Report to Mayor and City Council
Tuesday, August 01, 2017
Consent
SUBJECT:
Title
APPROVAL TO JOIN THE CSEA EXCESS INSURANCE AUTHORITY AND RENEW GENERAL LIABILITY INSURANCE FOR FY 2017/18 (CITY COUNCIL)
Body
I. SUMMARY
Presented for City Council's consideration is the annual purchase of General Liability Insurance for FY 2017/18. The City's current insurance carrier has declined to provide coverage for this fiscal year due to the City's claims history. As a result, after considering several options, staff has determined that the CSEA Excess Insurance Authority is able to provide coverage. The annual FY 2017/18 insurance cost is estimated at $619,850 for this policy. This represents an increase of $141,500 from FY 2016/17 insurance cost of $478,350 while providing improved insurance coverage and policy limits. The following must also be considered:
1. Their joint powers agreement does not contain a provision stating that the authority's debts, liabilities and obligations are not the debts, liabilities or obligations of its members.
2. There is a multistep appeal process, with litigation being the final step, for any disputes that the City may have with the CSEA Excess Insurance Authority.
3. The City could be required to pay an additional "Development Charge" which represents certain administrative costs of the insurance program.
4. The City may be charged an additional "Premium Surcharge" representing its share of the required funds to fund the program in a year where there is an unusually large number of losses under the excess liability program such that program funds would be exhausted prior to when the next annual premiums are due or where their Board of Directors determines that program funds are insufficient to pay losses, fund known estimated losses, and fund underreported incurred estimated losses. This surcharge is capped at three times the City's annual premium for a given year, unless otherwise determined by the CSEA Excess Insurance Authority'...
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