HomeMy WebLinkAbout15 - Excess Workers Compensation Insurance ExtensionCITY OF NEWPORT BEACH
CITY COUNCIL STAFF REPORT
Agenda Item No. 15
December 8, 2009
TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: Human Resources, Lauren Farley, Risk Manager, (949) 644 -3302,
lfarleyn.newaortbeachca.gov and Terri L. Cassidy, Human Resources
Director, (949) 644 -3303, tcassidyaAnewoortbeachca.gov
SUBJECT: Excess Workers Compensation (WC) Insurance Extension
Issue:
Should the City Council approve the expenditure of $325,002 for a policy extension of
the City's current excess workers compensation insurance coverage through March 1,
2011?
Recommendation:
Approve the extension of the excess workers compensation coverage for an additional
twelve -month period, at the same rate approved at the Council meeting of February 24,
2009. This coverage has a self - insured retention (SIR) of $1 million with statutory
coverage limits and premium outlined below. The Workers Compensation Excess
Insurance budget for this expense is $450,000, so this would result in budget savings of
approximately $125,000 for Fiscal Year 200912010.
Background:
The City is self- insured for workers compensation and purchases excess workers
compensation insurance as a risk - financing tool to protect against catastrophic loss. In
an effort to find cost savings in the current economic climate, Risk Management
requested Brown and Brown, our insurance broker go back to our carriers looking to
lock in rates for multiple years with provisions of premium deductions should the City
incur reduced payroll. At this time, only the excess workers compensation carrier
agreed to grant the policy and premium rate extension.
Excess Workers Compensation (WC) Insurance Extension
December 8, 2009
Page 2
Renewal Quotation:
The City's workers compensation program is viewed by this insurance carrier as an
acceptable risk since no reported claims have exceeded our self insured retention limit
of $1 million this policy period with Safety National Casualty Corporation. Our loss ratio
for this policy period is 0 %. The excess workers compensation insurance market is also
entering a more difficult period due to the following: reports indicate that the insurance
commissioner will authorize an increase in premium rates to employers in 2010,
increased workers compensation benefits per legislative mandate that are effective
January 1, 2010, the continued increase in costs for medical treatments for work- related
injuries and the downturn in the economy. Therefore, the City is pleased that Safety
National Casualty Corporation agreed to lock in our current rate for an additional twelve
(12) month period.
Coverage Limits
Carrier SIR WC & Employers Liability Premium
Safety National $1,000,000 $1,000,000 $325,002
Funding Availability:
Funds which cover the recommended expenditure are in the Internal Services Budget —
Insurance Reserve Fund 6010 -8638.
Prepared by:
jlu� � --
Sheri An erson, r. H Analyst
Submitted by:
Lauren Farley,
HR Director