Report to Mayor and City Council
Tuesday, June 06, 2023
Consent
SUBJECT:
Title
CONSIDER RENEWAL OF EXCESS LIABILITY, EXCESS WORKERS COMPENSATION, ALL-RISK PROPERTY, AUTO PHYSICAL DAMAGE, INLAND MARINE EQUIPMENT INSURANCE, EARTHQUAKE, CYBER LIABILITY, VOLUNTEER ACCIDENT, DRONE INSURANCE, CRIME INSURANCE, STORAGE TANK LIABILITY AND FIDUCIARY LIABILITY INSURANCE FOR FY 2023/24 (CITY COUNCIL)
Body
I. SUMMARY
Presented for City Council's consideration is the annual renewal of the following insurance policies: 1) Excess Liability; 2) Excess Workers' Compensation; 3) Property Insurance; 4) Auto Physical Damage; 5) Earthquake, 6) Cyber Liability; 7) Volunteer Accident Insurance; 8) Drone Insurance; 9) Crime Insurance; 10) Storage Tank Liability; 11) Fiduciary Liability; and 12) Equipment Insurance; for FY 2023/24. The estimated premium cost for these policies is NOT-TO-EXCEED $1,565,220.
* The year-over-year increase of $438,082 is due to the City's loss experience in the liability and workers compensation lines, and the hardening insurance markets across nearly every coverage line. The factors that fuel the hardening market conditions have resulted in more and larger claims - frequency of severity. Public entities across the board have experienced dramatic increases in adverse loss development and this trend has had an adverse impact on the PRISM Insurance Pool and the Alliant Property Insurance Program which the City is a member of. Another factor impacting the liability premium is the City's loss ratio, the ratio of paid losses to premiums, which is now 113%; meaning PRISM is paying 1.13 times more in claims than it collects in premiums from the City. The City's broker marketed the renewal to ensure that the quoted rates are competitive. The recommended program is the best price and coverage option.
* Property insurance markets are less volatile than the casualty markets but recent large catastrophic losses are resulting in rate hardening of 15-20% for the n...
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