HomeMy WebLinkAbout29B - INSURANCE RENEWALS WITH BIG CITIESREQUEST FOR
COUNCIL ACTION
CITY COUNCIL MEETING DATE:
SEPTEMBER 4, 2018
TITLE:
APPROVE INSURANCE RENEWALS
WITH BIG INDEPENDENT CITIES
EXCESS POOL, PUBLIC ENTITY
PROPERTY INSURANCE PROGRAM
AND CALIFORNIA STATE
ASSOCIATION OF COUNTIES
(STRATEGIC PLAN NO. 4,1)
ftTJ MANAGER
RECOMMENDED ACTION
CLERK OF COUNCIL USE ONLY:
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❑ As Recommended
❑ As Amended
❑ Ordinance on 151 Reading
❑ Ordinance on 2nd Reading
❑ Implementing Resolution
❑ Set Public Hearing For
CONTINUED TO
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1. Approve the City's continued membership in the Big Independent Cities Excess Pool Liability
Program from July 1, 2018 to June 30, 2019 at an estimated premium cost not to exceed
$3,700,000.
2. Approve the City's continued membership in the Big Independent Cities Excess Pool
Workers' Compensation Program from July 1, 2018 to June 30, 2019 at an estimated
premium not to exceed $400,000.
3. Approve the City's continued participation in the Public Entity Property Insurance Program
from July 1, 2018 to June 30, 2019 at an estimated premium cost not to exceed $690,000.
4. Approve the City's continued participation in the Public Entity Property Insurance Program
from July 1, 2018 to June 30, 2019 for the annual administrative cost of $121,175.
Approve the City's continued participation in the California State Association of Counties —
Excess Insurance Authority's Crime Bond Program from July 1, 2018 to June 30, 2018 at
an estimated cost not to exceed $12,000.
DISCUSSION
The City is a member of Big Independent Cities Excess Pool (BICEP) Joint Powers Authority which
was formed in September 1988. The current member cities include Santa Ana, Huntington Beach,
San Bernardino, Oxnard, West Covina, and Ventura. The purpose of BICEP is to provide insurance
coverage for its member cities, shielding them from financial debt due to large liability claims,
judgments, and settlements. Additionally, participation in a pool provides rate stability and can offer
broader coverage.
2913-1
Approve Insurance Renewals for FY 2018/19 with BICEP
September 4, 2018
Page 2
The BICEP excess liability program covers liability claims from $1,000,000 to $27,000,000 per
occurrence with a $1,000,000 self-insured retention (SIR) which functions like a deductible. The
workers' compensation program provides statutory excess workers'. compensation insurance
coverage with a $1,000,000 SIR. The excess liability insurance premium for the period of July 1,
2018 to June 30, 2019 will not exceed $3,700,000. The excess workers' compensation insurance
premium for the July 1, 2018 to June 30, 2019 period will not exceed $400,000.
The Public Entity Property Insurance Program (PEPIP) was established in May 1993 with
seventeen public agencies including the City of Santa Ana. The purpose of PEPIP is to provide
public agencies with group purchasing strength. Since 1993, PEPIP -has grown to include over
6,400 members in 45 states, which has allowed the group to purchase property insurance at
affordable premiums. The estimated $690,000 premium, an increase' of approximately $40,000
from last year's premium, will provide $1,000,000,000 of coverage for insured City properties from
July 1, 2018 to June 30, 2019. PEPIP will provide the City with $100,000,000 for boiler and
machinery damage and $82,500,000 in coverage for flood damage (coverage is limited to
$50,000,000 in Flood Zone A.) This cost includes the purchase of.earthquake insurance. The
earthquake coverage provides coverage up to $25,000,000 per occurrence and annual aggregate
with a deductible of 5% per unit ($100,000 Minimum).
The City joined the California State Association of Counties — Excess Insurance Authority CSAC-
EIA) Crime Bond Program on April 1, 2004. This provides the City with $15,000,000 per occurrence
in coverage for employee theft/faithful performance of duty as well as inside and outside theft of
money, robbery or safe burglary, funds transfer fraud, computer fraud and other illegal activities
except as not covered by exclusion. The renewal premium from July 1, 2018 to June 30, 2020
(two-year policy term) remains at $12,000.
The above stated premiums are an increase over Fiscal Year 2017/2018 of $912,332 or 23.1%.
This is due in part to the fewer number of excess carriers willing to bid and an increase in recent
claim/settlement size trending state-wide.
STRATEGIC PLAN ALLIGNIVIENT
Approval of this item allows the City to meet Goal # 4 - City Financial Stability, Objective #1
(Maintain a stable, efficient and transparent financial environment).
FISCAL IMPACT
Funds are budgeted in the proposed 2018-19 Liability & Property Insurance account, Insurance
(Risk Management), (No. 08009051-64010) for an estimated premium and administrative costs not
to exceed $4,500,000 and Workers' Compensation account, Insurance (Risk Management), (No.
08209054-64010) for an estimated premium cost not to exceed $405,000.
29B-2
Approve Insurance Renewals for FY 2018/19 with BICEP
September 4, 2018
Page 3 z I -- —
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Steven V. PIom
Executive DiVector
Human Resources Agency
SVP/dsl/dsl
APPROVED AS TO FUNDS AND ACCOUNTS:
Sergio \Adal
Assistant Director
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Finance & Management Services Agency
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