HomeMy WebLinkAbout29A - INSURANCE RENEWALS
CITY COUNCIL MEETING DATE:
CLERK OF COUNCIL USE ONLY:
REQUEST FOR
COUNCIL ACTION
JUNE 19, 2006
TITLE:
INSURANCE RENEWALS
APPROVED
o As Recommended
o As Amended
o Ordinance on 1 st Reading
o Ordinance on 2nd Reading
o Implementing Resolution
o Set Public Hearing For
CONTINUED TO
FILE NUMBER
RECOMMENDED ACTION
1. Approve the City's continued membership in the Big Independent Cities
Excess Pool for an additional three years beginning July 1, 2006 at
an annual premium cost not to exceed $1,825,000 for the first year.
2. Approve the City's continued participation in the Public Entity
Property Insurance Program from July 1, 2006 to July 1, 2007 at a
premium cost of $387,188.
3. Approve the City's continued participation in the Crime Bond Program
at a premium cost not to exceed $11,500 from July 1, 2007 to July 1,
2008.
DISCUSSION
On September 23, 1988, the Big Independent Cities Excess Pool (BICEP)
Joint Powers Authority was formed with five cities. The current cities
are as follows: Santa Ana, Huntington Beach, San Bernardino, Oxnard, and
West Covina. The purpose of BICEP is to provide insurance coverage for
its members, shielding them from financial debt due to large liability
claims, judgments, and settlements.
BICEP operating documents require each city to enroll for a succeeding
three-year commitment. Each member city has a $1 million self - insured
liability retention that is similar to a deductible. The current excess
workers' compensation insurance policies will expire on July 1, 2006, and
the liability policies will expire on October 1, 2006. The total BICEP
insurance premium for the July 1, 2006 to July 1, 2007 period will not
exceed $1,825,000; an estimated $1,215,000 of which covers liability
claims from $1 to $25 million per occurrence. The balance of $610,000
purchases $150 million of excess workers' compensation insurance coverage
per occurrence with a $500,000 self-insured retention. The City Manager
will review the quotations and make the final approval and coverage will
be bound.
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Insurance Renewals
June 19, 2006
Page 2 of 3
The Public Entity Property Insurance Program (PEPIP) was established on
May 15, 1993 with seventeen public agencies that included the City of
Santa Ana. The purpose of PEPIP is to provide public agencies with group
purchasing strength in a challenging property insurance market. Since
1993, PEPIP has grown to include over 4,000 members in 35 states, which
has allowed the group to purchase adequate property insurance at
affordable premiums. Renewal of the City's participation in PEPIP will
ensure the City's ability to continue purchasing property insurance at
competitive rates.
The $387,188 premium will provide $500 million dollars or more of
coverage for most City properties. PEPIP will provide the City with $100
million for boiler and machinery damage and $82.5 million in flood
damage. All PEPIP members share $110 million of terrorism coverage with
a $400 million annual aggregate. However, due to the excessive premium
cost of earthquake insurance, the City will not seek this coverage.
Current insurance deductibles are as follows:
Coverage
Deductible
Vehicles
Fire Fighting
Vehlcles
All other
All other occurrences
Boiler & Machinery
$50,000
$25,000
$10,000
$2,500 to
the pieces
$375,000, depending
of equipment involved
on
Through BICEP, the City purchases excess workers' compensation and
liability coverage through the California Public Entity Insurance
Authority (CPEIA). The City joined the CPEIA Crime Bond Program in 2004,
and the current expiration date of this jointly purchased coverage is
July 1, 2007. The program's insurers offered to extend the coverage now
for another year to July 1, 2008 at attractive pricing, not to exceed
$11,500.
The Crime Bond Program provides a $10 million limit with a $25,000 per
occurrence deductible and covers the following:
1. Employee dishonesty with faithful performance coverage
2. Forgery and alteration
3. Theft, disappearance and destruction
4. Robbery and safe burglary
5. Computer fraud including funds transfer coverage
6. Money orders and counterfeit paper currency
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Insurance Renewals
June 19, 2006
Page 3 of 3
FISCAL IMPACT
Funds are budgeted in the proposed 2006-07 Liability & Property Insurance
account (account no. 80-180-6521) and Workers' Compensation account
(account no. 82-178-6521).
APPROVED AS TO FUNDS AND ACCOUNTS:
~~ ~~-L
1 Francisco Gutierrez ~
~~xecutive Director
Finance & Management Services Agency 1_
JIf
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