The URL can be used to link to this page

Home My WebLink About25 - City Insurance RenewalsCITY OF NEWPORT BEACH - City Council Staff Report June 9, 2015 Agenda Item No. 25 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: Sheri Anderson, Risk Manager and Jill Camille Ortiz, HR Specialist PHONE: (949) 644 -3307 and (949) 644 -3310, respectively TITLE: City Insurance Renewals ABSTRACT: The City currently purchases insurance coverage through CSAC — Excess Insurance Authority (CSAC- EIA), a joint powers authority under its risk management program. The coverage we purchase includes but is not limited to: excess general liability coverage and excess workers' compensation coverage. It also purchases property insurance covering all risk, earthquake & flood through the Public Entity Property Insurance Program ( PEPIP), a joint purchase property program. Attachment I outlines the City's current full schedule of insurance coverages. The City's insurance provides the City with a broad coverage base to protect its monetary, real and personal property assets. RECOMMENDATION: Approve renewal of the City's excess workers compensation and general liability coverage through CSAC- EIA of premiums not to exceed $934,877 in total premium and renewal of the City's property, earthquake and flood coverage through PEPIP of premiums not to exceed $802,911 from the Insurance Reserve Funds. It is important to note that negotiations for final premiums continue through July 1, 2015, and will meet or come in under the above initial quoted premiums. The term of the renewal is for a twelve (12) month policy period, July 1, 2015 through June 30, 2016, for excess general liability, excess workers' compensation and property insurance. Pollution liability coverage was 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 & 6020. 25 -1 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. The applications contain statistical and demographic information that depicts the City's operations and risks. Risk Management actively monitors and updates the City's Schedule of Values (SOV) throughout the year, as properties are added /deleted and /or renovated. This schedule, as well as, the City's loss runs for liability and workers' compensation claims, and City financial documents, are included in the application packet to market our overall risk to carriers. Insurance Market: Alliant releases the City's applications for coverage to insurance markets in March and starts negotiating coverage and premiums. The City's coverage criteria are 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 - Thirty (30) • Excess Workers Compensation Program — Six (6) • Earthquake and Flood Coverage - Twenty (20) Joint purchase plans and any stable, pooled insurance programs available were also reviewed to provide the City with the best renewal quotes possible. While other markets were explored, CSAC -EIA and PEPIP continue to offer the broadest policy language at the best premium for the City. Renewal Quotes: The City has maintained a $500,000 self- insured retention (SIR) level for its general liability program for the last 16 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. While we expected 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 to result in a higher SIR, CSAC -EIA quoted and is the only option for maintaining the $500,000 self- insured retention level. The City's ability to obtain broad coverage with low SIRS and deductibles is a direct result of the Risk Management Division continually improving its programs to make the City desirable to insurance carriers, as well as the City's financial status. Risk Management efforts would include development of good relationships with brokers and vendors; safety and loss control programs — training and compliance; claims reporting and administration; and statistical reporting. Risk Management monitors trends and looks for viable solutions to best protect the City while it is providing services to the community. 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 3.4% from FY 14/15. The coverage type, insurance carrier(s), SIR or deductible, policy limits and preliminary premium costs are outlined below: 25 -2 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). 25 -3 Annual 2015 Annual 2016 Insurance Insurance Carrier and % Difference Carrier and premium Premium CSAC EIA & CSAC EIA & CLIP Excess General CLIP -4.8% Liability, $500,000 SIR $598,651 $569,727 ($50 million limits) Excess Workers' CSAC EIA CSAC EIA +17% Compensation, $311,679 $365,150 $500,000 SIR (Statutory Limits) PEPIP Primary Property PEPIP +11% $240,804 $267,952 Multiple Multiple Carriers Earthquake & Flood Carriers -17% $648,714 $534,959 Deductible 10% of Total Insured Value (TIV) of $374,846,497 ($50 million limits Total Annual Total Annual Premium $1,799,848 $1,737,788 Reduction -3.4% 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). 25 -3 ATTACHMENTS: Description Attachment I - 2014 City of Newport Beach Schedule of Coverage no premiums 25 -4 L6 N a 5 ^-A.E F y - ❑ y a 2 ;.; Cv � 0 y ❑� 'K V c' � c o C .- � m o v p �+ a ii obma o O 00 0 ❑ 9 O O q C C M U U 'O S C 3 'g R C❑ = M 'O N O U pp C ri w O M � O O O 'L T CO '��00ee •L T � itl 'UO � O O 2! .O-. IO M f5 tOi U 02 in v .J v z - � d d - a z o " - z s Q v > > F V d � r G] v c a 7 w 2� a raj S O T C4 L-1 -O `v 4-• y ZL y M TYPE OF COVERAGE TERM CARRIER POLICY LIMITS DEDUCTIBLE/ NUMBER SELF - INSURED RETENTION Excess Liability 7/1/14- 7/1/15 CSAC Excess EIA 14 EL PE 89 $ 4,500,000 Per occurrence, offense or wrongful $500,000 Per Occurrence or CSAC EIA Excess Insurance Insurance Authority act as respects Products /Completed operations Wrongful Act. Authority (CSAC EIA) excess of self - insured retention. $10,000,000 Per occurrence, offense or wrongful act as respects Product/Completed operations excess of $5,000,000 - Reinsurance $10,000,000 Per Occurrence and Aggregate where applicable Excess of $15,000,000 - Reinsurance $25,000,000 Total Limit Inclusive of Self Insured Retention Optional Excess Liability 7/1/14- 7/1/15 Lloyds PKI019614 $ 10,000,000 each occurrence in excess of 25,000,000 each occurrence, offense (OEL) the retained limit or wrongful act Great American NAC 1827267 -01 $ 10,000,000 annual aggregate as respects completed operations Allied World 0308 -4711 $ 15,000,000 each occurrence in excess of Layer 1, excess of the retained limit $ 15,000,000 annual aggregate as respects completed operations -Limits apply per member in excess of the Underlying Limits noted below Workers' Compensation 7/1/14- 7/1/15 CSAC Excess EIAPE14EWC13 Workers' Compensation —Statutory $500,000 Each Accident and Each CSAC Excess Insurance Insurance 3 Employee for Disease Authority (CSAC -EIA) Authority Employer's Liability - $5,000,000 Estimated Payroll $64,452,127 25 -6 TYPE OF COVERAGE TERM CARRIER POLICY LIMITS DEDUCTIBLE/ NUMBER SELF - INSURED RETENTION Governmental Crime Policy- 7/1/14 - 7/1/15 National Union Fire Insurance Company 01- 309 -61.64 $10,000,000 Faithful Performance/ Employee Theft $25,000 Primary of Pittsburgh, PA— Forgery/Alternation Primary Inside the Premises -Theft of Money /Securities Inside the Premises- Robbery/Safe Burglary of Other Property Outside Premises Computer Fraud Money Orders/Counterfeit Paper Follow Form Excess 7/1/14 - 7/1/15 National Union Fire 01- 309 -61 -65 $5,000,000 excess of Primary Governmental Crime Policy Insurance Company of Pittsburgh, PA — Excess Fiduciary Liability Insurance 3/01/14 to 7/01/15 RLI Insurance Company EPGO011704 $10,000,000 Aggregate $25,000 - Indemnifiable Program (FLIP) $500,000 Compliance Fee Sublimit $0— Non- Indemnifiable $1,500,000 HIPAA Sublimit Watercraft 3/01/14 to Navigators SF13CFT504742 $ 750,000 Blanket Hull and Machinery $1,000 Hull and Machinery ❑ 2003 29.5 Crystaliner #2842 3/01/15 Insurance Company $ 1,000,000 Protection and Indemnity $ 1,000 Protection Indemnity "Sea Watch P Workboat Fiberglass ❑ 2007 29.5 Crystaliner "Sea Watch II" Workboat Fiberglass 3/01/14 to ❑ 1985 29 Crystaliner #2844 3/01/15 Navigators SF13LLA504740 $9,000,000. excess of $1,000,000 "Sea Watch III" Workboat Insurance Company I Fiberglass ❑ 2003 18.6 Gregor #CF4445 XC "Clean Sweep" 25 -7 TYPE OF COVERAGE TERM CARRIER POLICY LIMITS DEDUCTIBLE/ NUMBER SELF - INSURED RETENTION Pollution Liability 7/1/14 to Illinois Union PPEG274107900 $15,000,000 Each Pollution Condition $50,000 Each Pollution Condition 7/1/17 Insurance Company 01 $18,000,000 Policy Aggregate $1,000,000 Underground Storage Tank Coverage (Financial Assurance) Mold Coverage Included (Full Limits) Non -Owned Disposal Site Coverage (Full Limits) $15,000,000 Underground Storage Tank Aggregate (Non - Financial) Oil Well Bond 10/28/14 to Liberty Mutual 325130399 Bond Amount $25,000 10/28/15 Public Official Bond 4/3/14 - 4/3/15 CNA Surety 71530695 Bond Amount $25,000 Public Official Bond 4/3/14- 4/3/15 CNA Surety 71530699 Bond Amount $100,000 Public Official Bond 4/3/14 - 4/3/15 CNA Surety 71530877 Bond Amount $50,000 Public Official Bond 4/3/14 - 4/3/15 CNA Surety 71530882 Bond Amount $50,000 Accidental Death & 6/21/14 to Hartford Life & 72CH166888 $35,000.00 Accidental Death Benefit None Dismemberment 6/21/15 Accident Insurance $35,000.00 Accidental Dismemberment Benefit Company $35,000.00 Accident Medical Expense Benefit For Jr. Lifeguard Program Special Events 1/1/14 to Evanston Insurance SEP41014 $1,000,000 per occurrence None 111115 Company $2,000,000 general aggre ate BROKER: Alliant Insurance Services, Inc. Newport Beach, California Mike Simmons, Vice Chairman — Public Entities (415) 403 -1425 Direct Line msimmons@alliant.com Renee McRaven, Account Manager (949) 660 -5932 Direct Line Rennetta Poncy, Vice President Courtney Ramirez, Assistant Vice President (949) 660 -8107 Direct Line (949) 660 -8133 Direct Line rponcy@alliam.co cramirez@alliant.com ME