HomeMy WebLinkAbout10 - Property Insurance Program RenewalCITY OF NEWPORT BEACH
CITY COUNCIL STAFF REPORT
Agenda Item to
February 28, 2006
To: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
From: Human Resources, Lauren F. Farley, Risk Manager, 949 - 644 -3302
Ifarley(a_)city.newport- beach.ca.us
Subj: Property Insurance Program Renewal
Issue
Should the City Council authorize the expenditure of $634,155 for the property
insurance program renewal?
Recommendation
Approve the renewal of the property insurance program for a total premium of
$634,155.
Background
The City purchases six different types of property insurance, All Risk, Boiler &
Machinery, Earthquake, Flood (Difference in Conditions Coverage), Watercraft
and Crime. The Crime policy covers monetary loss from employee theft and
embezzlement. These six types of policies provide the city with a broad coverage
base to protect the city's real & personal property assets. This includes the
newly completed Mariner's Library, Item 17B on the attached property schedule
(Attachment A — Property Schedule). Last year's renewal for the City's
property insurance program reflected the first decrease in premiums since FY
02/03. This certainly signaled some market stabilization for property insurance
from previous years due to the World Trade Center losses in 2001. However, the
worst US hurricane season in recorded history in 2005 has impacted the renewal
for property insurance in both the public and private sectors for 2006. The 2006
property insurance renewal increases were projected to be in the 20 to 25%
range for all lines of property insurance, especially the Earthquake and Flood,
Difference in Conditions (DIC) coverage.
Page 2
Renewal Quotation
With the expected difficulties in the 2006 property insurance market, our broker,
Mark Zahoryin of Brown & Brown began his negotiations in earnest to find ways
to be fiscally prudent without compromising coverage. He was successful in
negotiating the inclusion of the Earthquake and Flood (Difference in Conditions —
DIC) premium for the Newport and Balboa piers into the All Risk Property
premium for the piers at no additional charge. This very favorable result reflects
an overall increase in premiums for the entire property insurance program of 12%
including the total value of the newly completed Mariner's Library. The 12%
increase in premium is well below the projected 20 to 25% range. The two year
premium comparison for the City's Property Insurance Program is listed in
(Attachment B — Property Insurance Program, Two Year Premium
Comparison).
Funding Availability
Funds which cover the recommended expenditure are in the Internal Services
Budget — Insurance Reserve Fund, # 6020 -8715, 8721 & 8726. The renewal
premium of $634,155 is approximately 1% (or $6,311) greater than the FY 05/06
budget amount of $627,844.
Prepared By-
Lauren F. Far ey, Risk ManageF'�
Submitted By:
Barbara Ramsey, HR D r ctor
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