HomeMy WebLinkAbout2002-09-10; City Council; 16869; Renew Liability Coverage through CAMEL ProgramCITY OF CARLSBAD -AGENDA BILL 5-
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AB# 16,869
CITY ATTY @ - CALIFORNIA MUNICIPAL EXCESS LIABILITY MTG. 9/10/02
DEPT. lid. a TITLE: b
RENEWAL OF LIABILITY COVERAGE THROUGH
(CAMEL) PROGRAM
DEPT. Risk CITY MGR
I I
RECOMMENDED ACTION:
Approval of Resolution No. 2002-258 approving the renewal of liability insurance through the California
Municipal Excess Liability (CAMEL) program.
ITEM EXPLANATION:
h 1999, the City’s liability coverage was placed through the Robert Driver Company’s California Municipal
Excess Liability (CAMEL) joint purchase program. A list of program members is shown as Exhibit 2. The
premium was $129,000, less than half the premium under PARSAC (the coverage pool of which the City
previously was a member) and was capped for three years. Since 1999 the insurance market has changed
jignificantly. Forces creating an upward adjustment in rates include:
Negligible interest income from investments due to the low interest rates and poor returns of the
Significant losses associated with mold claims, a new and unexpected claim type which the industry
The September 11 disaster, the largest single loss to the insurance market impacting multiple sectors
The loss of asset value in the financial markets which has reduced insurance company surplus to the
financial markets;
had not contemplated in rate or loss reserves;
of this market; and
extent that insurance companies were invested in equities.
The capacity (the amount of available insurance) in the insurance industry has been significantly reduced as
well. Many insurance companies are able to accept a smaller limit of liability than was previously their
maximum, and new coverage restrictions have emerged.
As a result of market conditions, Driver has been negotiating with carriers in the market since February 2002.
The results of these negotiations include a 23.9% higher premium this year, or $159,831, and the renewal is
for a one year period only. This compares favorably with the minimum 40% to over 100% increases Driver is
reporting for individual placements of coverage, and the premium is 40% below the 1999 PARSAC premium
before the City left the pool. In addition, CAMEL’S dividend program, based on loss experience of program
members, will return a dividend of 5% of the expiring premium, or $6,450. The CAMEL Program has also
been placed with a nonadmitted carrier. This means that in the event of insolvency, members cannot make a
claim to the State Guarantee Fund, which provides up to $500,000 per claim. However, the placement was
made after weighing the financial strength of the carrier, its Best rating of A++, and the premiums, against the
current market conditions for obtaining coverage. Lastly, exclusions for mold and terrorism have been added
to our policy. A binder and summary of coverage are shown as Exhibit 3.
Finally, Driver-Alliant anticipates that premium increases will be higher next year. As a result, staff will be
monitoring the market closely in the ensuing months to determine if alternative placement of coverage is
prudent.
PAGE 2 OF AGENDA BILL NO. 16,869
FISCAL IMPACT:
Sufficient funds are available in the Liability Fund to cover this premium. The Carlsbad Municipal Water
District and Housing and Redevelopment Agency are also insureds under this coverage and contribute to the
premium through the budget process.
EXHIBITS:
1. Resolution No 2002-258
2. Camel Program 2002-2003 Participants
3. Binder JPCamelO701-02
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RESOLUTION NO. 2002-258
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
CARLSBAD, CALIFORNIA, APPROVING THE RENEWAL OF
LIABILITY INSURANCE THROUGH THE CALIFORNIA
MUNICIPAL EXCESS LIABILITY PROGRAM (CAMEL)
WHEREAS, in 1999 the City became a member of the California Municipal Excess Liability
program (CAMEL) for purposes of obtaining liability coverage; and
WHEREAS, the City desires to renew its insurance through the Driver-Alliance Company.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Carlsbad,
California, as follows:
1. That the above recitations are true and correct.
2. That the renewal of liability coverage through the California Municipal Excess Liability
program effective July 1, 2002 to June 30, 2003 is hereby approved and the Finance Director is
authorized to issue a warrant in the amount of $159,831 for the payment of the premium to the Driver-
Alliant Company.
PASSED, APPROVED AND ADOPTED at a Regular Meeting of the City Council of the City of
Carlsbad on them day of SEPTEMBER , 2002, by the following vote:
AYES: Council Members Lewis, Kulchin, Finnila, Hall
NOES: None
ABSENT: Council Member Nygaa
ATTEST:
+Ah= INE M. \VC)OD, City Clerk
(SEAL)
Risk Library - Camel program - Camel 02-03 AB Resolution
EXHIBIT 2
driver+alliant j INSURANCE SERVICES
“CAMEL” PROGRAM
2002-2003
PARTICIPANTS
CITY OF BURBANK
COMMUNITY DEVELOPMENT COMMISSION OF LOS ANGELES (CDC)
CITY OF CARLSBAD
CITY OF CORONA
TOWN OF CORTE MADERA
CITY OF COSTA MESA
CITY OF EL CAJON
CITY OF FRESNO
CITY OF GARDEN GROVE
GLENN COUNTY TRANSIT SERVICE
CITY OF HEMET
CITY OF INDUSTRY
CITY OF LONG BEACH
CITY OF MONTEBELLO
ORANGE COUNTY SANITATION DISTRICTS
CITY OF PASADENA
CITY OF RIVERSIDE
CITY OF SAN BUENAVENTURA
CITY OF SAN MATE0
CITY OF SIMI VALLEY
CITY OF THOUSAND OAKS
CITY OF TORRANCE
TWIN CITIES POLICE AUTHORITY
driver+alliant INSURANCE SERVICES California Lic# OC36861 Exhibit 3
Named Insured:
Carrier:
Best Rating:
Standard &
Poor’s Rating:
Policy Term:
Policy Number:
Limits:
Sub- Limit:
Self-Insured
Retention:
Defense Costs:
Coverage Form:
BINDER JPCAMEL0701-02
ATTACHMENT
City of Carlsbad
Great Lakes U.K.
A++, Superior; Financial Size Category 15;
Greater than $2,000,000,000
AAA; Extremely strong financial security
July 1,2002 to June 30,2003
To be determined
$10,000,000 Per Occurrence
(Annual Aggregate applies to each entity for Public Officials Errors & Omissions)
$5,000,000 - Employment Practices Liability.
$500,000
Included in Self Insured Retention and inside Limit of Liability
Retained Limits Form (American Re) will be endorsed to include coverages that exist in
current CAMEL form.
Additional Exclusions:
Mold
Terrorism applies to the following exposures (if applicable): . . . . . . . . . . . .
Airports or Airline Companies
Bridges (greater than 300 feet in length)
ConventioniExhibition Centers (in cities with population greater than 250,000 and
greater than 3,000 person capacity fire code)
Dams (greater than 300 feet in length with downstream population exposure
greater than 25,000)
Emergency services (Police, firefighters, highway patrol and ambulances)
greater than 250,000 population cities
Hospitals in cities with populations in excess of 500,000 or with bed count in excess of
300 beds
Maritime Operations
Municipalities or cities greater than 250,000 in population
Pornransit Authorities
Railroad Operations
Theme parks, amusement parks greater than 5,000 person capacity
Utility Companies (exclusion will not apply to water operations less than 250,000 customers)
Stadiums, sport arenas, or other large venues (capacity greater than 15,000)
Tunnels (greater than 300 feet in length)
Premium: 20% increase over expiring pricing, plus Surplus Lines TaxesiFees
Dividend: 5% of expiring primary Basic Program Premium