HomeMy WebLinkAbout29A - INSURANCE RENEWALS
REQUEST FOR
COUNCIL ACTION
8 CITY COUNCIL MEETING DATE:
JUNE 21, 2004
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CLERK OF COUNCIL USE ONLY:
TITLE:
APPROVED
D As Recommended
D As Amended
D Ordinance on 1s1 Reading
D Ordinance on 2,d Reading
D Implementing Resolution
D Set Public Hearing For
INSURANCE RENEWALS/REVISIONS
TO RISK POOL AGREEMENT
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ITY MANAGER
CONTINUED TO
FILE NUMBER
-
RECOMMENDED ACTION
1. Approve City's continued membership in the Big Independent Cities
Excess Pool for an additional three years beginning July 1, 2004 at
an annual premium cost not to exceed $2,367,000 for the first year.
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2. Approve the City of Riverside and the Community Development
Commission of the County of Los Angeles as potential members of Big
Independent Cities Excess Pool (BICEP) effective July 1, 2004 and
authorize the City Manager to execute any documents and any
amendments to operative agreements including, but not limited to, the
BICEP Liability Risk Coverage Agreement and/or the BICEP Joint Powers
Agreement necessary to carry out this approval, including waiver of
certain time limits in Section 6.1 of the Liability Risk Coverage
Agreement.
3. Approve the City's continued participation
Property Insurance Program from July 1, 2004
premium cost of $457,439.
in the Public Entity
to July 1, 2005 at a
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 provides insurance stability through its annual requirement of each
8City to enroll for a succeeding three-year commitment. Each member city
has a $1 million self-insured retention that is similar to a deductible.
An estimated $1,560,000 of the total BICEP insurance premium covers
liability claims from $1 to $25 million per occurrence. The remaining
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Insurance Renewals
June 21, 2004
Page 2
balance ($807,000) of this premium purchases $50 million of excess
workers' compensation insurance coverage per occurrence. The self-insured
retention is still undetermined but will be $500,000 to $1,000,000. We may
not know the exact amount of insurance coverage and premium until June 30,
2004. The current excess insurance policies will expire on July 1, 2004.
The City Manager will review the quotations and make the final approval
and coverage will be bound.
In the interest of continuing to strengthen BICEP and minimize Santa Ana's
share of risk in the pool, BICEP periodically considers new pool members.
The City of Riverside and the Community Development Commission of the
County of Los Angeles are interested in joining BICEP effective July 1,
2004. BICEP's actuary has reviewed the history and claims data of these
two agencies and recommends their membership in BICEP. Their average
frequency of claims is better than the existing BICEP members. Addition
of these agencies in BICEP will reduce our City's costs and will give
BICEP greater negotiating power in this difficult insurance market. On
June 3, 2004, the BICEP Board of Directors unanimously approved both
entities for membership effective July 1, 2004, subject to 1) forma~
acceptance of one or both agencies to participate in BICEP, and 2)
approval by two-thirds of the BICEP member city councils. Staff seeks
authorization to grant Santa Ana's approval of these two new members and
to execute any agreements granting waivers, approval or amendments to
documents including, but not limited to, the Liability Risk Coverage
Agreement and/or the Joint Powers Agreement, as may be deemed necessary or
desirable by the City Manager and the City Attorney in order to carry out
the City Council's approval of this action.
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 5,000 members, 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 premium will provide $750 million coverage on City properties, except
for boiler & machinery, flood, sabotage & terrorism, and earthquake
damage. PEPIP will provide $100 million in boiler & machinery, and 82.5
million in flood damage. However, due to the excessive premium costs of
earthquake, sabotage and terrorism insurance the City will not seek
renewal of this coverage.
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~nsurance Renewals
June 21, 2004
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Current insurance deductibles are as follows:
Coverage Deductible
Vehicles
Fire Fighting $50,000
Vehicles
All other $25,000
All other occurrences $10,000
Boiler & Machinery $2,500 to $375,000, depending on
the pieces of equipment involved
FISCAL IMPACT
Funds have been included in the proposed 2004-05 Liability & Property
Insurance fund (account no. 80-180-6521) in an amount not to exceed
$2,017,439 and in the Workers' Compensation Fund (account no. 82-178-6521)
in an amount not to exceed $807,000 to pay the premiums.
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APPROVED AS TO FUNDS AND ACCOUNTS:
oma
Director
& Management
Services Agency
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