HomeMy WebLinkAbout1985-07-09; City Council; 8248; Establishing standards related to insurance**-;• i?CIW OF CARLSBAD — AGENDA BILL
AB#_
MTG. : 7/9/85
DEPT C.A.
TITLE:ESTABLISHING STANDARDS FOR
REVIEWING INSURANCE'AND
SURETY COMPANIES . •
DEPT HP.——
CITY ATTYV^B
CITY
RECOMMENDED ACTION:
Adopt Resolution No. #7 O f establishing standards for
reviewing insurance and surety companies.
ITEM EXPLANATION: .; ,
Currently, the City requires contractors, builders, subdividers
and other persons doing business with the City .to post bonds or
furnish insurance. However, we have no Council approved
standards for reviewing" the insurance or surety (bonding)
companies. Current practice is to require that an insurance
company be authorized by the Insurance Commissioner of the
State of California to transact the business of insurance in
the State of California. A listing as an authorized company by
the Insurance Commissioner assures that the company does do
business in the State of California, and therefore can be sued
in this States However, it does not impose any criterion for
the size or financial stability of a company.
It is our opinion that in order to assure that a company can be
sued in California, has an adequate performance record, and
sufficient, surplus the following criteria should be applied by.
the City to determine whether or not an, insurance or bonding
company is acceptable: . • ' .
, 1. Listing by the State Insurance Commissioner as "a company
authorized to transact the business of insurance in the State of
California. For liability insurance, the City may accept a
surplus line carrier upon receipt of a copy of appropriate
affidavit.
2. A Best's Rating of "A", Class. XI, or better.
The Best's Rating Guide is a reliable rating index both for
size and performance of insurance companies. A Best's Rating
of "A+" or "A" indicates excellent performance relative to
other insurance companies. A Best's rating of "Class XI" or
above indicates that the company has 12.5 million dollars in
surplus to policy holders plus conditional reserves and the
estimated equity in unearned premiums.
3. Should a company not be included in Best's, but it can
be shown by convincing evidence that its financial
responsibility is equal or better than the rating set forth in
No., 2, the City Attorney and City Manager may approve the.
company. .
Agenda Bill #
Page/ 2
We think these standards are necessary to limit the City's
risk of having'to use City funds to complete development
obligations. The insurance standards will also help ensure
that City public works contracts are adequately secured.
Without these standards it is possible we may not be able to
collect when we need to rely on a bond or insurance policy.
At a recent meeting of the San Diego County "city attorneys,
it was agreed that all cities should set the same standards
for insurance. The action recommended in this agenda bill
follows the agreed upon standards.
FISCAL IMPACT . .
No cost to City. Will increase strength of City's secured
positions. .
EXHIBIT
Resolution No. p"/ o
. O ill
Q M 3.
II-<
:>•
'O
1
,2
3
•4
5
6
7
8
9
10
11
12
§ 13
I 14
I ' 15
S 16
17
18
19
20
21
22
23
24
25
26
•27
'28
RESOLUTION NO. 8108
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
CARLSBAD, CALIFORNIA ESTABLISHING STANDARDS FOR
REVIEWING INSURANCE AND SURETY COMPANIES.
WHEREAS, the City requires contractors, builders,
subdividers, and other persons doing business with the City to
have various types of insurance; and
WHEREAS, it is necessary to ensure that the insurance
and surety companies selected .by those persons meet certain
financial and performance standards, -
Therefore the City Council of the City of Carlsbad
resolves as follows: .
insurance or surety companies securing or insuring any
obligation or risk of which the City is a beneficiary or an
additional insured shall meet the following minimum standards:
a. Authorization to conduct the business of insurance,
of a type required by the transaction, in the State of California
as evidenced by listing by the State Insurance Commissioner.
For libility insurance the City may accept a surplus line
carrier provided the City is provided with a copy of a surplus
line carrier affidavit.
b. A rating by "Best's Rating .Guide" of "A", "Class XI"
or better. If a company is not rated by Best's the City Attorney
' • ' • •' - ' _ • • ?--'-" " ••* c^ .and City Manager may approve an insurer or surety if the company
produces sufficient evidence that its financial responsibility
and performance capability is equal or better than the Best's
rating requirement. :
Q
CD en
CO o
-1, O
- O oi <
1
2
3
4
5
6
8
9
10
11
12
13
^ | . 14
s £ * 3 15
16
u. • • j oi_ •>• UJz £! o.o"UJ Z O <
Q 01 ^ CD
Z O "~ CO5i 5 17
18
19
20
21
22
23
.24
25
26
27
£8
; PASSED, APPROVED AND ADOPTED at a regular meeting of
the City Council of the City of Carlsbad, California held on the
16th day of July f 1985 by the following vote to wit:
AYES: Council Members Casler, Lewis, Kulchin, Chick and Pettine
NOES: None •
ABSENT: None ,
MARY H. CALLER, Mayor
ATTEST:
,f\-
ALETHA L. RAUTENRRANZ, CTty^Cllrk
2.