HomeMy WebLinkAbout1983-03-15; City Council; 7314; Purchase of Excess liability insuranceCIT 3F CARLSBAD —
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MTG 3-15-83
OEPT CM
TITLE:
PURCHASE OF EXCESS
AGEND.
LIABILITY
3ILL
INSURANCE
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RECOMMENDED ACTION:
Approve Resolution No. 'VA5"V authorizing the purchase of excess
liability insurance at an annual premium of $33,350.
ITEM EXPLANATION
Presently the City purchases excess liability insurance over a
$100,000 self-insured retention up to a limit of $20,000,000. This
program provides broad protection for claims brought against the City
including claims based on Errors and Omissions. Annual premium for
1981-82 was $63,662. The current annual premium is $43,106.
Since renewal of this program on July 1, 1982, insurance markets have
continued to soften, although all forcasts indicate a reversal in this
trend later this year. The City Broker has been successful in
re-negotiating placement of our coverage, with some slight broadening
in protection, for an annual premium of $33,350. This rate is
guaranteed until October 16, 1984. To take immediate advantage of the
cost savings introduced, acceptance of the new proposal is recommended
at this t ime .
FISCAL IMPACT
Placement of the City's Excess Liability Insurance at an annual
premium of $33,350 represents a gross annual savings of $9,756 or a
net savings of $9,156 after allowing the for cancellation penalties
payable to the existing excess carrier. Funds are available in the
City's liability revolving fund to pay this premium.
EXHIBITS
1. Resoultion No. ^7/^TV
2. Consultant's Report on Proposed Change
1 ' RESOLUTION NO. 7157
2 A RESOLTION OF THE CITY COUNCIL OF THE CITY OF
CARLSBAD, CALIFORNIA, AUTHORIZING PURCHASE OF
3 EXCESS LIABILITY INSURANCE
4 WHEREAS, the City has established a self-insurance
5 program for liability insurance; and
WHEREAS, the City's Insurance Broker has received
7 quotes for liability insurance; and
8 WHEREAS, upon evaluation of the quotes for liability
9 insurance, the City desires to renew it insurance.
10 NOW, THEREFORE BE IT RESOLVED by the City Council of
11 Carlsbad, California as follows:
12 1. That the above recitations are true and correct.
13 2. That the Mayor is hereby authorized to enter into
14 an agreement for the renewal of the City's liability insurance
15 with Canadian Indemnity Insurance Company and First State
16 Insurance Company.
17 . PASSED, APPROVED AND ADOPTED at a regular meeting of
18 the City Council on the 15th day of March, 1983 by the following
19 vote, to wit:
20 AYES : Council Members Casler, Lewis, Kulchin, Chick and Prescott
21 NOES: None
22 ABSENT: None
23 <- ,/
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24 MARY H. CASLER, Mayor
25 ATTEST:
26
27 ALETHA L. RAUTENKRANZ, City Cler/k
28 (SEAL)
EXHIBIT A
March 7, 1983
TO: CITY MANAGER
FROM: RISK MANAGEMENT CONSULTANT
SUBJECT: CITY OF CARLSBAD EXCESS LIABILITY INSURANCE
I have reviewed the attached proposal obtained by the City
Broker, Cal Surance Associates, for the re-write of the City's
current Excess Liability Insurance Program. Current insurance
markets are extremely soft, and in making a change at this time,
the City would in all probability be taking advantage of the most
competitive rates that will be available for some time. All
predictions are for an upturn in premium costs later this year.
Acceptance of the proposal is strongly recommended. The two
Carriers involved are both admitted California companies with A+
ratings by BEST'S. In addition, the change will result in
substantial cost savings and some improvements in overall
prot ect ion:
Co s t Sav ing s
Gross annual premium savings will total $9,756. Since the rate
is guaranteed for a total of 19 months these savings will again
apply for at least seven months into the following year. There
is no change in the primary carrier, Canadian Indemnity Company,
so that no cancellation penalty will be payable to them which
would offset this saving. In changing excess protection from
Protective National to First State, the penalty will be only
$600.
Coverage
Currently, the City has a retention of $100,000 per occurance
and a maximum aggregate retention of $300,000. Under the
re-write, this aggregate is reduced to $250,000. In addition,
under the current program we have no protection for any claims
resulting from a failure to supply water. This exclusion will
eleminated under the re-write.
be
It should be noted that a detailed comparison has been made
between this insurance program and the insurance program
available through the San Diego County Cities Risk Management
Authority. Coverage is somewhat less broad under the Authority
Program and premium rates are higher.
CAL-SURANCE ASSOCIATES, INC.
CITY OF CARLSBAD
EXCESS LIABILITY INSURANCE
CURRENT PROGRAM PROPOSED PROGRAM
Period Covered;
Limit:
S.I.R.
Stop Loss:
Ins. Co mp a n i e s
20 ,000 ,000
100 ,000
300 ,000
Canadian
A+
Protective
A+
3-16-83/84
20,000,000
100,000
250 , 000
Canadian
A+
First State
A+
3-16-84
10-16-84
20,000, 000
100 ,000
250,000
Canadian
A+
First State
A+
Annual Cost $43 , 106 $33,350 $19,543
Cancel Protective
Natl. Policy
3-1-83 Penalty
Total Cost for
3-1-83/84
600
$33,950