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Home My WebLink About2013-06-18; City Council; 21267; Renewal Liability Coverage CAMEL ProgramCITY OF CARLSBAD - AGENDA BILL AB# 21,267 RENEWAL OF LIABILITY COVERAGE THROUGH CALIFORNIA MUNICIPAL EXCESS LIABILITY (CAMEL) PROGRAM DEPT. DIRECTOR c/i^ MTG. 6/18/13 RENEWAL OF LIABILITY COVERAGE THROUGH CALIFORNIA MUNICIPAL EXCESS LIABILITY (CAMEL) PROGRAM CITY ATTORNEY DEPT. FIN RENEWAL OF LIABILITY COVERAGE THROUGH CALIFORNIA MUNICIPAL EXCESS LIABILITY (CAMEL) PROGRAM CITY MANAGER £P-7 RECOMMENDED ACTION; Approval of Resolution No. 2013-153 . approving the purchase of liability insurance through Alliant Insurance Services, Inc. ITEM EXPLANATION: The City participates in the Alliant Insurance Services, Inc. joint purchase program known as CAMEL (California Municipal Excess Liability) for liability coverage or ANML (Alliant National Municipal Liability) depending on the group of Cities marketed for liability coverage. Alliant negotiated a renewal of coverage for the City for 2013-14 policy year with Security National Insurance Company. A summary of coverage is shown in Exhibit 1 and the coverage is similar to that of the current policy. The premium is $366,996 to continue $10,000,000 of coverage and requires a self- insured retention (SIR) of $1,000,000 with an additional $500,000 Corridor Aggregate Retention. (This represents a 4.5 % increase over last year's premium). Alliant also negotiated another layer of excess coverage of $5,000,000 over and above $10,000,000 for an additional $78,500. This will bring total excess coverage limits to $15,000,000. The coverage summary is shown in Exhibit 2. The additional insurance is being purchased to better protect the City in the event of a very high exposure loss. As a result of market conditions, cost trends in litigation and settlements, and loss history, the City's SIR has been $500,000 for over 20 years. As a result of market conditions, the increase in litigation and settlement costs over the years and losses piercing this retention level in recent years, this SIR now represents a higher risk to insurance carriers and was not made available to the City by carriers for several years. Benefits of self-insuring: greater control over the claims-handling and settlement process. Stability: greater fluctuations in premiums due to commercial market cycles. Although excess liability premiums may still fluctuate with the market, self-insureds generally enjoy greater year-to-year stability, since the insurance market makes up a smaller percentage of their total cost of risk. DEPARTMENT CONTACT: Ed Garbo, (760) 602-2470, ed.garbo@carlsbadca.gov FOR CITY CLERKS USE ONLY. COUNCIL ACTION: APPROVED CONTINUED TO DATE SPECIFIC • DENIED CONTINUED TO DATE UNKNOWN • CONTINUED • RETURNED TO STAFF • WITHDRAWN • OTHER-SEE MINUTES • AMENDED • Page 2 Problems with self-insurance: greater year-to-year variance in actual vs. expected costs, which can complicate the budgeting process (proper actuarially-based funding (including risk margins for error) and the use of excess insurance to cap large losses can allow the self-insurer to smooth its results from one year to the next), budgets are prepared months in advance, making accurate estimates of future losses difficult (but it's difficult to predict premiums months in advance too). The City was marketed separate from the joint purchase program as well. However, of the 12 carriers approached, 11 declined to provide a quote based on pricing or coverage terms that would not be competitive with the joint purchase program. A summary of these results is shown in Exhibit 3. Staff recommends purchasing liability insurance at a cost not to exceed $445,496. FISCAL IMPACT; This represents a $15,996 (approximately 4.5%) increase over last year's liability premium for the first $10,000,000 in coverage. The additional $78,500 is for an additional $5,000,000 of coverage being purchased this year to handle potential catastrophic losses and rectify an underinsured situation. This premium will be paid with funds from the 2013-14 Liability Fund. The Carlsbad Municipal Water District is also an insured under this coverage and contributes to the premium through the budget process. ENVIRONMENTAL IMPACT; This action is not a "project" within the definition ofthe California Environmental Quality Act in that it does not have a direct or indirect impact on the physical environment under California Code of Regulations, Title 14, Chapter 3, section 15378. EXHIBITS: 1. Resolution No 2013-153 2. Insurance Proposal 3. Optional Excess Liability 4. Marketing Report EXHIBIT 1 3 23 24 25 26 27 28 1 RESOLUTION NO. 2013-153 2 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD, CALIFORNIA, APPROVING THE PURCHASE OF LIABILITY 4 INSURANCE THROUGH ALLIANT SERVICES INC. WHEREAS; the City desires to renew its liability insurance through Alliant Insurance 5 6 y Services, Inc.; and 8 WHEREAS, Alliant Insurance Services has negotiated a renewal of liability coverage from ^ July 1, 2013 to June 30, 2014 for a premium of $ 445,496.00; and 10 NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Carlsbad, 11 California, as follows that: 12 1. The above recitations are true and correct. 14 2. That the purchase of liability coverage through the California Municipal Excess Liability program, effective July 1, 2013 to June 30, 2014, is hereby approved and the Administrative Services Director is authorized to issue a warrant in the amount of $445,496.00 for the payment of the premium to Alliant Insurance Services, Inc. 16 17 18 19 20 // // 21 // 22 // // // // 3 PASSED, APPROVED AND ADOPTED at a Special Meeting of the City Council of the City of Carlsbad on the 18^^ day of June, 2013, by the following vote to wit: AYES: NOES: ABSENT: Council Members Hall, Packard, Wood, Blackburn and Douglas. None. None. 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MATT HALL, Mayor ATTEST: BARBARA ENGLESOTJ, City Clerk CALIFORNIA MUNICIPAL EXCESS LIABILITY PROGRAM (CAMEL) INSURANCE PROPOSAL JULY 1,2013 TO JULY 1,2014 CITY OF CARLSBAD INSURANCE COMPANY: *BEST'S GUIDE RATING: (VERIFIED May 2013) *STANDARD & POOR'S: (VERIFIED May 2013) CALIFORNIA STATUS: PROGRAM TERM: COVERAGE: PRESENT SKCliRH V N.\TL INSIIR-A.NCK COMPANY Ai.i LVM NAM. Mi NiciPAi. LIABILITY PR(K;R\.M A, Excellent; Financial Size Category IX; $250 Million to $500 Million Not Rated Admitted July 1,2012 to July 1,2013 Excess Municipal Liability on an Occurrence Basis including: • Bodily Injury • Personal Injury • Property Damage • Public Officials Errors & Omissions • Unfair Employment Practices Liability PROPOSED SECURITY NATIONAL INSURANCE COMPANY ALLIANT NATL MUNICIPAL LIABII.ITY PROGRAM A, Excellent; Financial Size Category IX; $250 Million to $500 Million Not Rated Admitted July 1,2013 to July 1,2014 Excess Municipal Liability on an Occurrence Basis including: • Bodily Injury • Personal Injury • Property Damage • Public Officials Errors & Omissions • Unfair Employment Practices Liability MAJOR EXCLUSIONS: Note: Refer to policy for complete details *See last page for additional details. • Dams • Nuclear • Punitive, exemplary or multiplied damages • Aircraft or Airports, except public areas and Non- Owned Aircraft operated by or on behalf of the insured • Workers' Compensation or similar law Dams Nuclear Punitive exemplary or multiplied damages Aircraft or Airports, except public areas and Non-Owned Aircraft operated by or on behalf of the insured Workers' Compensation or similar law Alliant insurance Services, [nc hoiie 949-756-0271 • i-ax 949-756-27 Page 1 301 Dove Sii-eet. Suite 200 • Newport Beach. CA 92660 www.alliantinsurance.com • license No. 0C3686i 5 o v) Alliant CALIFORNIA MUNICIPAL EXCESS LIABILITY PROGRAM (CAMEL) INSURANCE PROPOSAL JULY 1,2013 TO JULY 1,2014 CITY OF CARLSBAD INSURANCE COMPANY: PRESENT SKCI Rl I ^ N A I L INSURANCE COMPANY ALLLWr N.VI L MlMClP.M. LlAHILI l Y PR()CR/\M PROPOSED SECT RH Y N.'VnON.AL INSIJR.V.NCE COMPANY ALLI ANT N.VI L MlMC IPAL Ll.MMLi n PR(X;R\M MAJOR EXCLUSIONS: Note: Refer to policy for complete details (cont) Property owned by insured or in their care, custody and control Asbestos Pollution/Contamination except for: Hostile Fire and Collision Upset/Overturn of owned and non-owned vehicles and Time Element Extension. Eminent Domain or condemnation proceedings except as a result of negligence ERISA Financial Interests Subsidence Failure to Supply - amended Medical Malpractice • Transit • TRIA Property owned by insured or in their care, custody and control Asbestos Pollution/Contamination except for: Hostile Fire and Collision Upset/Overturn of owned and non-owned vehicles and Time Element Extension. Eminent Domain or condemnation proceedings except as a result of negligence ERISA Financial Interests Subsidence Failure to Supply - amended Medical Malpractice Transit TRIA (Except where coverage is purchased) INSURING AGREEMENT: CLAIMS ADMINISTRATION: LIMITS OF LIABILITY: Pay on behalf Claims reporting requirements apply as outlined in the issued policy. $ 10,000,000 Any one occurrence or any combination thereof $ 10,000,000 Aggregate applies to Completed Operations Hazard Note: Aggregate applies separately to each CAMEL Pay of behalf Claims reporting requirements apply as outlined in the issued policy. $ 10,000,000 Any one occurrence or any combination thereof $ 10,000,000 Aggregate applies to Completed Operations Hazard Note: Aggregate applies separately to each CAMEL Page 2 Alliant insurance Services. Inc. • 130! Dove Street, Suite 200 • Ne\vporl Ekach. CA 92660 Phone 949-756-0271 • Fax 949-756-2713 • www.alliantinsurancc.com • License No. 0C3686] Alliant JP mmmmmMm mmm. INSURANCE COMPANY: CALIFORNIA MUNICIPAL EXCESS LIABILITY PROGRAM (CAMEL) INSURANCE PROPOSAL JULY 1,2013 TO JULY 1,2014 CITY OF CARLSBAD PRESENT SECi Ri TY NATL INSURANCE COMPANY ALLIANT NATL MLTSICIPAL LlABILI'l \ PR(K;RAM PROPOSED SECT RII Y NATIONAL INSI:RA.\CE COMPANY ALLI.ANT N.A TL MUNICIPAL LIABILITY PRC)C;R.V\1 Member Member SELF-INSURED RETENTION: DEFENSE COSTS AND EXPENSES: $ 1,000,000 Per Occurrence $ 1,000,000 Employment Practices Liability $ 500,000 Corridor Aggregate Retention Defense Costs are included inside the Self-Insured Retention and inside the Limits of Liability $ 1,000,000 Per Occurrence $ 1,000,000 Employment Practices Liability $ 500,000 Corridor Aggregate Retention Defense Costs are included inside the Self-Insured Retention and inside the Limits of Liability ANNUAL PREMIUM: $ 337,500.00 $ 13,500.00 $ 351,000.00 Wholesale Broker Fee Total Premium $ 352,881.00 $ 14,115.00 $ 366,996.00 Wholesale Broker Fee Total Premium TRIA can be purchased for an additional fee of $7,057.62 (Total including TRIA $374,053.62) SUBJECT TO AUDIT: CONDITIONS: BROKER: No ALLIANT INSURANCE SERVICES, INC. NEWPORT BEACH, CALIFORNIA Gordon DesCombes Rennetta Poncy Executive Vice President First Vice President No Coverage applicable to Named Insureds at time of binding. Additional named insureds subject to underwriting and additional premium Julia Gordon Assistant Vice President Courtney Ramirez Account Executive Page 3 Ailiant Insurance Services, inc. • 130! Dove Street. Suite 200 • Newport i::k£ich. CA 9266() hone 949-756-0271 • Fax 949-756-2713 • « u w.ailiantinsurancc.com • License No. 0C36861 j^Uiant THIS PROPOSAL IS FOR INFORMATION PURPOSES ONLY AND DOES NOT ALTER THE POLICY IN ANY WA Y. PLEASE REFER TO THE POLICY FORM FOR COMPLETE COVERAGE, TERMS & CONDITIONS AND EXCLUSIONS This proposal of insurance is provided as a matter of convenience and information only. All information included in this proposal, including but not limited to personal and real property values, locations, operations, products, data, automobile schedules, financial data and loss experience, is based on facts and representations supplied to Alliant Insurance Services, Inc. by you. This proposal does not reflect any independent study or investigation by Alliant Insurance Services, Inc. or its agents and employees. Please be advised that this proposal is also expressly conditioned on there being no material change in the risk between the date of this proposal and the inception date of the proposed policy (including the occurrence of any claim or notice of circumstances that may give rise to a claim under any policy which the policy being proposed is a renewal or replacement). In the event of such change of risk, the insurer may, at its sole discretion, modify, or withdraw this proposal whether or not this offer has already been accepted. This proposal is not confirmation of insurance and does not add to, extend, amend, change, or alter any coverage in any actual policy of insurance you may have. All existing policy terms, conditions, exclusions, and limitations apply. For specific information regarding your insurance coverage, please refer to the policy itself. Alliant Insurance Services, Inc. will not be liable for any claims arising from or related to information included in or omittedfrom this proposal of insurance Alliant embraces a policy of transparency with respect to its compensation from insurance transactions. Details on our compensation policy, including the types of income that Alliant may earn on a placement, are available on our website at www.alliantinsurance.com. For a copy of our policy or for any inquiries regarding compensation issues pertaining to your account you may also contact us at: Alliant Insurance Services, Inc., Attention: General Counsel, 701 B Street, 6th Floor, San Diego, CA 92I0I. Analyzing insurers' over-all performance and financial strength is a task that requires specialized skills and in-depth technical understanding of all aspects of insurance company finances and operations. Insurance brokerages such as Alliant Insurance typically rely upon rating agencies for this type of market analysis. Both A.M. Best and Standard and Poor's have been industry leaders in this area for many decades, utilizing a combination of quantitative and qualitative analysis ofthe information available in formulating their ratings. A.M. Best has an extensive database of nearly 6,000 Life/Health, Property Casualty and International companies. You can visit them at www, ambest. com. For additional information regarding insurer financial strength ratings visit Standard and Poor's website at www .standardandpoors.com. Our goal is to procure insurance for you with underwriters possessing the financial strength to perform. Alliant does not, however, guarantee the solvency of any underwriters with which insurance or reinsurance is placed and maintains no responsibility for any loss or damage arising from the financial failure or insolvency of any insurer. We encourage you to review the publicly available information collected to enable you to make an informed decision to accept or reject a particular underwriter. To learn more about companies doing business in your state, visit the Department of Insurance website for that state. Page 4 Alliant insurance Services. Inc. • 1301 Dove Street. Suite 200 • Newport ]3each. CA 92660 *hone 949-756-0271 • f-'ax 949-756-2713 • www.aliiantinsyrance.com • License No. 0C36861 OPTIONAL EXCESS LIABILITY INSURANCE PROPOSAL JULY 1,2013 TO JULY 1,2014 CITY OF CARLSBAD EXHIBIT 3 Alliant INSURANCE COMPANY: STARR INDEMNITY & LIABILITY COMPANY *A.M. BEST'S GUIDE RATING: (VERIFIED MA Y 2013) A, Excellent; Financial Size Category 14; $1,5 Billion to $2 Billion *STANDARD AND POOR'S RATING: (VERIFIED MA Y 2013) CALIFORNIA STATUS: Not Rated Admitted POLICY TERM: COVERAGE: LIMIT OF UABllATY: UNDERLYING LIMIT: TERMS CONDITIONS AND EXCLUSIONS (Including but not limited to): ANNUAL PREMIUM: July 1,2013 to July 1,2014 Following Form Excess Liability - except to extent the terms, conditions and exclusions differ from underlying insurance See specific policy for complete terms, conditions and exclusions. $10,000,000 Any One Occurrence and Aggregate as respects Completed Operations Excess of Underlying Limit $10,000,000 Any One Occurrence $10,000,000 Annual Aggregate applies separately for Completed Operations Per Security National's ANML policy including but not limited to: Asbestos Exclusion Nuclear Energy Exclusion Financial Institutions Uninsured Motorists/Under Insured Motorist War TRIA can be purchased for an additional fee $125,500 TRIA can be purchased for an additional fee of $2,510 (Total including TRIA $128,010) Alliant OPTIONAL LIMIT: SUBJECTIVITY: $5,000j000 each Occurrence/Completed Operations Aggregate y Annual Premium: $78,500 (TRIA $1,570' additional) Total including premium including TRIA $80,070) $15,000,000 each Occurrence/Completed Operations Aggregate Annual Premium $160,000 (Indication only will firm up if interested) • Signed TRIA Form • No flat cancellation • 25% Minimum Earned Premium MARKETING NOTE: BROKER: Berkeley National Insurance Company provided the following options: $5,000,000 excess of $10,000,000 excess of SIR $93,600 Annual Premium $10,000,000 excess of $10,000,000 excess of SIR $145,109 Annual Premium $15,000,000 excess of $10,000,000 excess of SIR $176,000 Annual Premium TRIA cost 1% of above premiums ALLIANT INSURANCE Newport Beach, California Rick Steddom, First Vice President Rennetta Poncy, First Vice President Julia Gordon, Assistant Vice President Courtney Ramirez, Account Executive THIS PROPOSAL IS FOR INFORMATION PURPOSES ONLY AND DOES NOT ALTER THE POLICY IN ANY WAY. PLEASE REFER TO THE POLICY FORM FOR COMPLETE COVERAGE, TERMS & CONDITIONS AND EXCLUSIONS This proposal of insurance is provided as a matter of convenience and information only. All information included in this proposal, including but not limited to personal and real property values, locations, operations, products, data, automobile schedules, financial data and loss experience, is based on facts and representations supplied to Alliant Insurance Services, Inc. by you. This proposal does not reflect any independent study or investigation by Alliant Insurance Services, Inc. or its agents and employees. Please be advised that this proposal is also expressly conditioned on there being no material change in the risk between the date of this proposal and the inception date of the proposed policy (including the occurrence of any claim or notice of circumstances that may give rise to a claim under any policy which the policy being proposed is a renewal or replacement). In the event of such change of risk, the insurer may, at its sole discretion, modify, or withdraw this proposal whether or not this offer has already been accepted. This proposal is not confirmation of insurance and does not add to, extend, amend, change, or alter any coverage in any actual policy of insurance you may have. All existing policy terms, conditions, exclusions, and limitations \0 Ailiant apply. For specific information regarding your insurance coverage, please refer to the policy itself. Alliant Insurance Services, Inc. will not be liable for any claims arising from or related to information included in or omittedfrom this proposal of insurance Alliant embraces a policy of transparency with respect to its compensation from insurance transactions. Details on our compensation policy, including the types of income that Alliant may earn on a placement, are available on our website at www.alliantinsurance.com. For a copy of our policy or for any inquiries regarding compensation issues pertaining to your account you may also contact us at: Alliant Insurance Services, Inc., Attention: General Counsel, 701 B Street, 6th Floor, San Diego, CA 92101. Analyzing insurers' over-all performance and financial strength is a task that requires specialized skills and in- depth technical understanding of all aspects of insurance company finances and operations. Insurance brokerages such as Alliant Insurance typically rely upon rating agencies for this type of market analysis. Both A.M. Best and Standard and Poor's have been industry leaders in this area for many decades, utilizing a combination of quantitative and qualitative analysis of the information available in formulating their ratings. A.M. Best has an extensive database of nearly 6,000 Life/Health, Property Casualty and International companies. You can visit them at www.ambest.com. For additional information regarding insurer financial strength ratings visit Standard and Poor's website at www.standardandpoors.com._ Our goal is to procure insurance for you with underwriters possessing the financial strength to perform. Alliant does not, however, guarantee the solvency of any underwriters with which insurance or reinsurance is placed and maintains no responsibility for any loss or damage arising from the financial failure or insolvency of any insurer. We encourage you to review the publicly available information collected to enable you to make an informed decision to accept or reject a particular underwriter. To learn more about companies doing business in your state, visit the Department of Insurance website for that state. w EXHIBIT 4 Alliant CALIFORNIA MUNICIPAL EXCESS LIABILITY PROGRAM (CAMEL) JULY 1, 2013 MARKETING REPORT CARRIER RESPONSE Security National Insurance Co. (AmTrust) Quote provided Ironshore Insurance Company Unable to compete on price and form Civic Risk . Unable to compete on price, form and retention levels AIG Declined, not competitive on price and form Starr Indemnity & Liability Co. Declined - not competitive on pricing and retention levels ACE Unable to provide occurrence coverage on EPLI Alteris Declined - unable to compete on pricing Berkley Declined - quoting excess layers Genesis Pricing 2 -3 times expiring Houston Casualty Unable to compete on price, form and retention levels Munich Re Declined - pricing not competitive with expiring Travelers Declined - can't compete on form, not a market for large retention public entities 10-