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Home My WebLink About03.r. AUTHORIZE GENERAL MANAGER TO RENEW INSURANCE COVERAGES FOR FISCAL YEAR 2010-11Central Contra Costa Sanitary District ' BOARD OF DIRECTORS - POSITION PAPER Board Meeting Date: June 17, 2010 No.: 3. r. Consent Calendar Type of Action: AUTHORIZE GENERAL MANAGER TO RENEW INSURANCE COVERAGES FOR FISCAL YEAR 2010-11 Subject: AUTHORIZE GENERAL MANAGER TO RENEW INSURANCE COVERAGES FOR FISCAL YEAR 2010-11 Submitted By: Initiating Dept./Div.: Shari Deutsch, Safety & Risk Administration/Safety & Risk Management Management Administrator REVIEWED AND RECOMMENDED FOR BOARD ACTION: ~h R. graves J e elly, General Manager ISSUE: The District purchases commercial insurance to cover general and auto liability, pollution legal liability, and employment practices liability losses. Current insurance policies expire on June 30, 2010 and renewal pricing must be reviewed prior to binding renewal coverage. RECOMMENDATION: Review and approve renewal pricing and authorize the General Manager to bind renewal coverage as follows: Policy Type Retention Coverage Limit Premium Change Excess Liability $1,000,000 $15,000,000 4% Pollution Legal Liability (HHW) $50,000 $10,000,000 <1% Employment Practices Liability $15,000 (gap coverage) $1,000,000 None FINANCIAL IMPACTS: The impact of the proposed recommendation is an increase of $9,106 in these insurance premiums from $293,055 in fiscal year 2009-10 to $302,161 in fiscal year 2010-11. ALTERNATIVES/CONSIDERATIONS: The alternatives to the recommended action are to purchase coverage from other insurance companies that provided quotes to Alliant or to adjust the District's retention on these policies. Although alternative markets were approached for all three lines of insurance, we only received one additional quote for our Employment Practices Liability (EPL) coverage. Staff has reviewed this alternate proposal but does not recommend it. POSITION PAPER Board Meeting Date: June 17, 2010 Subject AUTHORIZE GENERAL MANAGER TO RENEW INSURANCE COVERAGE FOR FISCAL YEAR 2010-11 BACKGROUND: The District's favorable loss history has continued through fiscal year 2009-10. However, given the ongoing weak economy and the continued reduction insurance companies have seen in investment income, staff anticipated moderate rate increases in all lines of liability coverage. At this time, only the cost of excess liability insurance has gone up. However, the rate upon which the premium is calculated has remained the same. Since payroll is used as a measure of exposure, increases in the District's total payroll resulted in a higher premium. The following table shows expiring and renewal premiums for each insurance policy. Policy Form Retention/Limit Expiring premium Renewal Premium $$ Change Change Excess Liability Occurrence $1 mil / $15 mil $198,000 $207,097 $9,097 4% Pollution Occurrence $50k / $10 mil $78,648 $78,657 $9 <1 EPL Claims Made $15k / $1 mil $16,407 $16,407 - - $293,055 $302,161 $9106 3.1% Staff recommends renewing coverage at the above pricing and retentions with the expiring insurance companies. Other Insurance - Prooertv: 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 group purchase program with a rate increase not to exceed 15% or a maximum of $115,000. 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. Last year 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. POSITION PAPER Board Meeting Date: June 17, 2010 subject. AUTHORIZE GENERAL MANAGER TO.RENEW INSURANCE COVERAGE FOR FISCAL YEAR 2010-11 With the addition of another relatively low-loss year, the District's experience modifier has been reduced from .97 to .90. Alliant Insurance Services is anticipating a 10% increase in Workers' Compensation costs for 2010-11. As a result, we anticipate Workers' Compensation premium increases up to 10% over the expiring premium of $552,350. 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. The Budget and Finance Committee reviewed this item at the June 14, 2010 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, pollution (HHW) liability, and employment practices liability as quoted with expiring terms and conditions, to renew property coverage at rates not to exceed a 15% increase or $115,000 and to renew and report final Workers' Compensation premiums to the Budget and Finance Committee upon receipt. 4.a. Public Hearings Continued from June 3, 2010 CONDUCT PUBLIC HEARINGS TO RECEIVE PUBLIC COMMENT ON THE FY 2010-2011 OPERATIONS AND MAINTENANCE BUDGET, DEBT SERVICE FUND BUDGET AND SELF-INSURANCE FUND BUDGET, AND FOR THE ESTABLISHMENT OF THE FY 2010-2011 SEWER SERVICE CHARGE RATES, AND ON PLACING FY 2010-2011 SEWER SERVICE CHARGES ON THE COUNTY TAX ROLL FOR COLLECTION SUGGESTED AGENDA JUNE 17, 2010 President McGill will announce that two separate public hearings will be conducted: 1) Approval and adoption of the FY 2010-2011 Operations and Maintenance (O&M) Budget, Debt Service Fund Budget and Self-Insurance Fund Budget, and establishment of the FY 2010-2011 Sewer Service Charge ,, rates; and 2) Collection of the FY 2010-2011 .Sewer Service Charges on the County tax roll. Call for staff report on both items. Call for public comments on budget and rates. Board deliberation, and: a. Vote to approve and adopt the FY 2010-2011 O&M Budget, Debt Service Fund Budget and Self-Insurance Fund Budget, incorporating Sewer Service Charge as determined by ordinance to be considered separately; and b. Vote to set the Sewer Service Charge for FY 2010-2011, to be incorporated in the FY 2010-2011 budget: 1) Adopt an uncodified ordinance increasing the Sewer Service Charge by $16 for a total Sewer Service Charge of $327 per RUE (staff recommendation.), or 2) Adopt an uncodified ordinance setting the Sewer Service Charge increase between $0-$16 for a total Sewer Service Charge between $311 and $327 per RUE, or 3) Take no action which continues. the Sewer Service Charge at the maximum rate of $311 as set forth in Resolution 2008-063, N:WDMINSUPWDMIN\I2ATCLIFF\public hearing -sewer service charge & O&M 2010.doc 4. Open public hearing on collection of Sewer Service Charge on the County tax roll and call for comments. 5. Close public hearing. 6. Board deliberation, and: Vote to adopt resolution allowing collection of the FY 2010-2011 Sewer Service Charges on the County tax roll by 4/5~h vote of the Board. N:\ADMINSUP\ADMIN\RATCLIFF\public hearing -sewer service charge & 08M 2010.doc