HomeMy WebLinkAbout03.f. Renew insurance coverage for excess liability and property coverageCentral Contra Costa Sanitary District
BOARD OF DIRECTORS 3• �•
POSITION PAPER
Board Meeting Date: June 20, 2013
Subject. AUTHORIZE THE GENERAL MANAGER TO RENEW EXCESS LIABILITY
AND PROPERTY INSURANCE POLICIES FOR FISCAL YEAR 2013 -14
Submitted By. Initiating Dept /Div.:
Shari Deutsch, Safety & Risk Administration, Safety and Risk
Management Administrator Management
REVIEWED AND RECOMMENDED FOR BOARD ACTION:
C. Swanson
Provisional General Manager
ISSUE: The District purchases commercial excess insurance to cover general and auto
liability losses above its $1,000,000 self- insured retention., The District also purchases
liability insurance policies to cover losses from pollution legal liability, employment
practices, and claims for breach of fiduciary duties in administering employee benefit
funds and a property insurance policy to protect against loss to District assets. Current
insurance policies expire on June 30, 2013.
Since the cost of the excess liability and property policies exceed the General
Manager's spending authority, renewal of these policies must be approved by the
Board.
RECOMMENDATION: Review and approve renewal pricing and authorize the General
Manager to bind coverage as follows:
Policy Type Carrier Retention Limit Premium Change
Excess Liability ICSOP (AIG)
Property PEPIP
$1,000,000 $15,000,000 +6%
$250,000 Replacement Cost TBD
FINANCIAL IMPACTS: The impact of renewing the excess liability policy is an
increase of $13,911 in the premium from $217,648 in fiscal year 2012 -13 to $231,599
in fiscal year 2013 -14. As discussed in more detail below, renewal pricing for the
property coverage is not yet available.
ALTERNATIVES /CONSIDERATIONS: The alternatives to renewing the excess liability
policy are to purchase coverage from other insurance companies that provided quotes
or to adjust the District's self- insured retention.
Alternative markets were approached for this coverage. However, none of the other
carriers approached for excess liability quotes were willing to remove their exclusions
for inverse condemnation. As a result, there are no other quotes to review.
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Position Paper 1314.doc Page 1 of 3
POSITION PAPER
Board Meeting Date: June 20, 2013
Subject: AUTHORIZE THE GENERAL MANAGER TO RENEW EXCESS LIABILITY
AND PROPERTY INSURANCE POLICIES FOR FISCAL YEAR 2013 -14
BACKGROUND: The District's favorable loss history has continued through fiscal year
2012 -13. However, the liability sector of the insurance market has not performed as
well and insurance companies have not been able to recoup the loss of investment
income from the last several years. As a result, staff anticipated moderate rate
increases in all lines of liability coverage. At this time, only the cost of the excess
liability insurance has increased.
The following table shows the current expiring and renewal premiums for excess liability
coverage compared to last year's expiring and renewal premiums.
Year
Form
Retention /Limit
Expiring
Renewal
$$
%
Premium
Premium
Change
Change
2012 -13
Occurrence
$1 mil / $15 mil
$207,097
$217,648
$10,551
+5
2013 -14
Occurrence
$1 mil / $15 mil
$217,648
$231,599
$13,911
+6
Staff recommends renewing the District's excess liability coverage at the above pricing
and retention with AIG.
Other Insurance - Propert y: The District purchases property insurance through the
California Sanitation Risk Management Authority ( CSRMA). CSRMA offers the
coverage through a group purchase program of over 1,300 participating public entities
and between 35 and 40 different insurance and reinsurance companies in any given
year. Since Alliant has not yet received renewal quotes from all participating insurers,
renewal pricing is not yet available. Most US property insurers are increasing rates to
offset catastrophic loss costs and continued reductions in investment income. With this
in mind, staff has budgeted for a 15% increase in the property insurance premium. At
this time, staff recommends renewing the property coverage through CSRMA's Public
Entity Property Insurance Program (PEPIP) group program with a rate increase not to
exceed 15% or a maximum of $135,000.
Other Insurance — Workers' Compensation: The District is a member of CSRMA's
Workers' Compensation insurance pool. Renewal pricing for this coverage depends on
the cost of the pool's excess insurance and individual members' experience modifiers.
In 2009 -10 the District's experience modifier rose to .97 to reflect increases in both the
frequency and severity of the District's Workers' Compensation claims over the
preceding two years. Over time, the District's experience modifier has gone down. For
the 2013 -14 renewal, the District's experience modifier is down to .73.
Alliant Insurance Services is anticipating a 10% increase in the excess Workers'
Compensation premium for 2013 -14. As a result, staff anticipates Workers'
Compensation premium increases up to 10% over the expiring premium of $526,161.
C:\ Users\ danderson \HppData \Local\Microsoft \Windows \Temporary Internet Files \Content.Outlook \DVCG8C5G \Insurance Renewal
Position Paper 1314 (2).doc
POSITION PAPER
Board Meeting Date: June 20, 2013
subject: AUTHORIZE THE GENERAL MANAGER TO RENEW EXCESS LIABILITY
AND PROPERTY INSURANCE POLICIES FOR FISCAL YEAR 2013 -14
Renewal rates and any applicable dividends from prior years must be approved by the
CSRMA Board of Directors before members receive final renewal premiums. As in the
past, staff will report the final Workers' Compensation premium to the Budget and
Finance Committee as soon as it becomes available.
COMMITTEE RECOMMENDATION: The Budget and Finance Committee reviewed
this item at the June 17, 2013 meeting. Any recommended changes by the Committee
will be discussed with the Board prior to action taken on the Consent Calendar.
RECOMMENDED BOARD ACTION: Authorize the General Manager to renew
insurance coverage for excess liability with AIG for $231,599 and to renew property
coverage with the PEPIP program at rates not to exceed a 15% increase or $135,000.
C:\ Users \danderson\AppData \Local \Microsoft \Windows \Temporary Internet Files \Content.Outlook \DVCG8C5G \Insurance Renewal
Position Paper 1314 (2).doc