HomeMy WebLinkAbout10 - City Insurance RenewalsCITY OF
,W oR NEWPORT BEAC'H
City Council Staff Report
Agenda Item No, 10
June 26, 2012
TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: Human Resources Department
Terri L. Cassidy, Human Resources Director
949- 644 -3303, tcassidy cDnewportbeachca.gov
PREPARED BY: Lauren Farley, HR /Risk Management Administrator
APPROVED: V
TITLE: City Insurance Renewals — July 1, 2012 — June 30, 2013
ABSTRACT:
The City purchases coverage under its risk management program including, but not
limited to: excess general liability coverage, excess workers compensation coverage,
and property insurance covering all risk, earthquake & flood. This insurance provides
the City with a broad coverage base to protect the City's real and personal property and
its monetary assets.
RECOMMENDATION:
Approve renewal of the following insurances: excess general liability, excess workers
compensation and property insurance coverage for an amount not to exceed
$1,489,322 in total premium from the Insurance Reserve Funds. The term of the
renewal is for a twelve (12) month policy period, July 1, 2012 through June 30, 2013.
FUNDING REQUIREMENTS:
The current adopted budget includes sufficient funding for this purchase. It will be
expensed to the Insurance Reserve Funds account in the Human Resources
Department, 6010 and 6020.
DISCUSSION:
The City's insurance broker, Alliant Insurance Services, Inc. ( "Alliant "), has access to
competitive markets, joint purchase and pooled programs that provide the City with the
best possible renewal quotes with broad coverage terms and policy limits while keeping
premium costs stable.
City Insurance Renewals — July 1, 2012 — June 30, 2013
June 26, 2012
Page 2
In preparing the insurance budget, market indicators show that the property market was
hardening, especially in the earthquake and flood categories. City staff anticipates the
greatest increase in cost due to significant worldwide catastrophic events in 2011
including the earthquake in Japan; spring tornados in the U.S.; Thailand flooding; the
New Zealand earthquake; and, Hurricane Irene, which have strained insurer capital. In
anticipation of increases, the recently approved (June 12, 2012) City FY 12/13 budget
reflects appropriate funding levels for all lines of coverage.
In a proactive move, the City utilized the property program appraisal services from
Alliant during this fiscal year (FY 11112) to reduce the total insured values for accurate
premium calculations.
After several meetings with Alliant and insurance underwriters, staff reviewed the carrier
quotes which include the self- insured retention (SIR) amounts, policy limits, deductible
(applicable to property insurance only), coverage periods and forms. The coverage
type, insurance carrier(s), SIR or deductible, policy limits and preliminary premium costs
are outlined below:
Annual 2011
Annual 2012
Insurance
Insurance
Difference
Carrier and
Carrier and
Premium
Premium
Excess General Liability,
Ironshore. Arch
tronshore, Arch
$500,000 SIR ($50
and AWAC
and AWAC
+ 3.73%
million limits )
$519,903
$539,276
Excess Workers
Compensation, $1
CSAC
CSAC
+ 7.820/a
million SIR (Statutory
$277,211
$298,339
Limits
Primary Property
PEPIP
PEPIP
+ 12.87%
$150,751
$170,165
Multiple Carriers
Multiple
Carriers
+0.73%
Earthquake & Flood
$478,048
$481,542
Deductible 10% of
Total Insured value
(TM of $246,432,768
($50 million limits)
Total Premium
$1,425,913
$1,489,322
Annual Total
City Insurance Renewals — July 1, 2012 — June 30, 2013
June 26, 2012
Page 3
New Civic Center Coverage:
The new Civic Center will be insured under both the primary property and earthquake &
flood policies when the City takes possession of the facility in FY 12/13. To date,
Alliant's premium estimate for this facility is approximately $375,485 annually or
$31,290 per month. Staff will present a full report on the final premium pro -rata quote
for this new facility concurrent with a mid -year budget request for City Council approval.
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).
Submitted by:
//'�N
Terri L. Cassidy, rector