Here is a 2013-2014 Audit workpaper that consists of a document obtained from City files:
Here is a related partial late payment dated a few weeks later:
Now for some after the fact spin courtesy of the Mississippi Municipal league, who are now helping Mayor Fillingame cover up the financial problems.
Next up is the late renewal of the City’s windstorm policy:
The first email by the City”s insurance agent of record:
Text of subsequent email from the agent of record to Councilpersons McDonald and Seal:
Doug & Wendy,
I was sorry I wasn’t able to attend the meeting this week. Had another schedule meeting at the same time.
The comments by the press and the auditors about no wind insurance for 24 days is incorrect.
In 2014, we provided a wind policy for the city with a $1m deductible. This allows us to get very low rates because the probability of that policy paying a claim is slim.
The reason we structured the policy that ways was because in 2007 my partner and I were able to calculate that going through the MWUA and getting a $1,000,000 Blanket wind policy with a 2% wind deductible and applying the coinsurance penalty was a substantial benefit because the MWUA rates were extremely low. To make a long story short. The MWUA figured it out as well and discontinued the ability for us to use the Blanket coverage in late 2014. They had the first $1,000,000 coverage on all large property schedules on the MS Gulf Coast and knew they didn’t want to be in this position. Their reinsurance company figured it out as well.
That loop hole closed for us.
The city had the primary wind policy in place they just didn’t have the MWUA wind deductible buy down policy in place for 24 days. As an agent I recommend all my client not to self insure. It was an issue of not having the finances.
In reality, the city self insured a $1m deductible for 24 days and saved over $2,000. I do recall there was no tropical activity at that time.
If the any council member would like to contact me in regards to clarity of the wind coverage please feel free to give me a call. I don’t have the other council members emails but feel free to forward.
So out of one side of his mouth the gentleman is saying he recommends to all of his clients to not self insure while out of the other he says that is exactly what the City did, during Hurricane Season no less. While it is nice the gentleman pointed out that with the benefit of hindsight there was no tropical activity that is kinda the point in having insurance because one never knows about such things in advance. If a Hurricane had hit, that million dollar retention works out to about 7 or 8 mills of the 20 the City currently levies for operations and no insurer in its right mind would a cover a lapsed coverage time period that contained claims. These companies are not charity organizations after all.
To me though this whole exercise in trying to rationalize the financial mismanagement and flat out cash management incompetence illustrates the larger problem of bad financial priorities with the current administration because while large swaths of the City receive minimal to no City public works services and critical insurance coverages lapse because of a lack of funds, the Administration, at the behest of Ward 2 councilperson Wendy McDonald, does manage to find over $70,000 to fund free bus service that serves McDonald’s district. Few people ride the Bay St Louis Trolley for basic transportation but some enterprising citizens did find a way to take advantage of the Trolley Service as a party bus:
Until the gang stops trying to rationalize and cover up the financial mismanagement things will not get any better from a financial standpoint with the City. Could well be an election is the only thing that can truly fix what ails the City.