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Approve Insurance Renewals for FY 2018/19 with BICEP
<br />September 4, 2018
<br />Page 2
<br />The BICEP excess liability program covers liability claims from $1,000,000 to $27,000,000 per
<br />occurrence with a $1,000,000 self-insured retention (SIR) which functions like a deductible. The
<br />workers' compensation program provides statutory excess workers'. compensation insurance
<br />coverage with a $1,000,000 SIR. The excess liability insurance premium for the period of July 1,
<br />2018 to June 30, 2019 will not exceed $3,700,000. The excess workers' compensation insurance
<br />premium for the July 1, 2018 to June 30, 2019 period will not exceed $400,000.
<br />The Public Entity Property Insurance Program (PEPIP) was established in May 1993 with
<br />seventeen public agencies including the City of Santa Ana. The purpose of PEPIP is to provide
<br />public agencies with group purchasing strength. Since 1993, PEPIP -has grown to include over
<br />6,400 members in 45 states, which has allowed the group to purchase property insurance at
<br />affordable premiums. The estimated $690,000 premium, an increase' of approximately $40,000
<br />from last year's premium, will provide $1,000,000,000 of coverage for insured City properties from
<br />July 1, 2018 to June 30, 2019. PEPIP will provide the City with $100,000,000 for boiler and
<br />machinery damage and $82,500,000 in coverage for flood damage (coverage is limited to
<br />$50,000,000 in Flood Zone A.) This cost includes the purchase of.earthquake insurance. The
<br />earthquake coverage provides coverage up to $25,000,000 per occurrence and annual aggregate
<br />with a deductible of 5% per unit ($100,000 Minimum).
<br />The City joined the California State Association of Counties — Excess Insurance Authority CSAC-
<br />EIA) Crime Bond Program on April 1, 2004. This provides the City with $15,000,000 per occurrence
<br />in coverage for employee theft/faithful performance of duty as well as inside and outside theft of
<br />money, robbery or safe burglary, funds transfer fraud, computer fraud and other illegal activities
<br />except as not covered by exclusion. The renewal premium from July 1, 2018 to June 30, 2020
<br />(two-year policy term) remains at $12,000.
<br />The above stated premiums are an increase over Fiscal Year 2017/2018 of $912,332 or 23.1%.
<br />This is due in part to the fewer number of excess carriers willing to bid and an increase in recent
<br />claim/settlement size trending state-wide.
<br />STRATEGIC PLAN ALLIGNIVIENT
<br />Approval of this item allows the City to meet Goal # 4 - City Financial Stability, Objective #1
<br />(Maintain a stable, efficient and transparent financial environment).
<br />FISCAL IMPACT
<br />Funds are budgeted in the proposed 2018-19 Liability & Property Insurance account, Insurance
<br />(Risk Management), (No. 08009051-64010) for an estimated premium and administrative costs not
<br />to exceed $4,500,000 and Workers' Compensation account, Insurance (Risk Management), (No.
<br />08209054-64010) for an estimated premium cost not to exceed $405,000.
<br />29B-2
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