HomeMy WebLinkAbout14 - Decreasing Costs in General Liability InsuranceCITY OF NEWPORT BEACH
CITY COUNCIL STAFF REPORT
Agenda Item No. is
January 14, 2003
TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: Human Resources, Lauren F. Farley, Risk Manager, 949 - 644 -3300
Ifarley @ city. newport- beach.ca. us
SUBJECT: Decreasing Costs in General Liability Insurance - Information Report
Issue
The City Manager approved the changing of the excess general liability insurance
coverage with a self- insured retention (SIR) of $500,000 and policy limits of $21 million
from Cal Surance to Marsh for a total premium of $829,940 for a fourteen (14) month
policy period from 1/1/03 to 3/1/04 resulting in a net premium savings of $216,453.
RECOMENDATION: Receive and File
Background:
The City experienced a significant increase in annual premiums for FY 2002/2003 on
this coverage over the previous FY of 2001/2002. Marsh, which operates a local office
in Newport Beach, approached the insurance markets during a more favorable time
period in October 2002 and found an increase in underwriting capacity, not available in
July 2002, in the excess general liability coverage. This allowed Marsh to secure a
quote with comparable coverage, policy limits, SIR and at a more favorable annual
premium. To ensure the existing program was compared thoroughly to this quote, the
City hired Ron Rakich, Risk Management consultant to conduct the review. At the
completion of his review, Mr. Rakich advised the City to pursue the Marsh quote due to
premium savings, coverage and the knowledge that the City's current primary insurance
carrier, Royal Indemnity will not be underwriting municipal coverage after July 1. 2003.
In addition, Mr. Rakich also advised the City to extend the policy period fourteen (14)
months from 1/1/03 to 3/1/04 to provide the City with the potential strategic underwriting
advantage of a March renewal date.
Environmental Review:
Environmental Review is not required for this agenda item.
General Liability Insurance
January 14,2003
Page 2
Funding Availability:
Appropriate funds exist in the budget # 6020 -8720 to cover this expenditure.
Submitted by:
u
Linn Livings on, Hu n Resources
Director