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HomeMy WebLinkAbout2022-06-21; City Council; ; Purchase of Excess Liability Coverage Not to Exceed $43 Million Through California Insurance Pool Authority for Fiscal Year 2022-23 for an Amount Not to Exceed $930,000CA Review CKM Meeting Date: June 21, 2022 To: Mayor and City Council From: Scott Chadwick, City Manager Staff Contact: Ed Garbo, Risk Manager ed.garbo@carlsbadca.gov or 442-339-2471 Subject: District: Purchase of Excess Liability Coverage Not to Exceed $43 Million Through California Insurance Pool Authority for Fiscal Year 2022-23 for an Amount Not to Exceed $930,000 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 2022-23 for an amount not to exceed $930,000. Executive Summary/Discussion The city is renewing its excess liability protection not to exceed $43 million through California Insurance Pool Authority for fiscal year 2022-23 in an amount not to exceed $930,000. This renewal must be approved by the City Council because the cost exceeds $100,000 per agreement year, in accordance with 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 it was able to obtain higher coverage limits and a more competitive price than the previous insurance pool program. The policy period will run from July 1, 2022, to June 30, 2023. Options The market for municipal excess insurance is exceedingly unstable. If the purchase of excess liability coverage through California Insurance Pool Authority is rejected, the city will have to try 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 the city’s standards for seasoned management and financial stability. Fiscal Analysis The estimated premium for fiscal year 2022-23 for California Insurance Pool Authority excess liability coverage is not to exceed $930,000. This premium reflects an overall hardening in the insurance marketplace, with prices higher and policies harder to obtain. Sufficient funds have been requested in the fiscal year 2022-23 budget for this premium. June 21, 2022 Item #2 Page 1 of 3 Next Steps With the City Council’s approval, staff will obtain a final premium calculation from California Insurance Pool Authority and create a purchase order for payment. Environmental Evaluation In keeping with California Public Resources Code Section 21065, this action does not constitute a “project” within the meaning of the California Environmental Quality Act in that it has no potential to cause either 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 This item was noticed in accordance with the Ralph M. Brown Act and was available for public viewing and review at least 72 hours prior to scheduled meeting date. Exhibits 1.City Council resolution June 21, 2022 Item #2 Page 2 of 3 RESOLUTION NO. 2022-145 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD, CALIFORNIA, APPROVING THE PURCHASE OF EXCESS LIABILITY COVERAGE NOT TO EXCEED $43 MILLION THROUGH CALIFORNIA INSURANCE POOL AUTHORITY FOR FISCAL YEAR 2022-2023 FOR AN AMOUNT NOT TO EXCEED $930,000 EXHIBIT 1 WHEREAS, the City Council of the City of Carlsbad, California desires 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, 2022, and concluding on June 30, 2023. 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.That the City Manager or designee is authorized to take all necessary and appropriate actions to purchase up to $43 million of excess liability coverage through California Insurance Pool Authority, effective July 1, 2022, to June 30, 2023, in an amount not to exceed $930,000. PASSED, APPROVED AND ADOPTED at a Regular Meeting of the City Council of the City of Carlsbad on the 21st day of June, 2022, by the following vote, to wit: AYES: NAYS: ABSENT: Hall, Blackburn, Bhat-Patel, Acosta, Norby. None. None. ..f,-rFAVIOLA MEDINA, City Clerk Services Manager (SEAL) June 21, 2022 Item #2 Page 3 of 3 ~