HomeMy WebLinkAbout09 - City Insurance RenewalsCITY OF
o rA NEWPORT BEACH
City Council Staff Report
June 24, 2014
Agenda Item No. 9.
TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: Terri L. Cassidy, Deputy City Manager /Human Resources Director -(949) 644 -3303,
tcassidy @newportbeachca.gov
PREPARED BY: Lauren Farley, HR /RM Administrator, Sheri Anderson, HR Supervisor, and Jill Ortiz,
HR Specialist
PHONE: (949) 644 -3302, (949) 644 -3307, and (949) 644 -3310
TITLE: City Insurance Renewals
ABSTRACT:
The City purchases insurance coverage under its risk management program including, but
not limited to: excess general liability coverage, excess workers' compensation coverage,
and property insurance covering all risk, earthquake & flood. This insurance provides the
City with a broad coverage base to protect its monetary, real and personal property assets.
RECOMMENDATION:
Approve renewal of the following insurances: excess general liability, excess workers'
compensation, pollution and property insurance coverage for an amount not to exceed
$1,948,132 in total premium from the Insurance Reserve Funds. The term of the renewal is for
a twelve (12) month policy period, July 1, 2014, through June 30, 2015, for excess general
liability, excess workers' compensation, and property insurance. Pollution liability coverage is
being renewed for a thirty -six (36) month policy period, July 1, 2014, through June 30, 2017.
FUNDING REQUIREMENTS:
The adopted budget for the new fiscal year (FY) includes sufficient funding for this purchase. It
will be expensed to the Insurance Reserve Funds account in the Human Resources
Department, 6010 and 6020.
DISCUSSION:
Insurance Application Process The insurance renewal process commences in October, each
year, with Risk Management staff fulfilling the underwriter's requirements and providing the
completed applications to the City's insurance broker, Alliant Insurance Services, Inc. ( "Alliant ")
for thorough review.
Insurance Market
Alliant releases the City's applications for coverage to insurance markets in March. At the
City's request, the broker adheres to the following marketing criteria for its renewal: broad
coverage terms, various policy limits and self- insured retentions (SIR) with stable premium
costs. Alliant accessed numerous competitive- market insurance carriers:
Excess General Liability Coverage - seventeen (17)
Pollution Liability Coverage - twelve (12)
Earthquake and Flood Coverage - seventeen (17)
Joint purchase plans and any stable, pooled insurance programs available were also reviewed
to provide the City with the best renewal quotes possible. For the Excess Workers
Compensation Coverage — CSAC — EIA Pooled program has the broadest policy language at
the best premium for the City; therefore, no other markets were explored.
Renewal Quotes
The City has maintained a $500,000 self- insured retention (SIR) level for its general liability
program for the last 15 years. However, most cities with our underwriting criteria (population
size, payroll, services offered, geographic location and other specialty areas) have a minimum
$1 million SIR. Over the last 3 years, the City's large losses reserved or settled over $100,000
or greater in the areas of dangerous condition, employment liability, negligence and disability
access may result in this being the last year the City is offered a $500,000 SIR for its Excess
General Liability program.
Alliant provided staff final quotes for review of all the coverages listed above including the self -
insured retention (SIR) amounts, insured limits, deductible (applicable to property insurance
only), coverage forms and policy periods. The total renewal premium is a reduction of 2.6%
from FY 13/14.
The coverage type, insurance carrier(s), SIR or deductible, policy limits and preliminary
premium costs are outlined below:
Annual 2014
Annual 2015
Insurance Carrier and
I nsuranoe Carrier
% Difference
Premium
and Premium
Excess General Liability,
CSAC EIA & AWAC
CSAC EIA & CLIP
4'2%
$500,000 SI R ($50
$500,000 SI R
$598,651
million limits)
$579,000
Excess Workers'
CSAC EIA
Compensation, $500,000
CSAC EIA $334,215
$311,679
-7.2%
SI R (Statutory L i mits)
-1.1%
PER P
Primary Property $243,570
Earthquake & Flood
Deductible 10% of M ul ti pl e Card ers
Total I nsured Val ue (TIV) of $680,441
$246,432,768 ($50 million
limits)
XL
Pollution $202,233 (3 year premium)
Annual $67,411
Total Annual Premium 1 $1,904,637
E
M ul ti pl e Carri ers -9%
$648,714
XL, ACE or
Phi I add phi a
$168,799 (3 year -19.8%
premi um)
Annual $56,266
Total Annual
$1,856,113 Reduction
-2.6'0
ENVIRONMENTAL REVIEW:
Staff recommends the City Council find this action is not subject to the California Environmental
Quality Act ( "CEQA ") pursuant to Sections 15060(c)(2) (the activity will not result in a direct or
reasonably foreseeable indirect physical change in the environment) and 15060(c)(3) (the
activity is not a project as defined in Section 15378) of the CEQA Guidelines, California Code
of Regulations, Title 14, Chapter 3, because it has no potential for resulting in physical change
to the environment, directly or indirectly.
NOTICING:
The agenda item has been noticed according to the Brown Act (72 hours in advance of the
meeting at which the City Council considers the item).