Tuesday night at the joint City Council–Financial Advisory Committee meeting, staff announced they had researched several providers of liability insurance and had made a decision on a favorite, an outfit called the Municipal Insurance Cooperative Agency (MICA). There were three red flags when the MICA plan was laid out. One was that we were not allowed to hear from any of the other contenders. A second was hearing that the risk pool is very small, 23 I think they said. The third is that the premium sounds too good to be true: a premium of $1 million per year offered to a city with, currently, a $790,000+ per year indemnity plus legal and administrative costs.

Tuesday night I didn’t know what the red flags meant, exactly, but on Wednesday an insurance expert (who would like to remain anonymous, though I’d be glad to give credit) called me up and clued me in. After digesting the information I crafted an e-mail to the Council, which follows…

Members of Council:

I have some thoughts to share on the selection of a liability insurance provider.

First I would request you bring more transparency to the process in the form of presentations by the other provider-contenders so that we might be educated in insurance matters such as expense ratios and what they mean. MICA’s lies well below the industry standard and even further below the national average. Or, to put it into English, MICA is offering you a deal that sounds too good to be true: an almost dollar-for-dollar exchange between the premium and the city’s indemnity and legal expenses. How is that possible? One way is to employ folks who are gurus at significantly whittling down a city’s annual indemnity (though this suggests they believe DeKalb is badly managed). Another possibility is that MICA invests premiums in high-yield, AKA risky investments that potentially could leave us holding the bag — an indicator of this is the requirement to pay the entire premium up front.

Another municipal insurance company with a similar name went down in flames two years ago. This can and does happen.

So, as you question these companies, please ask for their current insurance industry ratings. With MICA and its tiny risk pool, you might also ask which other municipalities participate, and even more importantly which ones have left in the past few years.

Lastly, I note that MICA is not listed as an Illinois member of The Association of Governmental Risk Pools.

Please consider giving a hearing to the other providers.

Yours truly,


4 thoughts on “MICA”

  1. YINN If the city answers your questions here would be a few more. Who regulates MICA? Are they rugulated by te Illinois Department of Insurance like all Insurance Companies? If not who does regulate them? If they are not regulated are we really going to front them 1 million dollars to handle the city’s claims.

    2. What are the limits of liability in the MICA program. I think it was just Winnebago County or somewhere near there that just settled a claim for 15 million but only had 5 million in coverage. This was for a police squad car accident that certainly could happen anywhere in Illinois. My question would be the financial consultants say we need catastrophic coverage and IMO that would be coverage for around 100 million not 5 million. 5 million seems like ordinary covergae not catostrophic coverage. Would MICA require an Umbrella package and what would that cost.

  2. Hi Pevo.

    I have been hearing today from others on the insurance information gap and will add your questions on a new list to send to my alderman. He has told me he will ask the questions I’ve sent so far, so I am hopeful he will be receptive to an additional list.

    IRMA has also come up again, with positive comments. Are they on the list? I can’t remember. They seem pretty strict; it appears a municipality really has to have its act together to participate in IRMA.

  3. Gurnee is a member of MICA.

    Workers compensation coverage is provided through the Municipal insurance Cooperative Agency pool, also known as “MICA” in combination with property, auto, and liability coverage. As renewal rates for May 1st are unknown, a 10% increase was assumed for budgeting purposes. Of the $1.3 million premium paid to MICA, 69% of that premium relates to Workers Compensation coverage.

    Des Plaines is too.

    [The Risk Management Fund]is an internal service fund that accounts for the City’s self-insured property, general liability, automobile liability, errors & omissions, workers’ compensation, employer’s liability, employee benefits liability, and crime loss. The departmental charges are re-evaluated annually for workers compensation and property/liability insurance based on each department’s budget, number of vehicles, and employee salaries according to industry standards. The department charges for unemployment compensation are averaged solely upon each department’s salaries. The most recently completed fiscal year data is used to establish this information and to determine new allocation numbers and charges for the proposed budget.

    The City is a member of two municipal insurance pools for risk management: MICA and HELP. The City joined the Municipal Insurance Cooperative Agency (MICA) in 1998. MICA administers all claims against the City that are less than $2 million. MICA premium payments are placed into a pool wide loss fund, which if unused, is returned to participants. The City has received three such rebates since 1998.

    The City has been a member of the High Level Excess Liability Pool (HELP) since 1985. HELP becomes involved in claims that exceed the MICA limit of $2 million or greater.

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