HomeMy WebLinkAbout2023-06-20; City Council; ; Purchase of excess liability insurance coverage for fiscal year 2023-24CA Review JRT
Meeting Date: June 20, 2023
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: Purchase of excess liability insurance coverage for fiscal year 2023-24
Districts: All
Recommended Action
Adopt a resolution approving the purchase of a maximum of $43 million of excess liability
coverage through California Insurance Pool Authority for fiscal year 2023-24 in an amount not
to exceed $1,150,000.
Executive Summary
The city is renewing its excess liability coverage of up to $43 million through the California
Insurance Pool Authority for FY 2023-24 in an amount not to exceed $1,150,000.
The city moved its excess liability insurance program to the California Insurance Pool Authority
in FY 2019-20 because the authority was able to provide higher coverage limits and a more
competitive price than the previous insurance pool program.1
The policy period will run July 1, 2023, to June 30, 2024.
This purchase must be approved by the City Council under Carlsbad Municipal Code Section
3.28.040 (D)(1) because the cost exceeds $100,000 per agreement year.
Fiscal Analysis
The estimated premium for fiscal year 2023-24 for California Insurance Pool Authority excess
liability coverage is not to exceed $1,150,000, which represents a $233,151, or approximately
25%, increase over last year’s premium. While the market is showing signs of stabilization, this
increase is due to an overall hardening in the insurance marketplace, with prices higher and
policies harder to obtain. The premium will be paid with funds from the FY 2023-24 Risk
Management Internal Service Fund. Sufficient funds have been requested in the FY 2023-24
budget for this premium.
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
1 The California Insurance Pool Authority is a joint powers authority composed of fourteen member cities.
June 20, 2023 Item #3 Page 1 of 3
attempt to obtain coverage in the open market. This will likely result in a more expensive
premium for less coverage than what is being proposed. Additionally, other insurance pool
programs may not meet our standards for seasoned management and financial stability.
Next Steps
Staff will obtain a final premium calculation from the California Insurance Pool Authority and
create a purchase order for its payment.
Environmental Evaluation
This action does not require environmental review because it 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 or a reasonably foreseeable indirect physical change in the environment.
Exhibits
1.City Council resolution
June 20, 2023 Item #3 Page 2 of 3
Exhibit 1
June 20, 2023 Item #3 Page 3 of 3
RESOLUTION NO. 2023-173
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 2023-2024 IN AN AMOUNT NOT TO EXCEED
$1,150,000
WHEREAS, the City Council of the City of Carlsbad, California has determined that it 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, 2023,
and concluding on June 30, 2024.
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 purchase of a maximum of $43 million of excess liability coverage through
California Insurance Pool Authority effective July 1, 2023, to June 30, 2024, is hereby
approved and the Deputy City Manager of Administrative Services is authorized to issue
a warrant in an amount not to exceed $1,150,000 for payment of the premium to
California In surance Pool Authority.
PASSED, APPROVED AND ADOPTED at a Regular Meeting of the City Council of the City of
Carlsbad on the 20th day of June, 2023, by the following vote, to wit:
AYES:
NAYS:
ABSTAIN:
ABSENT:
Blackburn, Bhat-Patel, Acosta, Burkholder, Luna.
None.
None.
None.
KEITH BLACKBURN, Mayor
SHERRY FREISINGER, City Clerk
(SEAL)