HomeMy WebLinkAbout20 - Excess General Liability & Pollution Liability Insurance RenewalsCITY OF NEWPORT BEACH
CITY COUNCIL STAFF REPORT
Agenda Item No. 20
February 26, 2008
TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: Human Resources, Lauren Farley, Risk Manager, (949)-644 -3302
Ifarley (&citv.newport- beach.ca. us
SUBJECT: Excess General Liability and Pollution Liability Insurance Renewals
Issue:
Should the City Council authorize the expenditure of $706,924 for the excess general
liability and pollution liability insurance renewals?
Recommendation:
Approve the renewal of the excess general liability insurance coverage for a one -year
policy for $500,330 in premium and $206,594 in premium for pollution liability for a
three -year policy.
Background:
The broker of record establishes relationships with insurance markets to find the best
coverage for the least amount of premium. Mark Zahoryin is our account representative
with our broker, Brown & Brown and has been associated with our excess general
liability insurance program for the last sixteen years and the last twelve years for our
pollution liability program.
The renewal process begins approximately ninety (90) days prior to the expiration of the
insurance coverage and continues right up to the expiration of the existing coverage
(March 1s`). The conclusion of the process depends on the availability of the markets
and the need for underwriters to clarify and obtain information on our application. In
addition, our broker continues to press for the best possible premium for the new policy.
The City's history for excess general liability coverage is exhibited in the chart below.
Prior to FY 94/95 the City was self insured and the first eight (8) years of purchasing
excess insurance reflects a relative stable insurance marketplace. However, the
catastrophic losses earlier in the decade created a much harder insurance market which
is reflected in the premium beginning FY 02/03.
General Liability Excess Insurance Renewals
Council Agenda — February 26, 2008
Page 2 of 4
To adjust to the severe premium increases, the City took the opportunity to maximize its
position in the market by strategically selecting a March 1st renewal date. Typically,
public agencies chose either a January or July 1st renewal date to coincide with either
the calendar year or the fiscal year. Our March 1st renewal date continues to allow us
the opportunity to review the market trends of both the traditional July and January
dates providing us with a market edge for our insurance renewals.
General Liability Excess Insurance Limits and Premium History
Policy Period
Self Insured Retention
Annual Premium
(SIR) /Coverage Limits
FY 94195
$1 million/$10 million
$ 343,606
FY 95/96
$1 million /$10 million
$ 358,355
FY 96/97
$1 million /$20 million
$ 337,915
FY 97198
$750,000/$25 million
$ 299,800
FY 98/99
$500,0001$25 million
$ 255,000
FY 99/00
$500,0001$25 million
$260,000
FY 00/01
$500,000/$25 million
$ 268,000
FY 01/02
$500,0001$25 million
$ 331,000
FY 02/03 (6 mos. Only)
$500,0001$21 million
$ 475,997
1/1/03 to 3/1/04 (14 mos.)
$500,0001$21 million
$ 829,940
(Premium Annualized for
12 mos. is $711,377)
3/1/04 to 3/1/05
$500,000/$26 million
($1 million SIR for EPLI)
$ 799,156
3/1/05 to 3/1/06
$500,0001$26 million
($1 million SIR for EPLI)
$ 803,728
3/1/06 to 3/1/07
$500,0001$26 million
($1 million SIR for EPLI)
$ 800,115
3/1/07 to 3/1/08
$500,0001$26 million
($1 million SIR for EPLI)
$ 675,781
General Liability Excess Insurance Renewals
Council Agenda — February 26, 2008
Page 3 of 4
Renewal Quotation:
General Liability
The excess general liability market continues to remain stable in the public sector risk
arena reflecting very favorable renewal premiums. The quote below continues our
commitment to obtaining the broadest policy coverage at the best possible premium to
provide the protection needed to perform our daily operations and provide the services
to our community. This coverage provides the following categories of protection:
Bodily Injury, Property Damage Liability (including Automobile liability), Errors &
Omissions Liability, Employment Practices Liability and Employee Benefit Liability.
The insurance companies chosen meet or exceed the City's minimum standards for
financial strength and solvency with an AM Best rating of A XV, or greater.
Carrier
SIR
Coverage Limits
Premium
Ins. Co. of the State
Greenwich Ins. Co.
$11 million excess of
$15 million excess of
$50,000 SIR
Of Penn
$500,000
$500,000 SIR
$343,219
1gt Layer)
Axis-
$15 million excess of
$ 157,111
(21d Layer)
$11 million
Total Limits
Total
$26 million
Premium
$500;330
Pollution Liability
We began purchasing pollution liability coverage in 1996 and we have been able to
purchase this coverage in multiple year policies from the beginning. Our current
pollution liability coverage is expiring after three years and the opportunity to renew for
another three -year policy has been offered to the City. This coverage provides for
pollution losses such as pollution legal liability and mediation legal liability that are
otherwise excluded from the comprehensive general liability coverage listed above.
Carrier
SIR
Coverage Limits
Premium
Greenwich Ins. Co.
$50,000
$15 million excess of
$50,000 SIR
$206,594
Total Premium
$206,594
Funding Availability:
Ift - a'a,e�o3
CITY OF NEWPORT BEACH
STAFF MEMO
February 26, 2008
TO: Homer Bludau, City Manager
FROM: Lauren Farley, Risk Manager
SUBJECT: Excess General Liability Renewal
Amended Recommendation for Consent Calendar Item # 20:
We received a last minute quote today for a 3rd layer of excess general liability
that was discussed in the study session earlier. Therefore, we would like to
amend the original staff recommendation insurance to include this 3rd layer of
excess coverage for $113,281.
With this additional layer of coverage, the City will receive approximately
$300,000 in premium savings over last year's renewal.