Loading...
HomeMy WebLinkAbout1983-03-15; City Council; 7314; Purchase of Excess liability insuranceCIT 3F CARLSBAD — AB* 73 1 4 MTG 3-15-83 OEPT CM TITLE: PURCHASE OF EXCESS AGEND. LIABILITY 3ILL INSURANCE f ^ )^J nFDT HD.^-^ CITY ATTY^ CITY MGR/< m. 34L. Q LU o CC0. Q. O< 8 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 <- ,/ r4/ . 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