HomeMy WebLinkAboutItem No. 12 - Risk Management Insurance Program Fiscal Year 2020/21
Consent Calendar
City of San Bernardino
Request for Council Action
Date: June 17, 2020
To: Honorable Mayor and City Council Members
From: Teri Ledoux, City Manager
By:Rebekah Kramer, Assistant City Manager
Subject: Risk Management Insurance Program Fiscal Year 2020/21
Recommendation
Adopt Resolution No. 2020-131 of the Mayor and City Council of the City of San
Bernardino, California, authorizing the City Manager to purchase both a 30-day
extension to the current excess liability policies for the extended term of coverage
compensation insurance through Public Risk Innovation, Solutions, and Management
(PRISM) formerly California State Associate of Counties Excess Insurance Authority
(CSAC-EIA) premium quote in the amount of $384,275.
Background
On June 19, 2019, the Mayor and City Council adopted Resolution 2019-68 authorizing
California State Association of Counties Excess Insurance Authority (CSAC-EIA)
insurance pool and purchase stand-alone commercial coverage for excess liability
insurance for Fiscal Year (FY) 2019/20.
On July 17, 2019, the Mayor and City Council adopted Resolution 2019-176 authorizing
security insurance for Fiscal Year (FY) 2019/20.
e to protect against
catastrophic injury to City employees.
-EIA, which
uses pool purchasing power to achieve broad coverage for the lowest rates available.
CSAC-
compensation program provides services to 95 percent of the counties and 70 percent
has a $1 million SIR with a limit remaining at statutory coverage. Statutory coverage
provides payment for claims up to the amount required by law, without limits. The
program has a $5 million pooled limit and statutory reinsurance coverage for each
accident. FY 2019/20 premium for coverage was a total of $364,881.
Page 1
6763
Excess Liability Insurance
The City purchases excess liability insurance to protect against catastrophic incidents:
liability, and employment practices liability.
-alone commercial coverage with
the following carriers Allied, Arch, Berkeley and Hallmark, the coverage is layered to
provide the City a larger limit of coverage. Coverage was negotiated and secured by the
providing a broad range of insurance solutions that has been in business for over 30
has a $5 million SIR with a
limit of $35 million. The FY 2019/20 premium for coverage was a total of $581,275.
Commercial Property
The City purchases commercial property insurance to cover for direct physical loss or
damage to City property.
The current commercial property insurance is with Travelers Insurance. The policy
coverage provides a $50 million dollar limit per occurrence with a $100,000 dollar
deductible for all risks with the exception of DIC deductibles ranging from $100,000 to
$250,000, total premium for coverage was $621,097 for FY 2019/20.
Difference in Conditions (Earthquake and Flood)
The City purchases difference in conditions (DIC) insurance to protect against direct
physical loss of or damage to City property caused by or resulted from a covered cause
of loss such as earthquakes and flooding.
Westchester Specialty, Endurance Insurance Company, Evanston Insurance Company
and Arch, the coverage is layered to provide a $20 million dollars limit. Coverage was
premium for coverage was a total of $328,640.
Cyber Liability
The City purchases cyber liability insurance for reimbursement coverage in response to
data privacy security incidents, business interruption, system failure, digital access
protection, network security, cyber extortion, and media liability.
The current cyber liability carrier is Chubb; the policy provides a $2 million dollar limit.
Total premium for coverage was $47,974 for FY 2019/20.
Discussion
policy limits and self-insured retention options to find excess liability coverage in the
current insurance marketplace on behalf of the City. The current market presently has
faced many obstacles such as capacity restrictions meaning there are fewer firms
Page 2
6763
writing policies for public agencies and those that are writing are doing so for less
coverage, perceived jury verdicts for police-related claims, and the current uncertainty
that COVID-19 has created worldwide exacerbated insurance market conditions. The
tes to our current insurance
carriers and a variety of other carriers to explore and review available options for excess
liability, commercial property, and cyber liability.
mination
that it will not renew coverage for the City in FY 2020/21. Allied provides the City excess
liability insurance coverage in the amount of $5 million for the first layer of insurance
available to the City beyond the current self-insured retention rate of $5 million. Instead,
what Allied has offered is a 30-day extension of our existing policy to allow the City an
ide the City a 30-day extension of
the existing policies. The total cost for the 30-day extensions is $47,509. The following
is a breakdown of the pro-rata fee to extend our existing policies through July 31, 2020,
which will allow the City to secure excess liability insurance coverage.
Allied Excess Liability Insurance Carrier - 1st Layer ($5 - $10 million): $21,985
Hallmark Excess Liability Insurance Carrier - 2nd Layer ($10 - $15 million): $8,463
Berkley Excess Liability Insurance Carrier - 3rd Layer ($15 - $25 million): $12,300
Arch Excess Liability Insurance Carrier - 4th Layer ($25 - $35 million): $4,761
coverage for the City and the San Bernardino Municipal Water Department (SBMWD). It
coverage at this time as they have alternative excess liability coverage. The City has
directly worked with the pooled carrier PRISM, formerly CSAC-EIA, to secure excess
is $384,275 for FY 2020/21.
In July, staff will bring back renewal options and costs for excess liability insurance,
commercial property insurance, and cyber liability options for consideration. At this time,
after the stay-at home orders associated with COVID-19, we have received the
indication that excess liability insurance coverage could cost upwards of $1.5 million in
FY 2020/21. Preliminary estimates have not been received for the commercial property
insurance and cyber liability insurance coverage; however, these policies do not renew
until August 1, 2020. A re-evaluation of various self-insured retention rates, levels of
excess liability insurance, and difference in conditions insurance options is necessary to
a cost-containment standpoint and so that appropriate levels of coverage are secured
for the City.
2020-2025 Key Strategic Targets and Goals
The resolution authorizes the City Manager to purchase both a 30-day extension with
on insurance
Page 3
6763
through Public Risk Innovation, Solutions, and Management (PRISM) aligns with Goal
No. 1: Financial Stability.
Fiscal Impact
The cost for a 30-day extension through July 31, 2020 for excess liability coverage and
premiums is $431,784 for Fiscal Year (FY) 2020/21.
Sufficient funding is included in the proposed FY 2020/21 Operating Budget for the cost
of the premiums in accounts 629-110-0056*5161 (liability) and 678-110-0057*5161
Conclusion
It is recommended that the Mayor and City Council of the City of San Bernardino,
California, adopt Resolution No. 2020-131 authorizing the City Manager to purchase
both a 30-day extension to the current excess liability policies for the extended term of
coverage through July 31, 2020 for the premium amount of $47,509 and excess
Management (PRISM) formerly California State Associate of Counties Excess
Insurance Authority (CSAC-EIA) for the premium quote amount of $384,275.
Attachments
Attachment 1 Resolution 2020-131
Attachment 2
Attachment 3 EWC Memorandum of Understanding
Attachment 4 Aon 30-Day Extension Letter
Ward: n/a
Synopsis of Previous Council Actions:
June 20, 2019 Mayor and City Council adopted Resolution 2019-68 authorizing
the City Manager enter into California State Association of Counties
Excess Insurance Authority (CSAC-EIA) insurance pool for excess
ensation insurances and to purchase stand-alone
commercial coverage for excess liability insurance with Aon.
July 17, 2019 Mayor and City Council adopted Resolution 2019-176
terrorism, difference in conditions, and cyber security insurance
policy term July 31, 2019 to July 31, 2020 for Fiscal Year (FY)
2019-2020.
Page 4
RESOLUTION NO. 2020-131
RESOLUTION OF THE MAYOR AND CITY COUNCIL OF
THE CITY OF SAN BERNARDINO, CALIFORNIA,
AUTHORIZING THE CITY MANAGER TO PURCHASE
BOTH A 30-DAY EXTENSION TO THE CURRENT
EXCESS LIABILITY POLICIES FOR THE EXTENDED
TERM OF COVERAGE THROUGH JULY 31, 2020 FOR
THE PREMIUM AMOUNT OF $47,509 AND EXCESS
THE PUBLIC RISK INNOVATION, SOLUTIONS AND
MANAGEMENT (PRISM) FORMERLY CALIFORNIA
STATE ASSOCATION OF COUNTIES EXCESS
INSURANCE AUTHORITY (CSAC-EIA) FOR THE
PREMIUM QUOTE IN THE AMOUNT OF $384,275
WHEREAS, on June 19, 2019 the Mayor and City Council adopted Resolution No.
2019-68,
insurance with California State Association of Counties Excess Insurance Authority (CSAC-
EIA) and stand-alone commercial coverage for excess liability insurance for Fiscal Year
2019/20; and
WHEREAS,
determination that it will not renew coverage for the City; and
WHEREAS, 30-
day extension of the existing policies; and
WHEREAS,
compensation coverage for the City; and
WHEREAS, staff will bring back renewal options and costs for excess liability
insurance, commercial property insurance, cyber liability options for consideration.
BE IT RESOLVED BY THE MAYOR AND CITY COUNCIL OF THE CITY OF
SAN BERNARDINO AS FOLLOWS:
SECTION 1. The above recitals are true and correct and are incorporated herein by this
reference.
SECTION 2. The City Manager is hereby authorized to purchase a 30-day extension to
the current excess liability policies for the extended term coverage through July 31, 2020 for the
premium amount of $47,509.
SECTION 3. The City Manager is hereby authorized to purchase
compensation insurance through Public Risk Innovation, Solutions, and Management (PRISM)
for the premium quote in the amount of $384,275.
Resolution No. 2020-131
SECTION 4. The City Council finds this Resolution is not subject to the California
Environmental Quality Act (CEQA) in that the activity is covered by the general rule that CEQA
applies only to projects which have the potential for causing a significant effect on the
environment. Where it can be seen with certainty, as in this case, that there is no possibility that
the activity in question may have a significant effect on the environment, the activity is not
subject to CEQA.
SECTION 5. Severability. If any provision of this Resolution or the application thereof
to any person or circumstance is held invalid, such invalidity shall not affect other provisions or
applications, and to this end the provisions of this Resolution are declared to be severable.
SECTION 6. Effective Date. This Resolution shall become effective immediately.
APPROVED and ADOPTED by the City Council and signed by the Mayor and attested
by the Acting City Clerk this ___ day of __________ 2020.
John Valdivia, Mayor
City of San Bernardino
Attest:
Genoveva Rocha, CMC, Acting City Clerk
Approved as to form:
Sonia Carvalho, City Attorney
Resolution No. 2020-131
CERTIFICATION
STATE OF CALIFORNIA )
COUNTY OF SAN BERNARDINO) ss
CITY OF SAN BERNARDINO )
I, Genoveva Rocha, CMC, Acting City Clerk, hereby certify that the attached is a true
copy of Resolution No. 2020-___, adopted at a regular meeting held on the ___ day of _______
2020 by the following vote:
Council Members: AYES NAYS ABSTAIN ABSENT
SANCHEZ _____ _____ _______ _______
IBARRA _____ _____ _______ _______
FIGUEROA _____ _____ _______ _______
SHORETT _____ _____ _______ _______
NICKEL _____ _____ _______ _______
RICHARD _____ _____ _______ _______
MULVIHILL _____ _____ _______ _______
WITNESS my hand and official seal of the City of San Bernardino this ___ day of
____________ 2020.
Genoveva Rocha, CMC, Acting City Clerk
June 4, 2020
City of San Bernardino
Edelia Eveland, Director of Human Resources
290 North D St
San Bernardino, CA 92401
Dear Edelia:
Here is our proposal for the extension of your policies. We have confirmations
from all the carriers for a 30-day extension at the following costs:
Allied has agreed to extend Pro-rata. A/P $21,985
Hallmark has agreed to extend Pro-rata as per APR/AWAC. A/P $8,463
Berkley has agreed to extend Pro-rata as per APR/AWAC. A/P $12,300
Arch has agreed to extend Pro-rata as per APR/AWAC. A/P $4,761.
Total is $47,509 for the 30-day extension. Let me know if I should have the
carriers process this change.
If you have any further questions, please feel free to contact me.
Regards,
William S. Deeb. Ed.D.
Director of Public Entities
Aon Risk Insurance Services West, Inc.
|
Aon Risk Insurance Services West, Inc. Public Entities Practice Group
|
707 Wilshire Blvd., Suite 2500 Los Angeles CA 90017
||| |
t +1.213.630.3210 m +1.213.200.0080 o +1.213.630.3200 f +1.213.996.1783 aon.com
CA Corp. Lic. No. 0363334