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HomeMy WebLinkAbout2021-07-13; City Council; ; Purchase of Excess Liability Coverage Not to Exceed $43 Million Through California Insurance Pool Authority for Fiscal Year 2021-2022 in an Amount not to Exceed $753,424Meeting Date: July 13, 2021 To: Mayor and City Council From: Scott Chadwick, City Manager Staff Contact: Ed Garbo, Risk Manager ed.garbo@carlsbadca.gov, 760-602-2471 Subject: District: Purchase of Excess Liability Coverage Not to Exceed $43 Million Through California Insurance Pool Authority for Fiscal Year 2021-2022 in an Amount not to Exceed $753,424 All Recommended Action Adopt a resolution authorizing the purchase of excess liability coverage not to exceed $43 million through California Insurance Pool Authority for fiscal year 2021-22 in an amount not to exceed $753,424. Executive Summary/Discussion The city is renewing its excess liability protection for FY 2021-22. This renewal must be approved by the City Council because the cost exceeds $100,000 for the agreement year as outlined in Carlsbad Municipal Code Section 3.28.040(D)(1). The city moved its excess liability insurance program to California Insurance Pool Authority in FY 2019-20 because the city was able to obtain higher coverage limits and a more competitive price than the previous insurance pool program. The policy period will run July 1, 2021, to June 30, 2022. Options The market for municipal excess insurance is exceedingly unstable. If the purchase through California Insurance Pool Authority is rejected, the city will have to attempt to obtain coverage in the open market. This will likely result in more expensive premiums for less coverage than what is being proposed. Additionally, other insurance pool programs may not meet our standards for seasoned management and financial stability. July 13, 2021 Item #3 Page 1 of 4 Fiscal Analysis The estimated premium for FY 2021-22 for California Insurance Pool Authority excess liability coverage is not to exceed $753,424, which represents a $155,761, or approximately 26%, increase over last year’s premium. This increase is due to an overall hardening in the insurance marketplace, with prices higher and policies harder to obtain. Sufficient funds for this premium have been approved in the FY 2021-22 budget. Next Steps Obtain a final premium calculation from California Insurance Pool Authority and create a purchase order for payment. Environmental Evaluation (CEQA) This action does not constitute a “project” within the meaning of the California Environmental Quality Act under California Public Resources Code Section 21065 in that it has no potential to cause either a direct physical change in the environment or a reasonably foreseeable indirect physical change in the environment and therefore does not require environmental review. Public Notification Public notice of this item was posted in keeping with the Ralph M. Brown Act and it was available for public viewing and review at least 72 hours before the scheduled meeting date. date. Exhibits 1. City Council resolution July 13, 2021 Item #3 Page 2 of 4 RESOLUTION NO. 2021-160 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD, CALIFORNIA, APPROVING THE PURCHASE OF A MAXIMUM OF $43 MILLION OF EXCESS LIABILITY COVERAGE THROUGH CALIFORNIA INSURANCE POOL AUTHORITY FOR FISCAL YEAR 2021-2022 IN AN AMOUNT NOT TO EXCEED $753,424 WHEREAS, the City Council of the City of Carlsbad, California has determined that it has a desire to purchase excess liability coverage through California Insurance Pool Authority; and WHEREAS, AON has negotiated the purchase of a maximum of $43 million of excess liability coverage through California Insurance Pool Authority for the next fiscal year beginning on July 1, 2021 and concluding on June 30, 2022 in an amount not to exceed $753,424 (Attachment A). NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Carlsbad, California, as follows that: 1.The above recitations are true and correct. 2.The purchase of $43 million of excess liability coverage through California Insurance Pool Authority effective July 1, 2021 toJune 30, 2022, is approved in an amount not to exceed $753,424. 3.The City Manager or a designee is authorized to take any further action necessary and appropriate to carry out the purpose of this resolution. PASSED, APPROVED AND ADOPTED at a Regular Meeting of the City Council of the City of Carlsbad on the 13th day of July, 2021, by the following vote, to wit: AYES: Hall, Blackburn, Acosta, Bhat-Patel. NAYS: None. ABSENT: None. MATT HALL, Mayor PvIc:RS10- XI/1ov -f-'7)‘r BARBARA ENGLESON, City Clerk (SEAL) July 13, 2021 Item #3 Page 3 of 4 California Insurance Pool Authority Serving the Cities of Arcadia, Brea, Buena Park, Carlsbad, Cypress, Irvine, Laguna Beach, La Habra, Montclair, Orange, Tustin, Whittier, Yorba Linda June 23, 2021 Ed Garbo Risk Manager City of Carlsbad 1635 Faraday Avenue Carlsbad, CA 92008 RE: California Insurance Pool Authority 2021/22 Liability Program Renewal Dear Ed: This will confirm that the City of Carlsbad’s 2021/22 liability program contributions to California Insurance Pool Authority will not exceed $753,424. Sincerely, Janet Kiser, General Manager Attachment A July 13, 2021 Item #3 Page 4 of 4