HomeMy WebLinkAbout04 - City Insurance RenewalsCITY OF NEWPORT BEACH
CITY COUNCIL STAFF REPORT
Agenda Item No. 4
February 22, 2011
TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: Human Resources, Terri L. Cassidy, HR Director, (949) 644 -3303
tcassidV(a?newportbeachca.gov
Lauren Farley, HR /Risk Management Administrator, (949) 644 -3302
Ifarley(a)newportbeachca.gov
SUBJECT: City Insurance Renewals
Recommendation:
1. Council approve the renewal of the following insurances: excess general liability,
pollution liability, excess workers compensation and property insurance coverage for an
amount not to exceed $ 1,910,441 in total premium from the Insurance Reserve Funds.
The term of these programs are for a sixteen (16) month policy period, March 1, 2011
through June 30, 2012 for the general liability, workers compensation, property
coverage and pollution liability coverage for forty (40) months, to align with the City's
fiscal year.
2. Council approve the recommended Excess Workers Compensation quote with CSAC
— EIA (County Supervisors Association of California - Excess Insurance Authority), a
pooled and joint purchase program that requires a Council Resolution authorizing
membership and delegating a staff position (Attachment A).
Background:
The City ,purchases coverage in four major categories: excess general liability
coverage, excess workers compensation coverage, pollution liability property insurance
covering all risk, earthquake & flood. These policies provide the. City with a broad
coverage base to protect the City's real & personal property and its monetary assets.
The City went out to bid for broker of record and City Council approved Alliant Insurance
Services as the new broker of record, effective December 1, 2010. Alliant specializes in
public entity insurance programs, especially joint purchase and pooled programs. They
began their work on our renewal process immediately after their selection in order to
obtain the most competitive pricing available. Negotiations continue until the current
policy expiration to ensure the lowest cost. Therefore, the premiums indicated for
renewing policies could be reduced further, but will not exceed the price indicated.
City Insurance Renewals
Council Agenda — February 22, 2011
Page 2 of 3
After several meetings with Alliant and insurance underwriters, staff thoroughly
reviewed the carrier quotes which included the self insured retention (SIR) amounts for
each line of coverage, deductible applicable to property insurance only, policy limits and
periods and coverage forms.
Alliant's access to other markets, joint purchase and pooled programs provided renewal
quotes with new carrier programs for three of the four renewals and these options offer
broader coverage terms, the same or greater policy limits with annual premium savings
in addition to policy extensions for a July 1st renewal date. Pollution Liability is a three
(3) year plus 4 month quote for a total of forty (40) months with the same carrier at a
reduced premium.
The coverage type, insurance carrier(s), SIR or deductible, policy limits and premium
costs are outlined below:
Annual 2010
Annual 2011
Four-
Month
Insurance
Insurance
% Difference
Extension
Carrier and
Carrier and
Pro -rated
Premium
Premium
Premium
Excess General
Travelers, Arch
Ironshore,
Liability, $500,000 SIR
and AWAC
Endurance
-7.3%
$177,581
($50 million limits)
$573,336
and AWAC
$531,679
Excess Workers
Compensation, $1
Safety National
CSAC
-51.9%
$52,345
million SIR (Statutory
$325,002
$156,025
Limits)
,Property including
Earthquake & Flood,
Deductible 10% of
Philadelphia
PEPIP
-11.6%
$197,941
Total Insured Value
$670,365
$592,637
(TIV) of $245,483,629
$50 million limits
Pollution Liability
$50,000 SIR ($15
XL
XL
million limits) 3 year
$206,594
$182,028
-11.9%
$20,205
policy ($60,676
annual premium)
Annual Total
Total Premium
$1,775,297
$1,462,369
Savings
$448,072
$312,928
City Insurance Renewals
Council Agenda — February 22, 2011
Page 3 of 3
Environmental Review
Approval to renew the City's insurance coverage is not a "project" as defined in the
California Environmental Quality Act (CEQA) Implementing Guidelines. As a result, no
environmental review is needed in this matter.
Funding Availability
Funding for the prorated portion of the premium (March — June 2011 totaling $448,072)
is available through current appropriations in the Insurance Reserve Fund and
Environmental Liability Fund. The portion of the premium covering July 1, 2011 through
June 30, 2012 and beyond will be funded through future budget appropriations subject
to Council approval.
Prepared by: �^
Sheri Anderson, HR Supervisor
Submitted by:
Terri L. Cassidy, HR Director
Lauren Farley, HR/RM Administr for
ATTACHMENT A
RESOLUTION NO.:
RESOLUTION OF THE CITY COUNCIL
OF THE CITY OF NEWPORT BEACH
TO JOIN CSAC EXCESS INSURANCE AUTHORITY
WHEREAS, Article 1, Chapter 5, Division 7, Title 1 of the California
Government Code (Section 6500 et seq.) permits two or more public agencies by
agreement to exercise jointly powers common to the contracting parties; and
WHEREAS, the City of Newport Beach desires to join together with the
members of the CSAC Excess Insurance Authority (Authority) for the purpose of
jointly funding and /or establishing excess and other insurance programs as
determined; and
WHEREAS, the Authority has determined that it is necessary for each
member of the Authority to delegate to a person[s] or position[s] authority to act
on the member's behalf in matters relating to the member and the Authority;
NOW THEREFORE, BE IT RESOLVED by the City Council of the City of
Newport Beach that said City Council does hereby approve becoming a member
of the CSAC Excess Insurance Authority, authorizes execution of the CSAC
Excess Insurance Authority Joint Powers Agreement, and except as to actions
that must be approved by the City Council or City Manager, the position of
Human Resource Director or designee is hereby appointed to act in all matters
relating to the member and the Authority.
PASSED AND ADOPTED by the City Council of Newport Beach on this 22nd day
of February, 2011.
Mayor Michael Henn
Date
ATTEST:
Leilani Brown
City Clerk