HomeMy WebLinkAboutBUDGET & FINANCE AGENDA 06-14-10Central Contra
sanitary District
REGULAR MEETING OF THE BO.tRDOFDIRECTORS.•
CENTRAL CONTRA COSTA ,+ll~'fl,aJ:r.lr.nl~'~,rr.l.
SANITARY DISTRICT l'resu/cnr
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BUDGET AND FINANCE COMMITTEE !'r~•~rrhntf'rr,r~~„r
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Chair Nejedly .).a~/,:s.r h~l:~l:,~f.,~
Member Hockett I~HO:vE: (915)118-9500
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www. cerrrralsan. erg
Monday, June 14, 2010
3:00 p.m.
Executive Conference Room
5019 Imhoff Place
Martinez, California
INFORMATION FOR THE PUBLIC
ADDRESSING THE COMMITTEE ON AN ITEM ON THE AGENDA
Anyone wishing to address the Committee on an item listed on the agenda will be heard when the
Committee Chair calls for comments from the audience. The Chair may specify the number of minutes
each person will be permitted to speak based on the number of persons wishing to speak and the time
available. After the public has commented, the item is closed to further public comment and brought to the
Committee for discussion. There is no firrther comment permitted from the audience unless invited by the
Committee.
ADDRESSING THE COMMITTEE ON AN ITEM NOT ON THE AGENDA
[n accordance with state law, the Committee is prohibited from discussing items not calendared on the
agenda. You may address the Committee on any items not listed on the agenda, and which are within their
jurisdiction, under PUBLIC COMMENTS. Matters brought up which are not on the agenda may be
referred to staff for action or calendared on a fixture agenda.
AGENDA REPORTS
Supporting materials on Committee agenda items are available for public review at the Reception, 5019
Imhoff Place, Martinez. Reports or information relating to agenda items distributed within 72 hours of the
meeting to a majority of the Committee are also available for public inspection at the Reception. During
the meeting, information and supporting materials are available in the Conference Roorn.
AMERICANS WITH DISABILITIES ACT
In accordance with the Americans With Disabilities Act and California Law, it is the policy of the Central
Contra Costa Sanitary District to offer its public meetings in a manner that is readily accessible to
everyone, including those with disabilities. If you are disabled and require special accommodations to
participate, please contact the Secretary of the District at least 48 hours in advance of the meeting at (925)
229-7303.
Budget and Finance Committee
June 14, 2010
Page 2
1. Call Meeting to Order
2. Public Comments
3. Old Business
4. Claims Management
*a. Review new and outstanding claims
5. Reports and Announcements
a. Review Position Paper on Board Election for November 2, 2010
(Item 8.a. in Board Binder)
""b. Review Position Paper on Insurance Program Renewal Options (See
attachment and Item 3.r. in Board Binder)
c. Review Position Papers dealing with Financial Matters of the District
(Items 4.a. and 4.b. in Board Binder)
d. Review Position Paper on Awarding Contract for Wet Weather Bypass
Improvements, DP 7214 (Item 6.a. in Board Binder)
6. Review Expenditures (Item 3.a. in Board Binder)
7. Adjournment
* Attachment
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Central Contra Costa Sanitary District
June 9, 2010
TO: Budget & Finance Committee p (~
VIA: Randall M. Musgraves, James M. Kelly RM"" U~
FROM: Shari Deutsch, Safety & Risk Management Administrator
SUBJECT: Insurance Program Renewal Options
As part of our annual insurance renewal process, the District's broker, Alliant Insurance
Services, submits the District's insurance applications to a variety of companies to get
competing quotes for the next policy year. In the last few years, only our current
insurers offered renewal quotes. Other carriers declined to quote as they believed they
would not be able to offer competitive pricing. This year, other carriers declined to
quote on our excess liability and pollution legal liability coverage. However, we did
receive another quote on our Employment Practices Liability (EPL) coverage. A
summary of this year's marketing effort follows this memo.
The District currently purchases an EPL gap policy that covers losses from our current
self-insured retention of $15,000 up to the $1,000,000 attachment point of our excess
liability policy. Navigators Insurance Company quoted EPL coverage with a $25,000
retention. In order to make a reasonable comparison, we also received a quote from
our current insurer, Admiral Insurance Company, at that same $25,000 retention.
I have summarized the three options below.
Carrier Retention Premium Comments
er claim for 1 ear
1. Admiral Ins. Co. $15,000 $16,407 Coverage, retention and price are the.
same as expiring.
2 Admiral Ins. Co. $25
000 $12
575 Higher retention per claim, coverage is
. , , the same as expiring.
Coverage is not quite as broad,
3. Navigators Ins. Co. $25,000 $12,770 reporting requirements are stricter than
expiring policy.
Since Navigators' coverage and reporting requirements provide a reduced benefit to the
District, I do not recommend this option. However, some consideration should be given
to Admiral's alternative proposal with the $25,000 retention. Three issues should be
considered in such an evaluation: 1) the District's overall risk tolerance for this gap
coverage, 2) the impact of increased claim costs compared to any premium savings and
3) the District's actual loss costs for this line of coverage.
1) Overall Risk Tolerance -Since 2003 the District has purchased a gap policy for EPL
losses to reduce its potential per claim cost from $1,000,000 (at which point the excess
liability policy would respond) to $15,000 per claim. Since the District purchases this
gap coverage to reduce its potential cost per claim, some thought should be given to
whether or not we should even consider increasing the potential cost per claim by
accepting a higher retention.
2) Increased Claim Costs Versus Premium Savings - For a premium reduction of
$3,832, the District would increase its potential cost per claim by $10,000. If we had no
claims at all, it would take 2.7 years before the premium savings would offset the
increase in exposure. If a claim did occur in that time, it is very likely that renewal
premiums would increase and we would still have the higher retention.
3) Actual EPL loss costs -Over the last 5 years the District has reported one claim to
the EPL carrier from which we only incurred legal expenses of less than $3,000. This is
both good and bad news. With only one claim, we have insufficient data to develop loss
trends but then again, our loss experience is very good. However, it is worth
considering recent EPL claims experience from other public entities in Califorriia. In
general, claim investigation costs ranged from $5,000 to $50,000 or more and most
claims settled before trial. Settlements ranged from $75,000 to over $200,000. The
vast majority of trials result in verdicts for the employee with awards averaging in the
$250,000 to $350,000 range.
Recommendation: Based on the above considerations, (recommend Option 1;
renewing"the Admiral Insurance Company policy at the current retention of $15,000 per
claim for an annual premium of $16,407.00.
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