HomeMy WebLinkAbout04.e. Renew insurance coverage for excess liability and property coverageCentral Contra Costa Sanitary District e
' BOARD OF DIRECTORS
POSITION PAPER
Board Meeting Date: June 4, 2015
Subject: AUTHORIZE THE GENERAL MANAGER TO RENEW EXCESS LIABILITY
AND PROPERTY INSURANCE POLICIES FOR FISCAL YEAR 2015 -16
Submitted By. Initiating Dept. /Div.:
Shari Deutsch, Risk Management Administration, Risk Management
Administrator
REVIEWED AND RECOMMENDED FOR BOARD ACTION:
D. Heath — Director of Administration w
Roger S. Bail y
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. All
current insurance policies expire on June 30, 2015. Since the cost of the excess
liability and property policies exceeds the General Manager's spending authority,
renewal of these policies is usually approved by the Board.
RECOMMENDATION: Authorize the General Manager to bind coverage for the
following lines of insurance:
Policy Type
Carrier
Retention
Limit
Excess Liability
TBD
$500,000 or $1,000,000
$15,000,000
Property
PEPIP
$250,000
Replacement Cost
FINANCIAL IMPACTS: Staff has not yet received all quotes for either the excess
liability or property insurance. As a result, the financial impacts are based on estimates
at this time. If the District keeps its $1,000,000 self- insured retention, the renewal
premium will be $255,000, an increase of 8.9 %. If the District reduces its retention to
$500,000, staff estimates a $65,000 premium increase resulting in a premium of
$320,000. Staff has also budgeted for an increase of 15% to the property insurance
premium.
ALTERNATIVES /CONSIDERATIONS: Given the cancellation of the June 18th Board
meeting, staff is asking that the Board authorize the General Manager to bind coverage
once the final quotes are received.
BACKGROUND: The District experienced a large liability claim this current fiscal year
which may ultimately exceed the District's self- insured retention of $1 million, thus
requiring notification to the incumbent excess carrier. Both the incumbent excess
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POSITION PAPER
Board Meeting Date: June 4, 2015
subject. AUTHORIZE THE GENERAL MANAGER TO RENEW EXCESS LIABILITY
AND PROPERTY INSURANCE POLICIES FOR FISCAL YEAR 2015 -16
carrier and potential alternative markets have requested information about the claim as
part of their underwriting process. As a result, staff is expecting a premium increase
over last year's prices.
The following table shows the expiring excess liability premium and staff's projections
based on the District's current loss history.
Year
Retention /Limit
Expiring
Premium
Renewal
Premium
% Change
2014 -15
$1 mil / $15 mil
$234,000
$234,000
0
2015 -16
$1 mil / $15 mil
$234,000
$255,000
8.9%
2015 -16
$.5 mil / $15 mil
NA
$320,000
+25.4%
Staff recommends authorizing the General Manager to renew the excess liability
coverage at a premium up to $350,000.
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, the District's insurance broker, has not yet received renewal quotes
from all participating insurers, renewal pricing is not yet available. Most US property
insurers have increased rates over the last few years to offset recent catastrophic loss
costs (i. e. Hurricane Sandy etc.). With this in mind, staff has budgeted for a 15%
increase for the FY 2015 -16 property insurance premium to $142,000 compared to the
current expiring premium of $123,000. Since there will not be time to reconsider should
quotes come in higher than expected, staff recommends authorizing the General
Manager to renew the property coverage through CSRMA's Public Entity Property
Insurance Program (PEPIP) group program at a premium up to $160,000.
COMMITTEE RECOMMENDATION: Authorize the General Manager to renew the
excess liability insurance at a premium up to $350,000 and to renew property coverage
with the PEPIP program at a premium up to $160,000.
RECOMMENDED BOARD ACTION: Authorize the General Manager to renew the
excess liability insurance at a premium up to $350,000 and to renew property coverage
with the PEPIP program at a premium up to $160,000 for FY 2015 -16.
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