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€ITY OF SAN BERNARDINO - REQUEST FOR COUNCIL ACTION
From:
EDWARD RAYA
Subject:
AUTHORIZING THE RENEWAL
OF THE CITY'S CONTINUED
PARTICIPATION IN THE
BICEP PROGRAM
Dept:
RISK MANAGEMENT
Date:
JUNE 25, 1997
O?/GINAl
Synopsis of Previous Council Action:
JUN 2 6 1997
Recommended Motion:
1. Authorize the payment of $442,956 as the City's cost of continuing participation in the BICEP
program.
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Signat e
Contact person:
Edward Raya
Phone:
909-384-5103
Supporting data attached:
Ward:
FUNDING REQUIREMENTS:
Amount: $442.956
Source: (Acct. No.)
629-453-5161 ~
<Acct. D<~ZJ;:ur:'
Fmance:
/
Council Notes:
;.. St<~ 7lJ /1t({!u..J/OJlf ~-11 ~71'13 ~lt,~"",-
It Pf (<0 ve1J of-
Continued to 09 /tJ~/9 7
Agenda Item No.
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CITY OF SAN BERNARDINO - REQUEST FOR COUNCIL ACTION
STAFF REPORT
The Big Independent Cities Excess Pool was formed as a Joint Powers Authority of California
cities (San Bernardino, Santa Ana, Pomona, Huntington Beach, and Oxnard) on October I,
1988. The pool provided member cities a means of insuring their catastrophic liability losses.
The program provides protection up to $25,000,000.
The group utilizes Certificates of Participation in the amount of $20,000,000 to capitalize the
pool. The pool was structured so that each member city retained the first $1,000,000 of each
loss and shared the risk for losses between $1,000,000 and $2,000,000. Commercial insurance
was purchased by BICEP to cover losses between $2,000,000 and $10,000,000, and the group
risk shared for losses between $10,000,000 and $25,000,000.
Since July I, 1994, the group has been able to purchase commercial insurance for all losses
between $1,000,000 and $20,000,000, and continues to risk share for losses between
$20,000,000 and $25,000,000.
The City's cost for the coverage for fiscal year 1997-1998 is $442,956. This figure inCludes
$120,801 for debt service on the COP's, a $206,470 cost for the commercial insurance, a
$82,103 cost for the City's portion of the risk sharing for those losses still carrying reserves
or paid losses which were not covered by commercial insurance. There is also a $33,582 charge
for administrative cost.
The BICEP bylaws require the City to provide three years written notice prior to leaving the
pool. In spite of this requirement, alternatives to the City's continued participation in BICEP
were reviewed.
Informal discussions with commercial insurance carriers indicated that coverage similar to that
provided by BICEP might be available at a cost of approximately $300,000. This cost would
be dependent on a strict underwriting review and would of course be subject to market
fluctuations. The City's obligation on the debt service which extends until the year 2008,
coupled with the City's portion of the risk sharing assessments, which both have to be paid in
addition to the cost for stand alone coverage, eliminate any financial advantage to leaving
BICEP.
Recommendations:
1. Authorize the payment of $442,956 as the City's cost of continuing participation in the
BICEP program.