HomeMy WebLinkAboutHR.Risk Management Insurance Program Update 3 0 (2)Risk Insurance Program Update
Fiscal Year 2020/21
Presented by Edelia Eveland, Director of Human Resources
Background
On June 17, 2020 the Mayor and Council authorized:
•Purchase excess workers’ compensation insurance through PRISM
•Purchase a 30-day extension of the current excess liability policies extending the term of coverage through July 31, 2020
•Return with an update consisting of insurance renewal options and costs for excess liability, commercial property, and cyber liability
Background
•Market Conditions - Factors Impacting the Renewal
•Capacity restrictions, fewer firms writing polices for public agencies
•Policies available for less coverage
•Uncertainty created by COVID19
•Recent protests
•Perceived jury verdicts for police related claims
Insurance Update
Insurance Update
Property Program Quote for Commercial Property, Earthquake and Flood,
Auto, Terrorism, and Cyber Liability Coverage
•Alliant Option
•Same lines of coverage renewal is $1,102,850
•Savings of $202,400 over Aon
•5% increase over FY 19/20 premiums
•Includes cyclical property appraisals, savings of up to $40,000 this
fiscal year
•Alliant is paid by the insurance pool, savings of $85,000 in broker fees (future years)
Insurance Update
Quote Solicitation Excess General Liability Insurance
Aon’s Efforts
•Solicited quotes from 28 carriers
•All declined to provide the City a quote
•Aon was unable to secure a viable option for the City
Insurance Update
Quote Solicitation
Staff Efforts
•Alliant partners with PRISM for excess general liability
•Expressed concern over the reliability of our loss data for the claims that would have settled for a much higher amount if not for the bankruptcy proceedings
•Requested an audit of 27 claims
•The audit data indicated a variance of $10 million between the audited numbers and settlements that were part of the bankruptcy proceedings •ICRMA quote is pending, and they have requested additional information associated with four claims
Insurance Update
Excess General Liability Program Quote for Bodily Injury, Property Damage,
Personal Injury, Public Officials Liability, and Employment Practices
•Alliant
•PRISM after reviewing the claims audit was able to offer a premium quote not to exceed $3.5 million
•Staff is working diligently and closely with Alliant to maintain the City’s self insurance retention rate and to negotiate a premium quote for less
•ICRMA
•Has requested additional information to be in a position to issue a quote
Insurance Summary Overview
If Excess General Liability Coverage is not Renewed
1.The current 30-day excess general liability insurance policies sunset July 31, 2020
2.On August 1, 2020 the City will be uninsured for bodily injury, property damage, personal injury, public officials liability, and employment practices
3.Losses would not be capped at the self insured retention rate, currently $5 million
4.With the increasing number of large jury verdicts, the City’s exposure of one large settlement would deplete the general fund reserve in its entirety
Conclusion
Staff is recommending that the Mayor and Council authorize:
1.An amendment to the FY 20/21 budget in the amount of $2,113,229 from the General Fund Reserves to cover the unanticipated costs of securing excess general liability
2.Renewal of the excess general liability insurance for a premium not to exceed $3.5 million
3.Continue to explore excess general liability insurance options and bring back an update in August of the outcome and option selected
4.Property program renewal with Alliant for a pro-rated premium not to exceed $820,190
5.Cyber liability insurance renewal with Alliant for $6,350
Questions