HomeMy WebLinkAboutC-4754 - Insurance Program AgreementINSURANCE PROGRAM AGREEME NT
This INSURANCE PROGRAM AGREEMENT ( "Agreement "), effective,
January 15, 2011, between Old Republic General Insurance Corporation ( "Company ")
and City of Newport Beach_( "Insured ")
WHEREAS, the Insured has requested the Company to issue to it for its benefit certain
Policies of insurance issued by the Company and rated in accordance with Schedule A to
this Agreement;
WHEREAS, the Company has agreed to issue the Policies in accordance with Schedule
A to this Agreement, as well as those in the insurance policies issued to the Insured.
WHEREAS, in consideration for the issuance of the Policies by the Company, the
Insured has agreed to make Payments to the Company as set forth herein, and has agreed
to provide the Company with security for such Payments as more fully described in such
Policies and herein.
NOW THEREFORE, the Insured and the Company agree as follows:
I. Definitions
A. Allocated Loss Adjustment Expenses means the expenses which are incurred in
conjunction with the investigation, defense, adjustment or settlement of claims or
suits made under any of the Policies and which are allocable to such claims according
to generally accepted insurance industry practices. Such expenses include, but are not
limited to, medical and legal costs, attorney's fees, costs of appeals bonds, interest
accrued before and after judgment expenses incurred in obtaining recovery against
any third party and the fees and expenses to any firm or company to render any field
investigation with respect to claims arising under any of the Policies.
B. Claims Service Company means the Claims Administrator designated or approved by
the Company.
C. Insured's Obligations means any and all amounts the Insured is or will be required to
pay under the terms and conditions of the Policies and this Agreement. The Insured's
Obligations include, but are not limited to, Losses, Allocated Loss Adjustment
Expenses, Unallocated Loss Adjustment Expenses to the extent permitted under the
Agreement, expenses incurred in seeking recovery of Paid Losses from a third party,
premiums, surcharges and assessments under the Policies and any and all
indemnification, defense, or any other agreement between the Insured and the
Company under this Agreement;
Page 1 of 14
City of Newport Beach
C- Lt-?A
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D. Paid Losses means the amounts paid as benefits or damages, or Allocated Loss
Adjustment Expenses arising under the Policies. Paid Losses shall be limited
however, not to exceed the amounts specified as payable to the Company in the
applicable retrospective premium endorsement or deductible endorsement.
E. Policies means the policies issued by the Company to the Insured together with all
endorsements, extensions or renewals thereof and replacements and additions thereto
as set forth in Schedule A and any addenda.
F. Payments means the amounts paid to reimburse the Company for Paid Losses
consistent with the Policies or any other payments to the Company under this
Agreement.
G. Unallocated Loss Adjustment Expenses means the costs of investigation,
administration, adjustments, settlement or defense of claims or suits under the
Policies by the Company salaried employees or any Claim Service Company.
H. Other Terms: Unless otherwise provided in this Agreement or unless the context
requires otherwise, terms used in this Agreement shall have the meanings attributed
to them in the Policies or the Company's applicable statistical or rating plans.
II. Payments By Insured
A. Premium Payments: The Insured agrees to make premium payments in accordance
with Schedule B of this Agreement and the Policies in Schedule A.
B. State Premium Taxes, Surcharges and Assessments: To the extent permitted by law,
the Insured agrees to pay state premium taxes, surcharges and assessments
attributable to the Policies not included as premium under the Company's rating plan
(including any additional amounts which may become due because of a state's
reinterpretation of the applicable law or regulation).
C. Funding for Paid Losses: The Insured agrees to fund and pay for Paid Losses in
accordance with ARTICLE III of this Agreement.
D. Unallocated Loss Adjustment Expenses: The Insured agrees to be responsible for and
pay Unallocated Loss Adjustment Expenses in accordance with the fee schedule, loss
conversion factor, or other method as outlined in Schedule A.
I1I. Funding for Paid Losses
A. The Company will bill the Insured for Paid Losses within the deductible and claims
handling fees on a monthly basis. Payment is due within 30 days of billing. If
collateral is in the form of depleting cash, paid losses will be automatically
transferred within 30 days.
Page 2 of 14 City of Newport Beach
B. Loss Deposit Fund:
1. The Company requires a deposit payment to establish a loss deposit fund
pending the periodic reimbursements from the Insured. The loss deposit fund,
or what remains, is returned to the Insured upon termination of the paid loss
program. The initial funding is as outlined in Schedule B.
2. The fund will be assessed by the Company from time to time to determine the
minimum amount required. If the minimum amount required to be on deposit
as reasonably determined by the Company is greater than the current balance
in the fund at any time, the Insured shall pay on demand into the fund an
amount necessary to bring the fund to the required level. If the Company
determines the minimum amount required to be on deposit in the fund is less
than the then current balance on deposit, then the Company will return the
difference
3. If collateral is in the form of depleting cash, loss deposit funds will be
automatically transferred within 30 days of determination.
C. Lar¢e Loss Payment: In the event the Company makes, or is scheduled to make, a
payment for a Paid Loss equal to or in excess of $50,000 , the Insured,
notwithstanding the availability of funds on deposit, shall immediately upon receipt
of notice pay the Company for the amount of the Paid Loss. If collateral is in the
form of depleting cash, loss deposit funds will be automatically transferred.
IV. Offset
The Insured grants to the Company the right to offset any balance(s) due from the Insured
to the Company under the terms of this Agreement, any subsequent or preceding
agreement relating to this subject matter or any of the Policies (including any preceding
or subsequent policies issued to the Insured by the Company) and grants a continuing
first priority security interest in any amounts due from the Company to the Insured. For
the purposes of this Article, "Company" or "Insured" shall include each of their
respective affiliates.
V. Security for Insured's Obligations
A. Security for the Insured's Obligations: As security for the Insured's Obligations, and
for performance of all of its obligations and duties hereunder, the Insured shall
deliver to the Company on or before the effective date of the Agreement, or in
accordance with Schedule B, cash, a letter of credit or other form of security in an
amount and form acceptable to the Company. If security is in the form of a Letter(s)
of Credit it must be issued by a bank(s) which is a member of the Federal Reserve
system, is acceptable to the Company and be of a form acceptable to the
Company(See Appendix A). Each such Letter of Credit must be clean,
unconditional and issued for a term of at least twelve (12) months and shall be, by its
terms, subject to an unlimited number of automatic renewals thereafter for additional
Page 3 of 14 CityofNewport Beach
terms of at least twelve (12) months, unless the issuer bank advises the Company in
writing, at least thirty (30) days prior to the next expiration date, of its intention not
to have the Letter(s) of Credit renewed. In that case, the Insured must furnish the
Company with a replacement Letter(s) of Credit issued by an acceptable bank(s), or
other security as may be acceptable to the Company, establishing credit or security in
an amount equal to the credit under the Letter(s) of Credit being replaced, within not
less than ten (10) business days before the expiry date. The requirement for such
security will remain in place until all of the Insured's current and future Obligations
have been paid or otherwise concluded in a manner satisfactory to the Company.
B. The amount of the initial required security is outlined in Schedule B. At such times as
the Company deems it appropriate or necessary, until all liability with respect to the
Insured's Obligations has been paid or otherwise concluded, the Company will
review the security requirement. The total Insured's Obligation will be calculated by
developing all Policies losses. The sum of all of the Insured's Obligations which
have been paid by the Insured or satisfied by sums drawn by the Company under the
Letter(s) of Credit or other acceptable security and held by the Company will be
subtracted to arrive at the required security. If the resulting security requirements as
reasonably determined by the Company exceed the amount of remaining credit
available to the Company under the Letter(s) of Credit or other acceptable security as
of the calculation date, then the Insured must provide the Company with additional
acceptable security equal to such excess within fifteen (15) days of the Insured's
receipt of notice of the increased security requirement. if the required security is less
than the remaining credit available to the Company under the Letter(s) of Credit or
other acceptable security, then the amount of such remaining credit will be reduced
by the amount of such difference, and the Company will execute any document
necessary in order to reduce the amount of such credits in accordance with this
section.
C. The Company or its successors in interest may draw upon any Letter of Credit or
other security at any time and from time to time, and such funds shall be applied
without diminution because of the insolvency of the Insured or the Company for one
or more of the following purposes only:
1. to reimburse the Company for the Insured's share of Losses or Allocated Loss
Adjustment Expenses paid by the Company;
2. to fund an account with the Company for the full amount secured under this
Agreement in the event the Insured has failed to replace timely any expiring
Letter of Credit as required by paragraph V.A hereof or to adjust timely the
amount secured hereunder as required by paragraph V.B hereof, and such
failure would result in a deficiency in the total security provided by the
Insured;
3. to fund an account with the Company for the full amount secured in the event
of the filing of a voluntary or involuntary petition in bankruptcy by the
Page 4 of 14 City of Newport Beach
Insured, the insolvency of the Insured, the admission in writing by the Insured
of its inability to pay its debts as they become due, or a general assignment by
the Insured of its assets for the benefit of creditors; or
4, to pay any other amounts the Company claims are due to it under the Policies
or this Agreement.
In the event the Company draws upon a Letter of Credit or other security pursuant to
items 2 or 3 above, the Company will be free to hold the proceeds thereof, without
liability for interest thereon, until the Insured has fully remedied the circumstances
for which the draw was made, whereupon the Company shall promptly return the
proceeds held by it, less portions allocable to amounts due it under items 1 or 4
above, upon receipt of written instructions from the Insured, signed by a duly
authorized officer of the Insured, indicating to whom such return is to be made.
D. If the Insured fails to pay or otherwise perform in a timely manner, the Company may
issue an endorsement deleting the deductible or retrospective premium endorsement
from the Policies, recalculate and bill in accordance with the Company's full premium
guaranteed cost rating plan. The premium will immediately be due and owing.
VL Arbitration
A. Submission to Arbitration: In the event of any dispute between the Company and the
Insured with reference to the interpretation, application, formation, enforcement or
validity of this Agreement, or their rights with respect to any transaction involved,
whether such dispute arises before or after termination of this Agreement, such
dispute, upon written request of either party, shall be submitted to the decision of a
board of arbitration composed of two arbitrators and an umpire meeting at the
Company's offices in California unless otherwise mutually agreed. Notwithstanding
the generality of the foregoing, the Company's right to exercise any of the options
contained in Article V.C. and V.D above shall not be limited by the submission of
any dispute to arbitration. The board of arbitration will have complete and exclusive
jurisdiction over the entire matter in dispute, including any question as to its
arbitrability.
B. Notice: The notice requesting arbitration shall state in particular all principal issues to
be resolved, name the requesting party's arbitrator and shall set a date for the hearing,
which date shall be no sooner than ninety (90) days and no later that one hundred
twenty (120) days from the date that the notice requesting arbitration is mailed.
C. Discovery: Each parry may obtain discovery from the other through written
interrogatories and through requests for documents, and may depose witnesses upon
notice to the other. Any objections to production of documents or to the scope of
discovery shall be submitted to the umpire for resolution. The umpire may schedule a
conference at which the parties may present oral arguments and submit written briefs
with respect to the production of documents or the scope of discovery. The umpire
Page 5 of 14 City of Newport Beach
shall render a decision within two business days of the conference. The decision shall
be binding on the parties.
D. Arbitration Board Membership: The members of the board of arbitration shall be
disinterested neutral individuals who have experience with and are qualified in the
disputed subject matter. Each party shall appoint its own arbitrator and the two
arbitrators shall choose a third arbitrator as umpire before the date set for the hearing.
If the party receiving the notice of arbitration fails to appoint its arbitrator within
thirty (30) days after having received the written notice of arbitration, the party giving
notice shall appoint the second arbitrator. If the two arbitrators fail to agree upon the
appointment of the umpire within thirty (30) days after their appointments, either
party may apply to the United States District Court, Central District of California and
the Court will appoint an umpire possessing the qualifications set forth above
E. Submission of Briefs: The parties shall submit their initial briefs within twenty (20)
days from appointment of the umpire. Each may submit reply briefs within ten (10)
days after filing the initial briefs.
F. Arbitration Award: The board shall make an award with regard to the custom and
usage of the insurance business which shall be in writing and shall state the factual
and legal basis for the award. The board may award compensatory money damages
and interest thereupon but may not award punitive, exemplary, extra - contractual or
similar damages arising out of or in connection with a breach of this Agreement. The
board may also make an award directing the insured to provide Collateral under the
terms of this Agreement. The award shall be based upon a hearing in which evidence
may be introduced without following strict rules of evidence but in which cross
examination and rebuttal shall be allowed. At its own election or at the request of the
board, either party may submit a post - hearing brief for consideration by the board
within twenty (20) days of the close of the hearing. The board shall make its award
within thirty (30) days following the close of the hearing or the submission of post -
hearing briefs, whichever is later, unless the parties consent to an extension. A
decision by the majority of the members of the board shall become the award of the
board and shall be final and binding upon all parties to the proceeding.
G. Confirming Court Order: Either party may apply to the United States District Court ,
Central District of California or to the Supreme Court of the State of California for an
order confirming the award or to enforce any decision by the umpire with respect to
discovery. The parties consent to the jurisdiction of any such court. A judgment of
such Court shall thereupon be entered. If such an order is issued, the attorneys fees of
the party so applying and court costs will be paid by the party against whom
confirmation is sought.
H. Arbitration Expense: Each party shall bear the expense of its own arbitrator and shall
jointly and equally bear with the other party the expense of the umpire. The
remaining costs of the arbitration proceedings or any other costs relating to the
arbitration may be allocated by the board.
Page 6 of 14 City of Newport Beach
I. The Arbitration shall be governed by the United States Arbitration Act, Title 9 U.S.C.
§1, et seq.
J. Survival: This Article shall survive the termination of this Agreement.
VII. Term and Termination
A. Term: This Agreement shall continue in force until terminated in accordance with
paragraph C below.
B. Cancellation of Policies: The expiration, or cancellation by either the Insured or the
Company, of the Policies will not terminate this Agreement. In the event of
cancellation of any of the Policies, the premium for such Policies shall be determined
in accordance with those provisions of the Policies relating to cancellation. All other
provisions of this Agreement shall apply until the Agreement terminates.
C. Conditions for Termination: This Agreement will terminate:
When the Company notifies the Insured that the Insured's Obligations have been
discharged; or
by written mutual Agreement of the Insured and the Company.
A. Return of Collateral: Upon termination of this Agreement by satisfaction of the
Insured's Obligations, the Company shall return to the Insured the remaining
Collateral, if any, securing obligations under this Agreement.
VIII. Miscellaneous Terms
A. Aonlicable Law: The rights of the parties to this Agreement shall be governed by and
construed in accordance with the laws of the state of California without application of
its choice of law rules.
B. Waiver: The failure of the Company to insist on strict compliance with this
Agreement, or to exercise any right or remedy shall not constitute a waiver of any
rights provided under this Agreement, nor stop the parties from thereafter demanding
full and complete compliance nor prevent the parties from exercising such a remedy
in the future.
C. Notices and Service of Process: Any notices given with regard to this Agreement
(other than the Company's notices or invoices with respect to amounts due hereunder)
shall be sent to the following addresses by U.S. mail or any other means calculated to
provide notice:
Page 7 of 14 City of Newport Beach
To the Company:
Old Republic General Insurance Corporation
225 S. Lake Ave Suite 900
Pasadena Ca 91101
Attn :Troy Groeneweg
To the Insured:
City of Newport Beach
3300 Newport Beach Blvd.
Newport Beach, CA 92663
Attn : Lauren Farley
For the purposes of enforcing the terms of Article VI and confirming any arbitral
award made pursuant thereto, the parties hereby consent to the exclusive jurisdiction
of either the US. District Court for the California Central District or the Supreme
Court of the State of California. For purposes of service of process related to disputes
governed by this Agreement only, the parties agree to accept service of process by
personal delivery, registered or certified U.S. mail or overnight courier/delivery
service to the addresses specified above.
D. Severability: If any provision hereof is or shall at any time be deemed invalid and
unenforceable then, to the fullest extent permitted by law, the other provisions hereof
shall remain in full force and effect in order to carry out the intentions of the parties
hereto as nearly as may be possible.
E. Entire Agreement: This Agreement constitutes the entire agreement of the parties
with respect to the subject matter herein and supersedes any other previous
agreements or quotations, whether written or oral, between the Company and the
Insured, unless specifically referred to within this Agreement. This Agreement may
be amended, altered, or modified only in writing signed by both parties.
IN WITNESS WHEREOF, the parties, intending to be legally bound, have executed
this Agreement.
Insured: City of Newport Beach
Title: C&4) m%r
Date:
Company: Old Republic General
Insurance Corp
By: Troy Groeneweg
Title: Authorized Representative
Date:
APPRON7gD As TOFORM: Signature
"AMmey 2 dg'h
Page 8 of 14
r G{i Clerk
City of Newport Beach
SCHEDULE A
Policies Subject to the Insurance Program Agreement
Between Old Republic General Insurance Corporation
and
City Of Newport Beach
(the "Insured ")
Effective: January 15, 2011
Policy
Deductible
XS premium
rate
Loss
Conversion Factor
Aggregate
Method(1, 2
or 3 Below
A1LW 53801100
$250,000
1.07
3
Aggregate Information: An aggregate may apply to your program separately to each line of
business or on a combined lines basis. All aggregates are minimum and adjustable upwards
only. The aggregate applies as follows:
1. No Aggregate Applies
2. The aggregate applies to individual lines of business as Follows:
a. WC per 100 of Exposure Basis
b.GL per 100 of Exposure Basis
c. AL per 100 of Exposure Basis
3. The aggregate applies to the deductible losses of the following lines of business on a
combined basis:
GL, WC $6.45 per 100 of Worker's Compensation Payroll
The aggregate applies on an Annual _Multiple Policy period X basis. If a multiple
period basis, the expected expiration date is Januaryl5, 2013 . Extensions or
continuations of the program will be included in the aggregate unless otherwise specified.
If a Controlled insurance Program (Wrap -up), all new and renewal policies issued to
enrolled subcontractors are considered policies under this agreement.
Surcharges and Assessments:
Page 9 of 14 City of Newport Beach
All state surcharges and assessments are payable by the Insured in accordance with
requirements as outlined by each state.
Any change in surcharges, assessments or tax basis will be calculated and billed to the
Insured in accordance with state regulation.
Other coverages: The policies issued to the Insured may include separately rated
coverages outside of the deductible premium, such as Terrorism. These charges are
outlined below:
Policy Number Surcharge $ Other Coverages Other Coverages $
Page 10 of 14 City of Newport Beach
SCHEDULE
To the Insurance Program Agreement
between
Old Republic Genera) Insurance Corporation
and
City of Newport Beach
(the "Insured")
Effective: _January 15, 2011 to January 15, 2013
TABLE I - PAYMENT SCHEDULE
C,0V, e, ra"g,
: - , , ""
1um&
Premium
- --------------
Payment Schedule
Collateral Letter of Credit
_._ - - ----------- - -----
Surcharges
Commercial General Liability
$414,963
Two Annual Installments
Terrorism Risk Insurance Act GL
I $14,112
['Additional premium if selected
Workers Compensation
—
0 rT� Ann Installments ual
.............. -----------
Terrorism Risk Insuranc e Act WC
Inclnded
Included at WC Premium
FWorkers Compensation Surcharges
___FPns`_Lb'e
!�90`47
at h anniversary the deposit
Estimated for 2-year, Program
First Annual 01-15-2012
F
installment
Total Account Premium including
Claims Payment Fund
$75,000
'Payable at inception
Collateral Letter of Credit
_._ - - ----------- - -----
$587,111 See aad_endwn no:-i
— -------- --
ANNUAL INSTALLMENTS ARE SUBJECT TO THE WORK
RAMP-UP
Premium
Payment Schedule
GL -First Year Deposit Premium
$214,548
i Deposit 01-15-2011
GL- Terrorism Included
GL- Second Year Premium
$214,547
First Annual 01-15-2012
GL- Terrorism Included
WC_ First Year Deposit Premium
$150,481
j Deposit 01-15-2011
Page 11 of 14 City of Newport Beach
_._.-.[..........._......._..__.. ._�_.......- .__._............_- ._.......
WC- Second Year Premium $150,480 First Annual 01 -15 -2012
Surcharges. LEST_.___...__..- - - - - -- — $45, 073 -
Claim Payment Fund i $75,000 At Inception 01 -15 -2011
LOC Collateral 587,111 Due within 30 days of inception
TABLE II - INITIAL AMOUNT OF REQUIRED COLLATERAL
Description Amount Due Date
LOC $587,111 At Inception
Other Security (Describe)
Loss Fund (Escrow) $ 75,000 At Inception
IN WITNESS WHEREOF, the parties, intending to be legally bound, have executed
this Agreement.
Insured: City of Newport Beach Company: Old Republic General
Insurance Corporation
By: `�+✓a G V �D By: Troy Groenewe2
Title: 114b " Title: Authorized Representative
Date: 31412o n Date:
Signature _
Page 12 of 14 City of Newport Beach
APPENDIX A — LETTER OF CREDIT
BANK LETTERHEAD
ISSUE DATE:
IRREVOCABLE LETTER OF CREDIT NO.
To Beneficiary:
Old Republic General Insurance Corporation
c/o Old Republic Construction Insurance
Agency
225 S Lake Ave. Suite 900
Pasadena Ca 91101
We hereby establish this irrevocable Letter of Credit
For Internal Identification Purposes Only:
Applicant:
in favor of the aforesaid addressee
( "Beneficiary") for drawings up to United States $ effective immediately. This
Letter of Credit is issued, presentable and payable at our office at (issuing bank's address)
and expires with our close of business on , 20_
The term 'Beneficiary" includes any successor by operation of law of the named Beneficiary
including, without limitation, any liquidator, rehabilitator, receiver or conservator.
We hereby undertake to promptly honor your sight draft(s) drawn on us, indicating our
Credit No. for all or any part of this Credit if presented at our office specified
in paragraph one on or before the expiry date or any automatically extended expiry date.
Except as expressly stated herein, this undertaking is not subject to any agreement,
condition or qualification. The obligation of (issuing bank) under this Letter of Credit is the
individual obligation of (issuing bank) , and is in no way contingent upon reimbursement with
respect thereto,
It is a condition of this Letter of Credit that it is deemed to be automatically extended
without amendment for one year from the expiry date hereof, or any future expiration date, unless
at least 30 days prior to any expiration date we notify you by registered mail that we elect not to
consider this Letter of Credit renewed for any such additional period.
This Letter of Credit is subject to and governed by the Laws of the State of New York
and the Uniform Customs and Practice for Documentary Credits (2007 Revision) International
Chamber of Commerce, Publication No. 600 and, in the event of any conflict, the Laws of the
State of New York will control. If this Letter of Credit expires during an interruption of business
as described in Article 36 of said Publication 600, the bank hereby specifically agrees to effect
payment if this Credit is drawn against within 30 days after the resumption of business.
Very truly yours,
(Issuing Bank)
By:
(Authorized Signature)
Page 13 of 14 City of Newport Beach
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