Ye Olde Town Inn payout won't raise inusrance rates much, official says
The roughly $6 million payout to Ye Olde Town Inn from Mount Prospect's insurance carrier won't have a big impact on the village's future insurance premiums, Finance Director Dave Erb said this week.
“The impact ... is not going to be significant,” he said. “This payment eats into some of the reserves that the pool had, but we still are funded to cover future claims for any of the municipalities that are part of it.”
On Aug. 5, the village announced it had reached a $6.5 million settlement with Tod Curtis, owner of Ye Olde Town Inn, who filed a racketeering lawsuit against the village in 2008, claiming officials conspired to drive his restaurant/tavern out of downtown Mount Prospect.
Of the settlement, slightly more than $6 million is covered by Mount Prospect's membership in the municipal insurance consortium HELP, or High-Level Excess Liability Pool. The village portion, about $400,000, will be covered by reserves in the village's risk management fund.
At Tuesday's committee of the whole meeting, which focused on a midyear review of the 2014 budget and projections for the 2015 budget, resident Jerry Novotny asked Erb how the settlement would affect the budget, and the village's premiums to HELP.
“I imagine this might be increasing the insurance rates or premium for the next fiscal year, because there was a big settlement,” Novotny suggested.
Erb, however, said the risk management fund has the $400,000 in reserves to pay the village's portion of the settlement. The fund covers health insurance, liability and workers' compensation.
“We have funded the reserves according to our policy,” so there is no impact on the general fund, he said.
Regarding the impact on insurance premiums, he said membership in HELP is not like conventional insurance.
“We are part of a consortium of communities that pulls together to help mitigate or spread out some of the risk, and that's what we have been able to do.”
He added there is excess coverage for any significant payout.
Trustee Paul Hoefert compared it to being in an HMO.
“If you went to the podiatrist last year, but I had open-heart surgery, my rates don't go up because …. everybody is helping pay. It's a pool.”
Hoefert added, “This settlement does not affect our operations day to day, other than we'll have to replenish the risk management fund down the road.”