HomeMy WebLinkAbout2018-06-26; City Council; ; The renewal of excess workers' compensation insurance in the amount of $203,150.~ CITY COUNCIL
~ Staff Report
Meeting Date:
To:
From:
Staff Contact:
June 26, 2018
Mayor and City Council
Kevin Crawford, City Manager
Donna Hernandez, Human Resources Manager
donna.hernandez@carlsbadca.gov or 760-602-7533
CA Review t,v(....
Subject: The renewal of excess workers' compensation insurance in the amount of
$203,150.
Recommended Action
Adopt a Resolution for the renewal of excess workers' compensation insurance in the amount of
$203,150.
Executive Summary
The city is currently self-insured for workers' compensation claims for up to $1,000,000 for
safety employees and up to $750,000 for non-safety employees per claim. Over the past year
the city had several large losses which have impacted the city's ability to obtain coverage at the
same self-insured retention level.
Safety National Casualty Corporation has been the incumbent insurance carrier since fiscal year
2007 /2008. Based on our successful history with this carrier and the acceptable quote, staff
recommends renewing its policy at with an annual premium of $203,150.
Pursuant to Section 3.28.060 Procurement of professional services and services of the Carlsbad
Municipal Code the city council shall be the awarding authority for procurement of services and
professional services for which the cost to the city is more than $100,000 per agreement year.
Discussion
The current excess workers' compensation insurance policy expires on June 30, 2018. HUB
International, the city's excess workers' compensation insurance broker, approached five
insurance carriers who are the major 'writers of excess workers' compensation for
municipalities. Of the five carriers, one is no longer writing policies for municipalities, one
declined stating that they could not provide a competitive quote. The remaining two carriers
would require a self-insured retention of $2,000,000.
The city's current self-insurance retention is $1,000,000 per claim for safety employees and
$750,000 per claim for non-safety employees. All of the quotes received assumed an increase
to the self-insured retention for all employees.
Safety National Casualty Corporation prov_ided quotes for three options, see Attachment A of
Exhibit 1 of this Staff Report. Staff recommends option number one, which would result in a
June 26, 2018 Item #7 Page 1 of 24
premium increase of 11% based on an 11% increase in the city's annual payroll. This maintains
the current rate of $0.3069 per $100 of annual payroll.
Fiscal Analysis
The recommended renewal quotation for one year is $203,150. Sufficient funds have been
included in the Fiscal Year 2018-19 budget.
Next Steps
Staff will complete all necessary administrative actions necessary to renew the insurance.
Environmental Evaluation (CEQA)
Pursuant to Public Resources Code section 21065, this action does not constitute a "project"
within the meaning of CEQA in that it has no potential to cause either a direct physical change
in the environment, or a reasonable foreseeable indirect physical change in the environment;
and therefore, does not require environmental review.
Public Notification
This item was noticed in accordance with the Ralph M. Brown Act and was available for viewing
at least 72 hours prior to the meeting date.
Exhibits
1. City Council Resolution.
June 26, 2018 Item #7 Page 2 of 24
RESOLUTION NO. 2018-107
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD,
CALIFORNIA, AUTHORIZING RENEWAL OF THE CITY'S EXCESS
INSURANCE FOR WORKERS' COMPENSATION.
Exhibit 1
WHEREAS, the city has established a self-insured program for workers' compensation;
and
WHEREAS, the city's insurance broker has received a renewal quotation for excess
workers' compensation insurance coverage; and
WHEREAS, upon evaluation of this quotation for excess insurance, the city desires to
renew its insurance.
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 the city's excess workers' compensation insurance with Safety
National Casualty Corporation, with the premium in the amount of $203,150, is hereby
approved and shall be effective July 1, 2018 through June 30, 2019.
PASSED, APPROVED AND ADOPTED at a Regular Meeting of the City Council of the City
of Carlsbad on the 26th day of June, 2018, by the following vote, to wit:
AYES: M. Hall, K. Blackburn, M. Schumacher, C. Schumacher, M. Packard.
NOES: None.
ABSENT: None.
June 26, 2018 Item #7 Page 3 of 24
HUB
PROPOSAL FOR INSURANCE SERVICES
COMMERCIAL INSURANCE
CITY OF CARLSBAD
Effective: July 1, 2018 to July 1, 2019
Date: June 5, 2018
Jeff Cruz, MBA, CPCU
Account Executive
HUB International Insurance Services Inc.
5375 Mira Sorrento Place, Suite 400
San Diego, CA 92121
(858) 255-3261
jeff.cruz@hubinternational.com
License: 0757776
Attachment A
June 26, 2018 Item #7 Page 4 of 24
City of Carlsbad
TABLE OF CONTENTS
HUB International Directory ............................................................................................. 3
Named Insured Listing and Location Schedule ............................................................... 4
Premium & Exposure Comparison .................................................................................. 5
Excess Workers' Compensation & Employers Liability -Option 1 ................................... 6
Excess Workers' Compensation & Employers Liability -Option 2 ................................... 7
Excess Workers' Compensation & Employers Liability -Option 3 ................................... 8
Rating, Terms & Conditions ............................................................................................ 9
Premium Summary & Authorization to Bind Coverage .................................................. 10
Appendix ....................................................................................................................... 11
• Other Coverages for Discussion
• Location Schedule
• Terrorism Disclosure
• How We Get Paid
• The HUB Advantage
• Privacy Policy
This proposal is for illustration purposes only. All coverages are subject to term, conditions, limitations and exclusions of
the actual policy. In the event of discrepancy between this proposal and the policy, the policy will supersede this proposal. 2 '
June 26, 2018 Item #7 Page 5 of 24
HUB INTERNATIONAL DIRECTORY
ACCOUNT EXECUTIVE:
ACCOUNT MANAGER:
PROPERTY & CASUAL TY CLAIMS:
WORKERS COMPENSATION CLAIMS:
RISK SERVICES:
ADDITIONAL HUB CAPABILITIES:
EMPLOYEE BENEFITS:
PERSONAL LINES:
City of Carlsbad
Jeff Cruz
Direct: 858-255-3261
jeff.cruz@hubinternational.com
Vance Morris
Direct: 858-373-6979
vance.morris@hubinternational.com
Lisa Winnert
Direct: 877-712-5246
lisa. winnert@hu binternational. com
Jon McPheters
Direct: 760-707-5665
jon.mcpheters@hubinternational.com
Irene Damsky
Direct: 858-373-6927
irene.damsky@hubinternational.com
Maggie Osburn
Direct: 858-373-6918
Maggie.Osburn@hubinternational.com
Suzanne Canfield
Direct: 760-707-5633
Suzanne.Canfield@hubinternational.com
This proposal is for illustration purposes only. All coverages are subject to term, conditions, limitations and exclusions of
the actual policy. In the event of discrepancy between this proposal and the policy, the policy will supersede this proposal.
3
June 26, 2018 Item #7 Page 6 of 24
City of Carlsbad
NAMED INSURED AND LOCATION SCHEDULE
First Named Insured has specific rights and duties under insurance policies that do not apply to other Named
Insured. These duties will be specified in the policies.
First Named Insured
City of Carlsbad
Additional Named Insureds
None
Please check to ensure all appropriate entities are named. Any entity (including Partnerships, corporations,
joint ventures, individuals, etc.) not listed above is not included as a Named Insured. Entities with limited interests
in policies, such as those who are to be included as an Additional Insured, Loss Payee, Lessor, or Mortgagee, are
listed in the relevant coverage sections.
LOCATION SCHEDULE
Address City State Zip Description. of Operations
See Attached Schedule
This proposal is for illustration purposes only. All coverages are subject to term, conditions, limitations and exclusions of the actual
policy. In the event of discrepancy between this proposal and the policy, the policy will supersede this proposal.
4
June 26, 2018 Item #7 Page 7 of 24
City of Carlsbad
PREMIUM AND EXPOSURE COMPARISON
Premium Options
2018-2019
Renewal Options
Expiring Option 1 Option 2 Option 3
Item $1,250,000 SIR $1.25M SIR -Police & Fire $1,000,000 SIR 2017 -2018 All Employees $1M SIR -All Other Employees All Employees
Total Payroll $ 59,629,511 $ 66,194,087 $ 66,194,087 $ 66,194,087
Premium $ 183,003 $ 203,150 $ 218,374 $ 228,568
Rate Per $100 of Payroll $ 0.3069 $ 0.3069 $ 0.3299 $ 0.3453
% Rate Change N/A 0% 7% 13%
% Premium Increase N/A 11% 19% 25%
Exposure Comparison
Payroll by Class Code
Class Code 2017 -2018 2018 -2019 %Change
7706 -Fire Fighters, Non-Volunteer $ 8,068,351 $ 10,608,059 31%
7720 -Police $ 13,283,786 $ 14,351,881 8%
8810 -Clerical $ 2,261,952 $ 3,818,343 69%
8820 -Attorneys -All Employees $ 27,077,623 $ 27,331,549 1%
9410 -Public Agency Employees -
Clerical $ 3,556,763 $ 5,133,363 44%
9420 -Public Agency Employees -All
Other $ 5,381,036 $ 4,950,892 (8%)
Total: $ 59,629,511 $ 66,194,087 11%
This proposal is for illustration purposes only. All coverages are subject to term, conditions, limitations and exclusions of the actual
policy. In the event of discrepancy between this proposal and the policy, the policy will supersede this proposal.
5
June 26, 2018 Item #7 Page 8 of 24
City of Carlsbad
EXCESS WORKERS' COMPENSATION & EMPLOYERS LIABILITY
Option 1
Workers' Compensation covers employees' medical and disability benefits, as specified by state laws, resulting
from on-the-job injuries. Employer's Liability applies to employee injuries for which you are liable that are not
covered under state workers' compensation laws, with certain exceptions defined by the policy.
GENERAL INFORMATION
Company
AM Best Rating
Effective Date
Expiration Date
Premium
POLICY LIMITS
Coverage
Workers Compensation
Employers Liability -Bodily Injury by Accident:
Employers Liability -Policy Limit (Disease):
Employers Liability-Each Employee (Disease):
Self-Insured Retention
TERMS & CONDITIONS
Covered States:
Other States:
Audit Period:
Total Payroll:
Minimum Premium Requirement:
CA
Safety National Casualty Corporation
A+, XIV (Admitted)
7/1/2018
7/1/2019
$203,150
Limit
Statutory
$2 ,000,000
$2 ,000,000
$2,000,000
$1 ,250,000 All Employees
All Other States Except AK, ND, OH , WA, WY
Annual
$66,194,087
90%: $182,835
You must notify us immediately if you hire employees or begin operations in any state not listed in "Covered
States" above. "Other States" coverage provides LIMITED, TEMPORARY coverage if you have or begin
operations in one of the "Other States" defined above. However, you must notify us IMMEDIATELY of any work in
one of the "Other States". Note: No coverage is offered for monopolistic states (ND, OH, WA, and. WY). Coverage
for monopolistic states must be arranged with the appropriate state agencies.
NOTE: Final premiums and surcharges are subject to payroll verification and change at audit
State of Exposure: CA
Classification
All Employees
Rate Per $100
$0.3069
Payroll
$66,194,087
This proposal is for illustration purposes only. All coverages are subject to term, conditions, limitations and exclusions of the actual
policy. In the event of discrepancy between this proposal and the policy, the policy will supersede this proposal.
6
June 26, 2018 Item #7 Page 9 of 24
City of Carlsbad
EXCESS WORKERS' COMPENSATION & EMPLOYERS LIABILITY
Option 2
Workers' Compensation covers employees' medical and disability benefits, as specified by state laws, resulting
from on-the-job injuries. Employer's Liability applies to employee injuries for which you are liable that are not
covered under state workers' compensation laws, with certain exceptions defined by the policy.
GENERAL INFORMATION
Company
AM Best Rating
Effective Date
Expiration Date
Premium
POLICY LIMITS
Coverage
Workers Compensation
Employers Liability -Bodily Injury by Accident:
Employers Liability -Policy Limit (Disease):
Employers Liability -Each Employee (Disease):
Self-Insured Retention
TERMS & CONDITIONS
Covered States:
Other States:
Audit Period:
Total Payroll:
Minimum Premium Requirement:
CA
Safety National Casualty Corporation
A+, XIV (Admitted)
7/1/2018
7/1/2019
$218,374
Limit
Statutory
$2,000,000
$2,000,000
$2,000,000
$1,250,000 Police & Fire
$1,000,000 All Other Employees
All Other States Except AK, ND, OH, WA, WY
Annual
$66,194,087
90%: $196,537
You must notify us immediately if you hire employees or begin operations in 1any state not listed in "Covered
States" above. "Other States" coverage provides LIMITED, TEMPORARY coverage if you have or begin
operations in one of the "Other States" defined above. However, you must notify us IMMEDIATELY of any work in
one of the "Other States". Note: No coverage is offered for monopolistic states (ND, OH, WA, and WY). Coverage
for monopolistic states must be arranged with the appropriate state agencies.
NOTE: Final premiums and surcharges are subject to payroll verification and change at audit
State of Exposure: CA
Classification
All Employees
Rate Per $100
$0.3299
Payroll
$66,194,087
This proposal is for illustration purposes only. All coverages are subject to term, conditions, limitations and exclusions of the actual
policy. In the event of discrepancy between this proposal and the policy, the policy will supersede this proposal.
7
June 26, 2018 Item #7 Page 10 of 24
City of Carlsbad
EXCESS WORKERS' COMPENSATION & EMPLOYERS LIABILITY
Option 3
Workers' Compensation covers employees' medical and disability benefits, as specified by state laws, resulting
from on-the-job injuries. Employer's Liability applies to employee injuries for which you are liable that are not
covered under state workers' compensation laws, with certain exceptions defined by the policy.
GENERAL INFORMATION
Company
AM Best Rating
Effective Date
Expiration Date
Premium
POLICY LIMITS
Coverage
Workers Compensation
Employers Liability -Bodily Injury by Accident:
Employers Liability -Policy Limit (Disease):
Employers Liability -Each Employee (Disease):
Self-Insured Retention
TERMS & CONDITIONS
Covered States:
Other States:
Audit Period:
Total Payroll:
Minimum Premium Requirement:
CA
Safety National Casualty Corporation
A+, XIV (Admitted)
7/1/2018
7/1/2019
$228,568
Limit
Statutory
$2,000,000
$2,000,000
$2,000,000
$1,000,000 All Employees
All Other States Except AK, ND, OH, WA, WY
Annual
$66,194,087
90%: $205,711
You must notify us immediately if you hire employees or begin operations in any state not listed in "Covered
States" above. "Other States" coverage provides LIMITED, TEMPORARY coverage if you have or begin
operations in one of the "Other States" defined above. However, you must notify us IMMEDIATELY of any work in
one of the "Other States". Note: No coverage is offered for monopolistic states (ND, OH, WA, and WY). Coverage
for monopolistic states must be arranged with the appropriate state agencies.
NOTE: Final premiums and surcharges are subject to payroll verification and change at audit
State of Exposure: CA
Classification
All Employees
Rate Per $100
$0.3453
Payroll
$66,194,087
This proposal is for illustration purposes only. All coverages are subject to term, conditions, limitations and exclusions of the actual
policy. In the event of discrepancy between this proposal and the policy, the policy will supersede this proposal.
8
June 26, 2018 Item #7 Page 11 of 24
City of Carlsbad-
RATING INFORMATION, TERMS & CONDITIONS -ALL OPTIONS
TERMS & CONDITIONS
• Safety National can no longer offer the $750,000 retention for All Other Employees
• Minimum Premium for the 2018-2019 policy term is 90%
SUBJECTIVITIES
• None
PAYMENT TERMS
• Premium due in full after binding (Premium financing available if needed)
This proposal is for illustration purposes only, All coverages are subject to term, conditions, limitations and exclusions of the actual
policy. In the event of discrepancy between this proposal and the policy, the policy will supersede this proposal.
9
June 26, 2018 Item #7 Page 12 of 24
City of Carlsbad
PREMIUM SUMMARY & AUTHORIZATION TO BIND COVERAGE
Premiums shown here are estimated annual premiums. They are based on the information you provided to us. In
the event further underwriting information is received which changes the exposures, premium may be subject to
change. Final premiums can be affected by audits, periodic reporting forms, retro and dividend plans, changes in
your operations (new buildings, vehicles, equipment) and other factors.
ESTIMATED ANNUAL PREMIUMS
Coverage
Excess Workers' Compensation -Option 1
Excess Workers' Compensation -Option 2
Excess Workers' Compensation -Option 3
Please Select Preferred Option to Bind:
Option 1 D
Option 2 D
Option 3 D
Carrier
Safety National
Safety National
Safety National
Proposal Accepted by: ------------------
Renewal Premium
$182,835
$196,537
$205,711
Date: ________ _
__ I approve of receiving policies and other documentation, when available, via electronic mail.
Please Initial. ~ Please consider the ENVIRONMENT
It is the policy of HUB International, on all new or renewal business, to collect premiums in a timely manner.
Deposit premiums for new policies are due with the policy order. Deposits for renewal are also due with the policy
order, however, upon prior agreement with your agent, the due date may be extended up to (5) days from the
renewal date, depending on the carrier. No client with an overdue outstanding balance will be renewed without
written confirmation from the HUB International Accounting Department.
This proposal is for illustration purposes only. All coverages are subject to term, conditions, limitations and exclusions of the actual
policy. In the event of discrepancy between this proposal and the policy, the policy will supersede this proposal.
10
June 26, 2018 Item #7 Page 13 of 24
City of Carlsbad
APPENDIX
This proposal is for illustration purposes only. All coverages are subject to term, conditions, limitations and exclusions of the actual
policy. In the event of discrepancy between this proposal and the policy, the policy will supersede this proposal.
11
June 26, 2018 Item #7 Page 14 of 24
City of Carlsbad
LOCATION SCHEDULE
Location Location Address City State
City Hall 1200 Carlsbad Village Dr. Carlsbad CA
Faraday Center 1635 Faraday Ave Carlsbad CA
Safety Center 2560 Orion Way Carlsbad CA
Fire Station #1 1275 Carlsbad Village Dr Carlsbad CA
Fire Station #2 1906 Arenal Dr Carlsbad CA
Fire Station #3 3701 Catalina Dr Carlsbad CA
Fire Station #4 6885 Batiquitos Dr Carlsbad CA
Fire Station #5 2540 Orion Way Carlsbad CA
Fire Station #6 7201 Rancho Santa Fe Road Carlsbad CA
Dove Library 1775 Dove Lane Carlsbad CA
Georgina Cole Library 1250 Carlsbad Village Dr Carlsbad CA
Learning Center 3368 Eureka Place Carlsbad CA
Communications Office/Elmwood 2955 Elmwood St Carlsbad CA
Alqa Norte Aquatics Center 6565 Alicante Rd Carlsbad CA
Harding Center 3096 Harding St Carlsbad CA
Swim Complex 3401 Monroe St Carlsbad CA
Holiday House 3235 Eureka Place Carlsbad CA
Kruqer House 3218 Eureka Place Carlsbad CA
Staqecoach Park 3420 Camino de los Coches Carlsbad CA
Calavara Hills Park 2997 Glasgow Dr Carlsbad CA
Pine Avenue Community Center 3209 Pine Avenue Carlsbad CA
Senior Center 799 Pine Ave Carlsbad CA
Carrillo Ranch 6200 Flyinq LC Lane Carlsbad CA
Parks Maintenance 1166 Carlsbad Villaqe Dr Carlsbad CA
City Maintenance Yard 405 Oak Ave Carlsbad CA
Fleet Maintenance 2480 Impala Dr Carlsbad CA
Safety Traininq Center 5750 Orion St Carlsbad CA
District 5950 El Camino Real Carlsbad CA
This proposal is for illustration purposes only. All coverages are subject to term, conditions, limitations and exclusions of the actual
policy. In the event of discrepancy between this proposal and the policy, the policy will supersede this proposal.
12
Zip
92008
92008
92008
92008
92009
92009
92009
92008
92009
92009
92008
92008
92008
92009
92008
92008
92008
92008
92009
92008
92008
92008
92008
92008
92008
92008
92008
92008
June 26, 2018 Item #7 Page 15 of 24
City of Carlsbad
OTHER COVERAGES FOR CONSIDERATION
These items represent some of the possible gaps or deficiencies in the coverage currently provided. We recommend
careful review of this list. We will be pleased to provide a detailed analysis of items if interested.
PROPERTY
Commercial Property -The Commercial Property policy covers your buildings, contents or specified other property
against perils defined by the form, subject to the terms of the policy. Coverage for off-premises property is limited.
Equipment Breakdown (Boiler & Machinery) -Insures against sudden and accidental loss or damage to "covered
objects" defined by the policy. Coverage for consequential business income and extra expense losses is optional.
Inland Marine/Equipment Floater -Insures against physical damage to specified mobile equipment and tools.
Inland Marine/Transportation (Cargo) -Covers merchandise and/or cargo shipped at your risk while in transit by land or
air.
Builders Risk/Installation Floater -Builders Risk insures against loss of or damage to a new building or structure under
construction, or an existing structure undergoing additions, alterations, or repairs. The Installation Floater covers supplies
and/or materials to be used in construction. Coverage ceases at events defined by the policy.
Electronic Data Processing -Insures computer equipment and media for broader perils than the property policy, and
covers the cost of data restoration and program replacement. Coverage for extra expense, business interruption and
equipment in transit is optional.
Accounts Receivable -Indemnifies you for the cost to recreate records of accounts receivable if destroyed, lost or
damaged by covered causes of loss as defined in the policy.
Valuable Papers -Indemnifies you for the cost of replacing or reproducing business records that are lost, destroyed or
damaged by a covered cause of loss.
Earthquake -California Earthquake coverage is available upon request.
Flood -Coverage for damage to property caused by flood.
CASUALTY
Commercial General Liability -Applies to bodily injury or property damage arising from your negligence in business
operations, subject to exclusions. The liability policy does not serve as a warranty for your work.
Commercial Auto Liability -Insurance that protects the insured against financial loss because of legal liability for
automobile-related injuries to others or damage to their property by an auto. Hired and Non Owned Auto Liability should
also be considered as this includes not owned, leased, hired, rented, or borrowed vehicles being used in the name of the
insured's business.
Garagekeepers Liability -Covers the liability exposures that arise from garage operations and the use of specified
vehicles. Also covers physical damage to specified vehicles.
Business Travel Accident -Supplemental Coverage for employees while on business travel.
Product Recall -Insurance coverage for the cost of getting a defective product back under the control of the
manufacturer or merchandiser that would be responsible for possible bodily injury (Bl) or property damage (PD) from its
continued use or existence.
Environmental Liability -covers costs related to pollution. This can include the costs of brownfield restoration and
cleanup, liability for injuries and deaths caused by pollution .
This proposal is for illustration purposes only. All coverages are subject to term, conditions, limitations and exclusions of the actual
policy. In the event of discrepancy between this proposal and the policy, the policy will supersede this proposal.
13
June 26, 2018 Item #7 Page 16 of 24
City of Carlsbad
OTHER COVERAGES FOR CONSIDERATION (CONTINUED)
Liquor Liability -Covers your liability for injury arising out of the selling, servicing or furnishing of any alcoholic
beverage.
Foreign Voluntary Workers Compensation (FVWC) Coverage -Provides coverage for lnsured's employees working
outside of the United States or where Insured maintains a physical location in another country. Coverage typically covers
three categories of workers: U.S. hires or "expats", Third country nationals (TCNs), and Local nationals.
EXECUTIVE LIABILITY
Directors and Officers Liability (D&O) protects directors and officers of public, private, and not-for-profit corporations
against loss (damages and defense costs) arising out of their status or conduct as directors or officers. Common claims
allege breach of duty, security law violations, and unfair competition.
Employment Practices Liability (EPL) protects companies and individuals against loss (damages and defense costs)
arising out of employment practice disputes. Common claims allege discrimination, sexual harassment, wrongful
termination, and wrongful discipline.
Fiduciary Liability -Liability for those accused of wrongdoing in their capacity as a fiduciary, related to
ERISA plans
Crime -Protects organizations from loss of money, securities, or inventory resulting from crime. Common Crime
insurance claims allege employee dishonesty, embezz!ement, forgery, robbery, safe burglary, computer fraud, wire
transfer fraud, counterfeiting, and other criminal acts.
Kidnap, Ransom & Extortion -Reimbursement paid to the company for expense incurred in paying a Kidnapping
Ransom or an Extortion Threat.
Cyber & Privacy Liability -Failure to prevent the transmission of a computer virus, failure to provide authorized users
with access to your website or your computer communications network and failure to prevent unauthorized access to or
use of electronic data containing private or confidential information to others.
Professional Liability -Covers your legal liability for claims arising out of your rendering or failure to render professional
services specified in the policy.
Representations & Warranties -Coverage provided either to the buyers or the sellers during an M&A transaction for
alleged breaches of the negotiated reps & warranties of the purchase & sale agreement.
Regulatory Billing Procedures -Legal expense coverage provided to entities that bill state & federal government
programs for reimbursement.
. Excess Side A Differences In Conditions (DIC) -Additional coverage provided to individual Directors & Officers when
no other form of indemnification is available to them. The policy also provides drop down coverage in the event of a
wrongful denial of an underlying D&O carrier.
OTHER
Political Risk Coverage -Includes different types of policies risk such as:
Political violence such as revolution, insurrection, civil unrest, terrorism or war
Governmental expropriation of confiscation of assets
Governmental frustration or repudiation of contracts
Wrongful calling of letters of credit or similar on-demand guarantees
Business Interruption
Inconvertibility of foreign currency or the inability to repatriate funds
Trade Credit -Protection of accounts receivable from loss due to credit risks such as protracted default, insolvency and
bankruptcy damage.
This proposal is for illustration purposes only. All coverages are subject to term, conditions, limitations and exclusions of the actual
policy. In the event of discrepancy between this proposal and the policy, the policy will supersede this proposal.
14
June 26, 2018 Item #7 Page 17 of 24
City of Carlsbad
OTHER COVERAGES FOR CONSIDERATION (CONTINUED)
Trade Disruption -Coverage to address shortcomings in traditional insurance for firms that depend on global supply
chains.
Reputational Risk -Coverage to address the risk that negative publicity regarding an institution's business practices will
lead to a loss of revenue or increased litigation.
EXCESS LIMITS
Excess/Umbrella Liability -Covers catastrophic liability losses that exhaust the specified underlying liability policy
limits. Umbrella Insurance differs from Excess in that it may drop-down to fill gaps that exist in underlying liability
policies.
Excess Limits -Excess Limits are available in the market place for all coverages upon request from the client.
This proposal is for illustration purposes only. All coverages are subject to term, conditions, limitations and exclusions of the actual
policy. In the event of discrepancy between this proposal and the policy, the policy will supersede this proposal.
15
June 26, 2018 Item #7 Page 18 of 24
City of Carlsbad
DISCLOSURE PURSUANT TO TERRORISM RISK INSURANCE ACT
Terrorism Coverage and Premium
In accordance with the federal Terrorism Risk Insurance Act (as amended "TRIA"), we are required to make
coverage available under your policy for "certified acts of terrorism." The actual coverage provided by your
policy(ies) will be limited by the terms, conditions, exclusions, limits, and other provisions of your policy(ies), as
well as any applicable rules of law.
The portion of your premium attributable to this terrorism coverage is shown in the premium section(s) of this
quote proposal."
Definition of Certified Act of Terrorism
A "certified act of terrorism" means an act that is certified by the Secretary of the Treasury, in concurrence with
the Secretary of State and the Attorney General of the United States, to be an act of terrorism under TRIA. The
criteria contained in TRIA for a "certified act of terrorism" include the following:
1. The act results in insured losses in excess of $5 million in the aggregate, attributable to all types of
insurance subject to TRIA; and
2. The act results in damage within the United States, or outside the United States in the case of certain air
carriers or vessels or the premises of an United States mission; and
3. The act is a violent act or an act that is dangerous to human life, property or infrastructure and is
committed by an individual or individuals acting as part of an effort to coerce the civilian population of the
United States or to influence the policy or affect the conduct of the United States Government by
coercion.
Disclosure of Federal Share of Terrorism Losses
The United States Department of the Treasury will reimburse insurers for 85% of that portion of insured losses
attributable to certified acts of terrorism that exceeds the applicable insurer deductible. However, if aggregate
industry insured losses under TRIA exceed $100 Billion in a Program Year (January 1 through December 31), the
Treasury shall not make any payment for any portion of the amount of such losses that exceeds $100 billion. The
United States government has not charged any premium for their participation in covering terrorism losses.
Cap on Insurer Liability for Terrorism Losses
If aggregate industry insured losses attributable to "certified acts of terrorism" under TRIA exceed $100 Billion in a
Program Year (January 1 through December 31), and we have met, or will meet, our insurer deductible under
TRIA, we shall not be liable for the payment of any portion of the amount of such losses that exceed $100 billion.
In such case, your coverage for terrorism losses may be reduced on a pro-rata basis in accordance with
procedures established by the Treasury, based on its estimates of aggregate industry losses and our estimate
that we will exceed our insurer deductible. In accordance with the Treasury's procedures, amounts paid for losses
may be subjectto further adjustments based on differences between actual losses and estimates.
4358075_1
This proposal is for illustration purposes only. All coverages are subject to term, conditions, limitations and exclusions of the actual
policy. In the event of discrepancy between this proposal and the policy, the policy will supersede this proposal.
16
June 26, 2018 Item #7 Page 19 of 24
City of Carlsbad
HOW WE GET PAID
HUB International takes pride in the services our brokerages provide to you, our client, for insurance brokerage and other related services. For our efforts
we are compensated in a variety of ways, primarily in the form of commissions and contingency amounts paid by insurance companies and, in some
cases, fees paid by clients or third parties. The means by which we are compensated are described below.
Commission Income: Commission, normally calculated as a percentage of the premium paid to the insurer for a specific policy, is paid to us by the
insurer for the distribution and servicing of your insurance policy. Our commission is included in the premium paid by you. The individuals at HUB
International who place and service your insurance may be paid compensation that varies directly with the commissions we receive.
Contingency Income: We also receive income through contingency arrangements with most insurers. They are called 'contingent" because to qualify
for payment we normally need to meet certain criteria, usually measured on an annual basis. Contingency arrangements vary, but payment is normally
the result of growing the business by attracting new customers, helping the insurance company gather and assess underwriting information, achieving
certain Joss or claims results and/or working to renew the policies of existing insureds. There is generally no meaningful method to determine the exact
impact that any particular insurance policy has on contingency arrangements; however, brokers tend to receive higher contingency payments when they
grow their business and retain clients through better service. In other words, the amount of earned contingency income depends on the overall size
and/or profitability of a group of accounts, as opposed to the placement or profitability of any particular insurance policy. For this reason, the individuals
involved in placing or servicing insurance are rarely compensated directly for the contingent income that we receive.
Supplemental Commissions: Some insurance companies have recently replaced contingent commissions with supplemental commissions. These
commissions, in fixed amounts, are established annually in advance based on historical performance measured by criteria comparable to those by which
contingent commissions are calculated. We refer to these commissions as guaranteed supplemental commissions, or "GSCs".
Fees Paid by Clients: On occasion, with more complex business insurance programs and where additional resources, products or services are
appropriate, a fee may be negotiated for placement of insurance coverage or additional services. Fees charged for the placement of insurance will
generally be outlined in a proposal and approved, usually in writing, prior to the insurer binding coverage. On occasion, we may receive both
commissions and client-paid fees for placing insurance, which generally will be disclosed in writing to you in advance. In certain circumstances clients
pay us mutually agreed-upon fees for additional services, such as third party administration of employee benefits or workers' compensation programs.
Wholesale Operations: We own wholesale insurance brokerages in both the U.S and Canada. These are intermediaries through which other brokers,
typically retail brokers that have a relationship and deal directly with their clients, place coverage. Our own retail brokers may place client policies through
HUB-owned wholesale brokers. In such cases, both the HUB retail broker and the HUB wholesale broker will earn commissions, and the client's premium
payment is generally not impacted. Ordinarily, wholesale brokers, whether owned by HUB International or not, are included in the transaction because
they offer products not available through normal brokerage retail channels that are particularly suitable to a client's needs.
Other Compensation and Benefits: We may receive revenue or further benefits from our insurance brokerage activities in other ways, including, but
not limited to, from insurance company promotional events, payments from insurers for promotional marketing and/or employee training and
development, fees or a percentage of the interest paid to us for the administration of premium finance contracts, interest paid to us by financial
institutions earned on fiduciary or trust accounts in which we hold your premium payments pending remittance to the insurance company, and fees paid
to us for policy and/or claims administration and/or loss control services that we provide.
Customer Centric Carriers: We have access to the products and services of hundreds of insurers; however, we believe our ability to provide the best
combination of products, service, value, and ongoing access to capacity is enhanced by focusing on a manageable number of carrier relationships.
These strategic relationships include many of the most respected national and regional insurance companies in the insurance industry (the "Strategic
Carriers"). Although we will continue to access our other insurance company relationships where appropriate, we expect that many of our clients'
insurance needs may be met through the Strategic Carriers. The Strategic Carriers may pay us enhanced compensation, which we intend to use in part
to invest in initiatives to improve our ability to serve our customers and to optimize their insurance buying experience. A portion of any enhanced
compensation from our Strategic Carriers may be used to incentivize our employees to prioritize, investigate, and access the products and services of
our Strategic Carriers for the purpose of consolidating the number of insurance markets with which we deal, while at the same time addressing the needs
of our clients. In limited circumstances, our employees may serve on boards or committees of these or other insurers with whom policies are placed.
More information regarding our Strategic Carrier relationships is available upon request from your HUB International account executive or by visiting our
website at www.hubintemational.com.
Our goal is to be your insurance brokerage of choice. We know you have many brokerages to choose from, so to earn your confidence, we hold
ourselves to the highest standard of service, a standard reflected in our written Client Commitment -we call it "The HUB Advantage." We hope you will
review the principles embodied in The HUB Advantage, a copy of which is attached for your convenience. You should also feel free to visit our website
at www.hubintemational.com for more information regarding HUB International and how we do business.
Please also feel free to ask any questions about our compensation generally, or as to your specific insurance proposal or placement, by contacting your
account executive directly, or by calling our client hotline at 1-866-857-4073.
We want you to choose a HUB International broker to be your insurance advisor-and we intend to make your decision an educated one.
This proposal is for illustration purposes only. All coverages are subject to term, conditions, limitations and exclusions of the actual
policy. In the event of discrepancy between this proposal and the policy, the policy will supersede this proposal.
17
June 26, 2018 Item #7 Page 20 of 24
City of Carlsbad
ABOUT HUB
HUB International is a leading brokerage providing a broad array of property, casualty, risk management, life and
health, employee benefits, investment and wealth management products and services across North America .
.
We serve our client's best interest through dynamic people, products and services. It's simple. We represent you,
the buyer. Our business model differs from our competitors in many ways. Each geographic hub is intended to be
a stand alone servicing entity, providing the services and expertise to various target industries that are prominent
in each geographic region.
We employ information technology to help clients manage risk, meet employee benefit goals, manage claims and
save money.
We have clearly outlined our proposed coverage's and services for your review and consideration. We trust you
will find this proposal to be accurate and detailed in nature, and we look forward to working with you .
THE PURPOSE OF THIS PROPOSAL
A commercial insurance program is often complicated. We prepared this insurance proposal to briefly and simply
summarize your program.
Any proposal sacrifices some detail for the sake of expediency. Since we could not restate your policies verbatim,
we outlined the major features and provisions to provide you with a guide to your insurance program.
INFORMATION YOU PROVIDE
We have relied solely on the information you provided us to prepare this proposal. If any of the information you
provided is inaccurate, the terms and conditions, premium , or event the availability of the insurance summarized
here may be subject to change.
The quality of your insurance program depends on the accuracy of the information you provide us. There will be
times when we require additional information to clarify our understanding of your business.
If at any time you have chan·ges in your business operations, please notify us as soon as possible. This will help
us prevent gaps in coverage, which in turn could lead to uninsured losses.
This proposal is for illustration purposes only. All coverages are subject to term, conditions, limitations and exclusions of the actual
policy. In the event of discrepancy between this proposal and the policy, the policy will supersede this proposal.
18
June 26, 2018 Item #7 Page 21 of 24
The HUB Advantage
Our Client Commitment
City of Carlsbad
HUB International is dedicated to maintaining and upholding the highest standards of ethical
conduct and integrity in all of our dealing with you, our client. We want to be your trusted risk
advisor, and as such, we need to earn your confidence. So we are making a promise. We call it The
HUB Advantage. Our mission is to make the advantage yours -and this is our commitment.
>-We strive to secure the most favorable terms from insurers, taking into account all of the
circumstances -the risk you need to insure, the cost of insurance, the financial condition of
the insurer, the insurer's reputation for service, and any other factors that are specific to
your situation.
>-We are open and honest as to how we are paid for placing your insurance. Our answers to
your questions will be forthright and understandable. When we intend to seek a fixed fee for
our efforts, we will disclose it to you in writing and obtain your approval prior to coverage
being bound.
>-You make the ultimate decision as to both the terms of insurance and the company
providing your coverage. Our objective is to provide you with choices that meet your
insurance needs, and to educate you so your decision is fully informed and best suited to
your circumstances.
>-We take our responsibility to our customers very seriously. If at any time you feel that we
are not fulfilling your expectations -that we are not meeting our Client Commitment -please
contact your account executive or call our toll free client hotline at 1-866-857-4073, and
your concerns will be addressed as soon as possible.
The HUB Advantage. The privilege is ours, but the advantage is yours.
Th is proposal is for illustration purposes only. All coverages are subject to term, conditions, limitations and exclusions of the actual
policy. In the event of discrepancy between this proposal and the policy, the policy will supersede this proposal.
19
June 26, 2018 Item #7 Page 22 of 24
PRIVACY POLICY
FACTS WHAT DOES HUB INTERNATIONAL LIMITED ("HUB") DO WITH YOUR PERSONAL INFORMATION?
Why? Financial companies choose how they share your personal information. Federal law gives consumers and clients the right to
limit some but not all sharing. Federal law also requires us to tell you how we collect, share, and protect your personal
information. Please read this notice carefully to understand what we do.
What? The types of personal information we collect and share depend on the product or service you have with us. This information
can include: . your name, address and social security number . . your payment history and claims information . . information from other reporting c!gencies and state and federal government agencies, such as state motor vehicle
departments. . information from other sources, such as your employer, information clearinghouses, medical or health care
providers and/or other third parties.
How? All financial companies need to share customers' personal information to run their everyday business. In the section below,
we list the reasons financial companies can share their customers' personal information; the reasons Hub may share; and
whether you can limit this sharing.
Reasons we may share your personal information: May Hub share? Can you limit this
sharing?
For our everyday business purposes -Yes No
such as to maintain or service your insurance account(s), report to credit bureaus, to process
or service requested or authorized transactions, to secure quotations for insurance, to obtain
insurance coverage or to report or process claims.
We may also disclose your health, medical conditions or treatment information as necessary
to process or service requested or authorized transactions or as otherwise permitted or
required by law.
For our marketing purposes -Yes No
to offer our products and services to you.
For joint marketing with other financial companies Yes No
For our affiliates' everyday business purposes -information about your transactions and Yes No
experiences, to process or service requested or authorized transactions, such as to secure
quotations for insurance, obtain insurance covera~e or to report or process claims.
For our affiliates' evervdav business practices -information about vour creditworthiness. Yes Yes
For our affiliates to market to you Yes Yes
For nonaffiliates to market to you Yes Yes
To Limit Our Sharing You can contact us at any time to limit our sharing. To do so, call (877) 825-2681 . You may also write to our
Chief Legal Officer at the address shown at the bottom of this notice.
When you are no longer our customer, we may continue to share your information as described in this notice.
Questions? Call (877) 825-2681 or go to www.hubinternational.com.
Who we are
Who is providing this This notice is provided by Hub and its subsidiaries and operating divisions listed below:
notice? • California Coastal Insurance
• Hub International Insurance Services Inc.
• I Hub International Investment Services Inc .
• Hub International Transportation Insurance Services Inc .
• lntercare Insurance Solutions, Inc .
This proposal is for illustration purposes only. All coverages are subject to term, conditions, limitations and exclusions of the actual
policy. In the event of discrepancy between this proposal and the policy, the policy will supersede this proposal.
20
June 26, 2018 Item #7 Page 23 of 24
What we do
How does Hub protect my To protect your personal information from unauthorized access and use, we use security measures that comply
personal information? with federal law. These measures include computer safeguards and secured files and buildings. We restrict
access to such information to those employees or service providers who need to know such information in
order to provide the requested services or products.
How does Hub collect my We collect your personal information, for example:
personal information?
When you submit an application or other completed forms that we receive from you . • • Through your transactions with us .
• From consumer or other reporting agencies and state and federal government agencies, such as
state motor vehicle departments. . From other sources, such as your employer, information clearinghouses, medical or health care
providers and/or other third parties.
We also collect your personal information from others, such as credit bureaus, affiliates or other companies.
Why can't I limit all sharing? Federal law gives you the right to limit only:
• Sharing for affiliates' everyday business purposes -information about your creditworthiness .
• Affiliates from using your information to market to you . . Sharing for nonaffiliates to market to you .
State laws and individual companies may give you additional rights to limit sharing.
What if there is more than This notice describes our privacy practices for both current and former customers. If there is more than one
one insured on a policy? person insured under a policy, this policy will be sent only to the named insured on that policy, but applies to all
insureds.
Definitions
Affiliates Companies related by common ownership or control. They can be financial and nonfinancial companies. . Affiliates include the family of insurance brokerage and other financial services companies owned by
Hub.
Nonaffiliates Companies not related by common ownership or control. They can be financial and nonfinancial companies.
Joint Marketing A formal agreement between nonaffiliated financial companies that together market financial products or
services to you.
• Our joint marketing partners include categories of companies such as insurance companies or
banks.
Other important information
This notice should not be construed as any notice required to be sent by the Health Insurance Portability and Accountability Act. If you have
additional questions you can write to us at:
Chief Legal Officer
Hub International Limited
300 North LaSalle Street, 17th Floor
Chicago, IL 60654
Please include your name, address, telephone number and email address whenever you contact us, including by email. This helps us handle
your request correctly.
This proposal is for illustration purposes only. All coverages are subject to term, conditions, limitations and exclusions of the actual
policy. In the event of discrepancy between this proposal and the policy, the policy will supersede this proposal.
21
June 26, 2018 Item #7 Page 24 of 24