HomeMy WebLinkAbout1981-06-16; City Council; 6515-3; Renewal of liability insuranceCITY OF,CARLSBAD
AGENDA BILL NO. (j^/S ~-ALMAsJb***^^^ Initial:
DATE: JUNE. 16, 1981 . . ... '. . . .. . .. . . ' :,' .-• • - - T. ---.-- , ........_ , --_- ^ — . - _ _ .... _ ^ ^^ ^
./DEPARTMENT: . CITY MANAGER . C. Mgr.
•..Subject: :/RENEWAL OF LIABILITY, INSURANCE AND .ASSUMPTION OF A ;••.. ., /;
: . ••• ,::.'' •;.'• SELF: ; INSURED. RETENTION • ; /, '; . ;• .' ^v. ^;.^ ''-;,;'
/Statement of the Matter •../., :;
Presently the City purchases liability insurance subject/to a , ..
,$10,000 deductible per occurrence, with limits of five million ....
dollars. Coverage is provided under five policies at a total ... " ;
: / annual premium of $265,636. .; ..-'.-. ... '.-. / - ''..••-''.;:',.'•'- :-v'. ••;"
As part of the City's new Risk Management Program reviewed; by'-Council ,/
at :their meeting of February 24, 1981, it was recommended that/
Carlsbad should follow the example of most California, cities and- :
change from the current deductible program to' a self-insured retention. -'•
Apart from anticipated cost savings, the primary significance of the;
change is to shift responsibility and authority for the adjustment
"and settlement of claims from the insurance carrier to the City. . / ,, -
Insurance premiums are payable in advance; disputed claims,.however, .,
• are often not paid/until five years after an accident occurs. As a ; -
result of this, the City will immediately 'see substantial cash flow. :,:
.benefits from the change to a self-insured retention. Ultimately,
,-. bottom line savings should result from the elimination of insurance
company overhead and profits, the investment of a portion of the . V/
: cash flow savings in improved risk managemeritj, safety and loss.;- '-; ,
prevention programs and the closer control which, the City can exerqise-
/ over claims management. - ."•.•• .,' • •'.'••/.••.•••: . './ ' : ,/ . •-'..-".-' '/ :
The City's insurance broker has received quotes/.from two insurance
companies for $20 million dollars coverage with a $100/0,00 self-insurance
retention: •• . ' -• . --;. : . • • ' : ''•••" /• /• '•'•'; •'-•.-•' / ', ;• -•'''
-/.••• "—/v /Company .: ' . ..... . . •'.'.. Premium .!" / /'•/•";,
': Canadian Indemnity & Protective National; ; $63,642 ^./;
.Industrial Indemnity & Lexington Insurance 76,320 :. // '•'
The staff recommends that the city renew its liability insurance coverage
-with Canadian Indemnity and Protective National Insurance Companies..
Fiscal Impact .''••' ' • -•/"'• . /' '• .' •. /-.'/. .• •" ."••.-. '•/•:.. '•' / '
The City will realize a substantial cash flow savings by establishing "
. a ,$100,000 self-insurance level. The premium for liability insurance
in .1980-81 is approximately $265,000 with a $10,000 deductible and /
$5 million coverage. The premium in 1981-82 will be $63,642 with
'a $100,000 self-insurance retention and $20 million coverage. However,
under the self-insurance program the city will have to pay the first
$1QQ., OOJD of a claim. In addition, the city will have to pay claims
administration expenses and legal defense fees. It is estimated that
the city will payout $50,000 in claims and $10,000 for claims
administration and legal ! fees, .next .year. '.. . • / " , • ". , - . .
2 .
Agenda Bill No. G £ \S " 3 Con't.
Subject: RENEWAL OF LIABILITY INSURANCE AND ASSUMPTION OF A
SELF INSURED RETENTION.
Fiscal Impact - Con't.
The recommended insurance coverage provides a $300,000 stop loss which
would limit the total amount the city would have to directly pay for
claims. . •
Funds are available in the city's liability revolving fund to pay
the above expenses.
Exhibits
'.!.' Resolution No.
Recommen'dation
Approve Resolution No. (# g~P9 authorizing purchase of excess
liability insurance and assumption of a self-insured retention o-fr
$,l'OD,700.0yfor.?.riability claims.
APPROVED
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RESOLUTION NO.6589
. A RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF CARLSBAD, CALIFORNIA AUTHORIZING RENEWAL ' :
OF THE CITY LIABILITY INSURANCE.
WHEREAS, the City has established a self-insurance program
for liability insurance; and '
WHEREAS, the City's insurance broker has received quotes
for liability insurance; and .
WHEREAS, upon evaluation of the quotes for liability
insurance, the city desires to renew its insurance. •
NOW, THEREFORE, BE IT'RESOLVED by the City Council of
Carlsbad, California as follows:
• ,1. 'That the above recitations are true and correct.
2. That the City Manager is hereby authorized to enter
into an agreement for renewal of the city's liability
insurance with Canadian Indemnity Insurance Company
and Protective National Insurance Company.
PASSED, APPROVED AND ADOPTED at a regular meeting of the
City Council on the ^th daY of June. 1981
by the following vote, to wit:
AYES: Council Members. Packard, Casler, Anear, Lewis and Rulchin
.....NOEST None -.. ' '. , ,, .
ABSENT: None
. ; RONALD C . .PACKARD , Mayor
ATTEST:
ALE'jfHA L. RAUTENKRANZ.7 City Clerk
KAREN R. STEVENS, Deputy City Clerk