of the Iowa Communities Assurance Pool (ICAP), a municipal risk pool, and said ICAP inspections and carrier reviews have emphasized preventative maintenance and building upkeep. He told council staff Marion's preventive maintenance record and prompt claims response rank well in the state, and that carriers are increasingly factoring visible upkeep into pricing and underwriting decisions.
What staff said and next steps
Staff and councilors asked whether Marion was reporting small claims that might increase frequency; Faraday said PDCM and city staff perform monthly claim reviews and did not see a pattern of filing small claims as a cash-flow practice.
No formal action was taken at the work session; the presentation was informational. Staff will include the renewal details in upcoming budget and renewal discussions.
Ending: Faraday said he expects the market to moderate in 2025 and highlighted options for Marion to assume more risk internally (larger self-retention) and for continued emphasis on preventive maintenance to limit future rate pressure.
