After recording 19 losses within the last three years -- totaling about $1.1 million in claims -- Travelers Insurance has dropped Nazareth Borough’s workers’ compensation policy.

“They are cutting us off,” Mayor Fred Daugherty Jr. announced Monday night at the end of Nazareth Borough Council’s meeting. “We have to go to the state. That’s going to be a bitter pill to swallow.”

Since no insurance company will issue the borough a policy, the State Workers’ Insurance Fund (SWIF) is the last resort.

Paul Kokolus, the borough’s secretary and treasurer, said he received the non-renewal notice Monday afternoon, so he did not know how much the state coverage would cost.

The borough’s policy with Travelers expires on June 1, 2012.

According to the non-renewal notice, the borough had 19 losses within the past three years. The losses broken down:

• Six losses totaling $838,000 in 2009-2010 term
• Seven losses totaling $95,979 in 2010-2011 term
• Six losses totaling $173,093 in 2011-2012 term

“This poor experience has had a negative impact on the overall profitability of your entire account,” the notice states. “That being the case, all lines of coverage are being non-renewed as of 06/01/2012.”

In addition to the workers’ compensation policy, the borough also had a commercial automobile policy with Travelers. That policy will also be dropped on June 1.

"We knew this was coming but now it's in black and white," Daugherty said after the meeting, adding that the bulk of the claims come from the Nazareth Borough Police Department.

Officer Stephen Schleig is the only officer currently out on workers' compensation. He is expected to return to work in April.

The rising operating costs of the borough’s police department has been the driving factor in the mayor’s quest to disband the department and contract services from Colonial Regional Police.

In December, the mayor withdrew his recommendation to buy coverage from Colonial Regional after a full year went by without any negotiations.