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Home My WebLink About2003-07-22; City Council; 17254; Renewal of Liability Coverage through CAMELAB# 17,254 MTG. 7/22/03 DEPT. Risk TITLE: RENEWAL OF LIABILITY COVERAGE THROUGH CALIFORNIA MUNICIPAL EXCESS LIABILITY (CAMEL) PROGRAM DEPT.HDY L- CITY MGR- 69 CITY ATTY. RECOMMENDED ACTION: Approval of Resolution No. 2003-201 approving the renewal of liability insurance through the California Municipal Excess Liability (CAMEL) program. ITEM EXPLANATION: In 1999, the City’s liability coverage was placed through the Robert Driver Company’s California Municipal Excess Liability (CAMEL) joint purchase program. 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 significantly. Forces creating an upward adjustment in rates include: 0 Negligible interest income from investments due to the low interest rates and poor returns of the financial markets; Significant losses associated with mold claims, a new and unexpected claim type which the industry had not contemplated in rate or loss reserves; The September 11 disaster, the largest single loss to the insurance market impacting multiple sectors of this market; and The loss of asset value in the financial markets which has reduced insurance company surplus to the extent that insurance companies were invested in equities. 0 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 began negotiating with carriers in January, 2003. Since then, the current carrier for CAMEL’S coverage has indicated that premiums for members will increase 150% to 200% and we will see significant restrictions in our coverage. Several carriers have declined to offer a bid on covering the program. Other carriers were willing to bid but with conditions outside the program, such as an increased self-insured retention of 10 million dollars, or a cap of only 5 million dollars of excess coverage. The results of Driver’s negotiations, and keeping the existing coverage under the program nearly intact, include a 97% higher premium this year, or $315,792. This will be the first time since fiscal year 1998-99, our last year in PARSAC, that the City will pay a premium in excess of, or even close to that charged by the pool. PARSAC’s premium in fiscal year 1998-99 was $264,718, or only 16% less than today’s premium for the CAMEL program, and the market it much harder today than it was 5 years ago. In each of the years since leaving the pool, CAMEL’S premium has been 40% or more below that charged by PARSAC. The CAMEL Program has been placed with an admitted carrier, with a Best rating of A++15. Substantive coverage changes include (1) the loss of coverage for inverse condemnation and subsidence, which we did not have prior to joining the CAMEL program and were not offered by any other carriers when we looked at alternative coverage programs prior to joining CAMEL; and (2) all members now have a $1,000,000 self- insured retention limit for employment practices liability. A binder and summary of coverage are shown as Exhibit 2. PAGE 2 OF AGENDA BILL NO. 17,254 Finally, and as reported last year, Driver-Alliant anticipated that premiums would be higher this year. At this time, Driver cannot anticipate market conditions next year. As a result, staff will be monitoring the market closely in the ensuing months to determine if an alternative to the current program is prudent. 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. EXHl BITS: 1. Resolution No 2003-201 2. Insurance Binder DEPARTMENT CONTACT: Erin Letsch, (760) 931 -2470, elets@ci.carlsbad.ca.us 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 8 24 .. F J 5 26 z =) 27 0 28 y 25 RESOLUTIONNO. 2003-201 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, 2003 to June 30, 2004 is hereby approved and the Finance Director is authorized to issue a warrant in the amount of $315,792 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 the 22nd dayof JULY ,2003, by the following vote: AYES: Council Members Lewis, Finnila, Kulchin, Hall NOES: None ABSENT: Council Member Packard ATTEST: U (SEAL) Risk Library - Camel program - CAMEL 03-04 AB EXHIBIT 2 I I FIRE DAMAGE (Any one fire) MED. EXPENSE (Any one person) BODILY INJURY (Per person) BODILY INJURY (Per accident) RETRO DATE FOR CLAIMS MADE: AUTOMOBILE LIABILITY COMBINED SINGLE LIMIT - ANY AUTO ALL OWNED AUTOS SCHEDULED AUTOS PROPERTY DAMAGE HIRED AUTOS MEDICAL PAYMENTS NON-OWNED AUTOS PERSONAL INJURY PROT. - - - - UNINSURED MOTORIST THIS BINDER IS A TEMPORARY INSURANCE CONTRACT, SUBJECT TO THE CONDITIONS SHOWN ON THE DRIVER ALLIANT INSURANCE SERVICES, INC. P.O. Box 6450 Newport Beach, CA 92658-6450 Ph (949) 756-0271 / Fax (949) 756-2713 CITY OF CARLSBAD 1635 FARADAY AVE. CARLSBAD, CA 92008 COMMERCIAL GENERAL LIABILITY I I AUTO PHYSICAL DAMAGE DEWCT'BLE II ALL VEHICLES II SCHEDULED VEHICLES I ACTUALCASHVALUE - STATED AMOUNT COLLISION: OTHER THAN COL. _I I OTHER EACHOCCURRENCE $10,000.000 CALIFORNIA MUNICIPAL AGGREGATE $1 0,000,000 EXCESS LIABILITY PROGRAM (CAMEL) SELF-INSURED RETENTION $500.000 OTHER THAN UMBRELLA FORM EMPLOYMENT PRACTICES $,,ooo,ooo EXCESS LIABILITY - UMBRELLA FORM ~ )( MUNICIPAL LIABILITY - LIABILITY SIR WORKER'S COMPENSATION EACH ACCIDENT AND DISEASE-POLICY LIMIT EMPLOYER'S LIABILITY DISEASE-EACH EMPLOYEE SPECIAL CONDlTlONSlOTHER COVERAGES CLAIMS MADE OCCUR ER'S a CONTRACTORS PROT. 1 PERSONAL a ADV. INJURY EACH OCCURRENCE r N0TE:THIS INSURANCE BINDER IS PROVIDED AS EVIDENCE OF COVERAGE PENDING RECEIPT OF COMPANY POLICY SEE ATTACHED ADVICE OF INSURANCE FOR ADDITIONAL INFORMATION @ G:UPUnit\Camel\Camel03-04\03-04 Binders\03-04 Camel Rnwl Binders-Mrg.doc driver 6alliant INSURANCE SERVICES INTEGRATED INSURANCE & FINANCIAL SERVICES California Lic# OC36861 ADVICE OF INSURANCE BINDER ATTACHMENT CALIFORNIA MUNICIPAL EXCESS LIABILITY PROGRAM (CAMEL) 2003 - 2004 INSURER: POLICY NUMBER: INSURED: POLICY TERM: COVERAGE: LIMITS OF LIABILITY: SELF-INSURED RETENTION: EMPLOYMENT PRACTICES LIABILITY SIR: Insurance Company of the State of Pennsylvania 4203-4827 CITY OF CARLSBAD July 1,2003 to July 1,2004 Excess Municipal Liability on Occurrence Basis and Aggregate where applicable BodilyInjury Personal Injury Property Damage Public Oficials Errors & Omissions $10,000,000 Per Occurrence Annual Aggregate applies to each Entity for Products/Completed Operations Public Officials Errors & Omissions $500,000 Per Occurrence $1,000,000 Per Occurrence IMPORTANT NOTICE Coverage outlined in this Advise of Insurance is subject to the terms and conditions which are set forth in the policy. If there is an inaccuracy in the above description of the insurance required, please advise immediately. Ihdc7 iliant Insurance Services, lnc. ojt ANin~r Rc~.s~u~r.c~.~ (:irot,p (:'(jj~~p~t~~ 1301 Dove St.. Ste. 200, Newport Beach. CA 92650 P.O. Box 6450, Newport Beach, CA 92658-6450 Phone (949) 756-9271 * Fax (949) 756-2713 ~wv.driveralliant.corn CALIFORNIA MUNICIPAL EXCESS LIABILITY (CAMEL) PROGRAM 07/01/03 TO 07/01/04 NAMED INSURED INSURED: CITY OF CARLSBAD 1635 FARADAY Am. CARLSBAD, CA 92008 NAMED INSURED: The City of Carlsbad Carlsbad Municipal Water District Public Improvement Corporation Carlsbad Redevelopment Agency Carlsbad Housing Authority G:UPUnit\CamenCamel -Cerls\Caml Nmdlns&Pri.doc