The City of Mercer Island has paid the 2012 insurance premium of $686,994 to the Washington Cities Insurance Authority. The amount is two percent less than what the city paid a year earlier.

The premium is the single largest payment that the city makes each year to anyone, according to city finance director, Chip Corder.

Since 2003, WCIA insurance premiums paid by the city have increased an average of 6 percent a year. The amounts can fluctuate dramatically. In 2010, the city paid $643,597, a 24 percent increase over 2009. In 2004, the premium was 13.8 percent less than in 2003.

In 2011, the city paid $1 million to end the lawsuit brought by former city employee, Londi Lindell against the city for wrongful dismissal.

The Washington Cities Insurance Authority (WCIA) is the insurance carrier for the majority of cities in Washington state. They paid the Lindell settlement amount. But according to Lew Leigh at WCIA, a $1 million loss out of 152 cities and a $35 million pool, represents a “tiny little pebble being thrown into a big pond.”

Such claims against cities are not unusual, he explained. “It is not that big a deal.”

Most of the claims are not similar to the lawsuit brought by Lindell. Most are injuries or property damage, Leigh explained. But they do happen.

In the simplest of terms, actuaries at insurance companies compute premiums by assessing the risk for future payouts and the need for reserves to pay them.

It is important to note that a claim is counted when it occurs, Leigh added, not when it is paid out. Premiums are calculated on a five-year rolling average of claim activity. Larger claims are effectively “aged out” over time.

For more information, go to www.mercergov.org.