HomeMy WebLinkAbout09 - Excess Workers Compensation Insurance RenewalCITY OF NEWPORT BEACH
CITY COUNCIL STAFF REPORT
Agenda Item No. 9
February 28, 2006
TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: Human Resources, Lauren Farley, Risk Manager, (949) 644 -3302,
farley@city.newport-beach.ca.us
SUBJECT: Excess Workers Compensation (WC) Insurance Renewal
Issue:
Should the City Council authorize the expenditure of $441,548 for the excess workers
compensation insurance renewal?
Recommendation:
Approve the renewal of the excess workers compensation coverage for a twelve month
policy with a self- insured retention (SIR) of $1 million, statutory coverage limits and
premium outlined below for FY 06/07.
Coverage Limits
Carrier SIR WC & Employers Liability Premium
Ace American $1 million Statutory Limits /$1 million $441,548
Employers Liability
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
addition to the City purchasing excess workers compensation insurance, legislative
reforms over the past ten years have provided assistance to the City in lessening the
monetary impact of its workers compensation claims. The most recent reform (SB 899)
in April of 2004 reduced medical costs and some permanent disability ratings and
settlements. As with any reform in the workers compensation arena, new legislation is
continuously introduced to change the recent reform. Both the League of California
Cities and the state's Public Risk Managers Associations are closely monitoring any
potential new legislation that would alter the SB 899 reform.
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Renewal Quotation:
The City's workers compensation program is viewed by the insurance carriers as an
excellent risk (during this policy period we did not have a single claim that exceeded our
self insured retention limit of $1 million), thereby providing the City with very competitive
renewal quotes. Our current insurance carrier, Ace American's renewal proposal offers
the greatest protection while allowing the workers compensation internal service fund to
retain a certain level of risk within its financial capacity at a premium quoted $1,700
dollars below last year's expiring premium. Therefore, staff recommends the renewal
policy from Ace American as outlined below:
Carrier SIR WC & Employers Liability Premium
Ace American $1 million Statutory Limits /$1 million $441,548
Employers Liability
Funding Availability:
Funds which cover the recommended expenditure are in the Internal Services Budget —
Insurance Reserve Fund, #6010 -8638. The renewal premium of $441,548 is less than
the anticipated amount of $531,900 in the FY 05/06 budget and represents a 17%
budget savings.
Prepared by:
Lauren F. Farley, Risk Manager
Submitted by:
Barbara Ramsey, HR Director /�