HomeMy WebLinkAbout04.b. Follow-up to June 20, 2017 discussion on evaluating earthquake insurance-targeted risk analysis to include flood and earthquake scenariosS
November 21, 2017
TO:
FROM:
REVIEWED BY:
Central Contra Costa Sanitary District
ADMINISTRATION COMMITTEE
SHARI DEUTSCH, RISK MANAGEMENT ADMINISTRATOR
PHIL LEIBER, DIRECTOR OF FINANCE AND ADMINISTRATION
ANN SASAKI, DEPUTY GENERAL MANAGER
ROGER S. BAILEY GENERAL MANAGER
Page 1 of 6
Item 4.b.
SUBJECT: FOLLOW-UP TO JUNE 20, 2017 DISCUSSION ON EVALUATING
EARTHQUAKE INSURANCE -TARGETED RISKANALYSIS TO INCLUDE
FLOOD AND EARTHQUAKE SCENARIOS
At the June 12, 2017 Administration Committee meeting, staff presented updated and comprehensive
models for two earthquake hazards for the most at -risk Central San facilities. Staff also analyzed the value
of earthquake insurance coverage for each facility and reported on flood and earthquake coverage
purchased by other wastewater agencies.
After much discussion, staff was asked to return with estimates to insure at -risk locations and facilities for
both earthquake and flood damage. Staff subsequently updated the facilities list for both hazards and
requested new pricing information from Central San's insurance broker. Pricing indications have come in
as follows.
Earthquake Insurance
Table 1 shows the locations and facilities included in the earthquake pricing under the Haywired Scenario.
The total insured value is $411,009,116. Earthquake insurance deductibles for all options are a minimum
of $50,000 for the structure, and another $50,000 for the contents or 5% of the total value of each
structure. For locations with more than one structure, multiple sets of deductibles would be applicable
before coverage takes effect. Only structures valued at or above $1 million were included in the estimate.
Given the total insured value and the deductible structure detailed above, Central San's insurance broker
received the following pricing indications:
Limit Price Range
$5 million $120,000 - $145,000
$10 million $185,000 - $220,000
$25 million $275,000 - $330,000
$50 million $325,000 - $390,000
November 21, 2017 Regular ADMIN Committee Meeting Agenda Packet - Page 41 of 59
Page 2 of 6
Note that none of these options would fully insure Central San's most at -risk assets in case of total
collapse/failure. However, for the Martinez campus structures, the modeling results indicate only a.02%
chance of complete destruction from an earthquake. Buying coverage for the full value of the Martinez
campus given this very low likelihood at the high cost involved would not appear to be cost effective. As a
result, earthquake insurance (at the coverage levels indicated) would only be one tool used in Central
San's overall risk financing strategy.
Flood Insurance
Table 2 shows the locations and facilities included in the flood insurance pricing. Since fewer structures
are at risk of flooding than those exposed to earthquake damage, the list is much smaller.
Unlike earthquake modeling, flood modeling is based on whether a structure is in a FEMA -designated
flood zone. Furthermore, damage estimates will depend more on the construction type of the building, the
value of contents and how high the water rises. Buildings in the 100 -year flood zone are generally at
greater risk of flooding than buildings in the 500 -year flood zone, but a 500 -year flood would cause a wider
damage footprint. Gravity has proven time and again that buildings with street level access to basements
or subterranean portions would receive more flood damage than buildings with no below -grade facilities,
regardless of flood zone.
The total insured value for the six Central San facilities at greatest risk of flooding is over $43,000,000.
The deductible is $50,000 per occurrence per location. However, the maximum limit for flood coverage is
only $500,000 per building.
The following shows the pricing for flood insurance for the six locations most likely to suffer flood damage.
Limit Price Range
$5 million $75,000
$10 million $95,000
As noted above, the total insured value of these locations exceeds $43,000,000. However, given that
coverage for the eight buildings in the six locations covered are capped at $4 million ($500K multiplied by
eight) there is no reason to purchase coverage above the $5 million limit.
I n all circumstances, flood insurance will not cover underground structures or facilities below sea level
unless they are within the footprint of a flood -insured structure. To illustrate this difference, consider that
the underground pump room inside the Martinez Pump Station would be covered, while the tunnels at the
Treatment Plant would not.
Conclusion
As noted earlier, these are pricing indications from Central San's insurance broker, based on discussions
with flood and earthquake insurance underwriters. Should the Board wish to pursue one or more of these
options, staff will complete formal applications and get firm quotes for the specified hazards.
ATTACHMENTS:
November 21, 2017 Regular ADMIN Committee Meeting Agenda Packet - Page 42 of 59
Page 3 of 6
1. Table 1 -Earthquake Scenario with EQ Coverage
2. Table 2 -Structures in Flood Zones with Flood Coverage
November 21, 2017 Regular ADMIN Committee Meeting Agenda Packet - Page 43 of 59
Table 1 - Earthquake Scenario with EQ Coverage
Haywired M7.5
Risk Weighted Exposure
Potential Value of EQ Coverage
Pumping Stations
L/S
Slight
Moderate
Extensive
Complete
Deductible
per Site
Slight
Moderate
Extensive
Complete
Moraga Pump Station
2
$377,113
$2,409,846
$883,654
$901,393
$1,751,978
$657,868
Orinda Crossroads Pump Station
1
$55,367
$1,240,020
$1,677,279
$204,433
$516,245
$723,775
$1,161,034
San Ramon Pump Station
1
$488,405
$2,392,705
$644,994
$922,719
$909,083
$1,483,623
$13,636
Martinez Pump Station
2
$256,127
$179,214
$3,393
$1,256,256
$1,005,407
$250,849
Force Mains
10
$600,000
$3,000,000
$4,500,000
$2,400,000
$1,200,000
Lower Orinda Pump Station
1
$44,244
$434,133
$268,921
$104,401
$153,757
$58,203
$280,376
$115,164
Headworks / MCCs
$0
$2,865,266
$1,161,034
$264,485
Haywired M7.5
Risk Weighted Exposure
Potential Value of EQ Coverage
Martinez Campus
US
Slight
Moderate
Extensive
Complete
Deductible
per Site
Slight
Moderate
Extensive
Complete
HOB
1
$1,164,395
$814,820
$12,852
$3,427
$1,713,606
Plant Ops/PBB
1
$4,963,269
$3,473,193
$54,782
$14,609
$7,304,296
Primary Sed Tanks
1
$3,611,837
$2,527,488
$39,866
$10,631
$5,315,433
Chem Feed Bldg/ MCC22
1
$5,630,828
$3,940,336
$62,150
$16,573
$8,286,722
MRC
1
$905,266
$633,486
$9,992
$2,665
$1,332,253
Sub 16
1
$158,203
$110,707
$1,746
$466
$100,000
$58,203
$10,707
Headworks / MCCs
1
$729,834
$510,723
$8,056
$2,148
$1,074,075
Sub 81
1
$117,069
$81,923
$1,292
$345
$100,000
$17,069
Warehouse
1
$1,215,440
$850,540
$13,415
$3,577
$1,788,727
November 21, 2017 Regular ADMIN Committee Meeting Agenda Packet - Page 44 of 59
Sub 73
1
$1,811,462
$1,267,623
$19,994
$5,332
$100,000
$1,711,462
$1,167,623
Standby Power Bldg
1
$470,198
$329,035
$5,190
$1,384
$100,000
$370,198
$229,035
B&G Building
1
$270,586
$189,351
$2,987
$796
$100,000
$170,586
SCB
1
$939,369
$657,351
$10,368
$2,765
$1,382,442
Aeration Tank/UV Channel
1
$350,788
$245,474
$3,872
$1,032
$516,245
Sub 33
1
$160,555
$112,353
$1,772
$473
$100,000
Sub 17
1
$158,203
$110,707
$1,746
$466
$100,000
$58,203
$10,707
UV Building and UV Banks
1
$905,266
$633,486
$9,992
$2,665
$1,332,253
Emg Switchgear Bldg
1
$65,714
$45,985
$725
$193
$100,000
Filter Plant Forebay
1
$1,023,073
$715,925
$11,292
$3,011
$1,505,627
Sub 82
1
$270,586
$189,351
$2,987
$796
$100,000
$170,586
$89,351
Filter Plant Ops, Filters, Pipe
Gallery
1
$729,834
$510,723
$8,056
$2,148
$1,074,075
Sub 40
1
$646,609
$452,484
$7,137
$1,903
Clearwell
1
$1,811,462
$1,267,623
$19,994
$5,332
Lab
1
$75,326
$52,712
$831
$222
Martinez *
$2,556,308
$1,507,424
$0
$0
Combined *
$2,556,308
$4,372,689
$1,161,034
$264,485
Damage Factors: Slight=25% Moderate=50% Extensive=75% Complete=100%
Risk -Weighted Exposure = Probability of Damage x Cost of Damage
November 21, 2017 Regular ADMIN Committee Meeting Agenda Packet - Page 45 of 59
Table 2 - Structures in Flood Zones with Flood Coverage
FLOOD
Flood
Zone
TIV
Limit Per
Building
# Buildings
Max
Coverage
Deductible
Martinez PS
X
$4,689,936
$500,000
2
$1,000,000
$50,000
Moraga PS
A
$8,759,892
$500,000
2
$1,000,000
$50,000
Orinda Crossroads PS
A
$5,162,447
$500,000
1
$500,000
$50,000
San Ramon PS
A
$9,090,826
$500,000
1
$500,000
$50,000
Lower Orinda PS
A
$1,537,572
$500,000
1
$500,000
$50,000
Headworks / MCCs
X
$13,824,419
$500,000
1
$500,000
$50,000
$43,065,092
$4,000,000
$300,000
November 21, 2017 Regular ADMIN Committee Meeting Agenda Packet - Page 46 of 59