HomeMy WebLinkAbout1995-03-14 - AGENDA REPORTS - 1995 PROPERTY INS RENEWAL (2)AGENDA REPORT
City Manage Approval
Item to be presented by:
Ken Pulskamp
UNFINISHED BUSINESS
DATE: March 14, 1995
SUBJECT: 1995 Policy Year General Liability and Property Insurance Renewal
DEPARTMENT: City Manager
This item is on the agenda for renewal of the City's Public Liability and Property
Insurance packages for 1995 policy year. Each year in order to obtain appropriate levels
of coverage, the City prepares detailed specifications profiling the City and outlining our
comprehensive insurance needs. These specifications are then taken to the insurance
markets by our broker, Antelope Valley Insurance, for quotation and review. Based on
the overall profile of the City, specifications again referenced the need for $10 million
in liability coverage per occurrence with a self insured retention (SIR) of $250,000. The
quotation for the City is based primarily on the following types and levels of exposures:
EXPOSURE
1995196 RENEWAL
POPULATION
147,228
OPERATIONS BUDGET
$45,176,495
CIP BUDGET
$24,058,663
STREET AD MILES
259
PAYR LL
$12019,919
#FULL TIME EMPLOYEES
184
#PART TIME EMPLOYEES
6
This year the City received proposals on the liability package from two companies, our
current provider, Insurance Company of the West (ICW) and Municipal Mutual. While
the Municipal Mutual quotation is $41,157 less than the ICW quotation, their proposal
Continued To:= �s Agenda Item: Co
presents a variety of concerns.
The City of Gardena, which originally established Municipal Mutual, due to their lack
of ability to obtain insurance through traditional markets, and the City of Richmond, are
the only cities within the State utilizing Municipal Mutual. Furthermore, while
established in 1980, Municipal Mutual is still considered to be a relatively new firm for
insurance markets. Considering their status as a new company, insuring only two cities
and their lack of a sound financial history, they have may have limited loss paying
ability and reserves in the eventthey experience several major claims in the same year.
Another weakness of the firm is they are not currently rated and have limited staff to
service the City. Additional key concerns which arose in staff's review of the Municipal
Mutual proposal include the following:
The Municipal Mutual Policy...
does not include under their definition of personal injury, mental anguish or
discrimination.
has an exclusion for bodily injury, property damage and errors and omissions liability
that may be expected or intended.
has a very broad care custody and control exclusion which eliminates fire damage, legal
liability and property damage in the care custody and control of the City.
has a very limited definition of "a contract". This limited definition removes from
protection much of the assumed lability that is stated and required in many of the
contracts the City may enter into.
has a total employment practices exclusion. The ICW policy provides for coverage for
any lability for salary and wages due to any form of discrimination specified in any
federal or civil rights law.
considers uninsured and underinsured motorists an absolute exclusion from the policy.
Finally, the Municipal Mutual contract is considered to be fully assessable. Therefore,
should the company experience financial difficulties, the City may be assessed a full
year's premium, $134,000, to assist in covering any losses or claims. Based on general
accounting principles the City would need to reserve this amount as a contingent lability
in our financial statements.
Conversely, the ICW policy proposal does provide for all of the components not
provided for through Municipal Mutual policy and does not require placement of any
additional funds in reserve. Therefore based on a comprehensive review of both policy
forms, staff is recommending that we continue to obtain insurance coverage from ICW.
This recommendations is based primarily on the following factors:-
The ability of ICW to provide broader and comprehensive forms of
coverage
Overall financial stability of ICW
"A" rating of ICW
Ability to fully service the City
Along with the liability package, renewal of the property insurance, business income and
steam boiler and machinery coverage is now in order. In these areas, staff also
recommends continuing coverage with our current provider, Reliance Insurance
Company. A complete detail of all coverages to be procured at this time is provided in
attachment A.
RECOMMENDATION
That the City Council authorize the City Manager to procure insurance of the types and
levels of coverage specified in attachment A at a cost not to exceed $308,291. In
addition authorize the transfer of $36,000 from Gas Tax Fund Balance 02-2600, transfer
$17,700 from Transit Fund Balance 55-2600 and $13,259 from CDBG Fund Balance' 12
2600 to Self insurance 26-4201-294 to cover the various funds proportional share of the
overall City insurance costs.
CITY OF SANTA CLARITA
PREMIUM COMPARISON
Policy Description 1994/95 1995/96
Insurance Co. of the West
Public Entity Liability
$1,000,000 Primary $ 115,454.00 $ 112,762.00
$9,000,000 Excess $ 101.082.00 $_ 63.166.00
Total: $ 216,536.00 $ 175,928.00
Reliance Insurance Co.
Property
$
30,609.00*
$
29,163.00
Glass
$
356.00
$
356.00
Inland Marine
$
8,157.00*
$
7,360.00
Crime
$
503.00
$
527.00
Auto
$
78.355.00*
$
80.979.00
Sub Total:
$
117,980.00
$
118,385.00
CIGA
$
245.68
$
231.92
Total:
$
118,225.68
$
118,616.92
*Endorsements included
and figured
at an annual premium.
Reliance Ins Company $ 9,090.00 $ 9.,146.35
Business Income Policy
for City Hall
Hartford Steam Boiler $ 4,224.00 $ 4,599.34
Boiler & Machinery
Total Premium $ 348,075.68 $ 308,290.61
TOTAL SAVINGS OF $39,785.07
CGG:jet
02/28/95