HomeMy WebLinkAboutAgenda Statement 1975/08/19 Item 07CITY OF CNULA VISTA ITEM N0._ ~ __
COUNCIL AGENDA STATEMENT (;/14/75
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ITEM TITLE: Resolution -Providing for t:he Special Appropriation of Funds for
~~"~~~~ Comprehensive General Liability Insurance
SUBMITTED BY Acting Direct:ar of finance
ITEM EXPLANATION
The budget request fur compret!ensive yeneral liability insurance for Fiscal Year
1975-76 was for 567,350. Of ti~is amount 357,7.50 was for the base policy and 510,10D
for umbrella coverage. In the interim, the City received a notice of cancellation
from tP~e Imperial insurance Company making it necessary to readvertise bids for
comp!^ehensive insurance coverage.
harbor Insurance Grnpany submitted low bid for the base policy coverage totaling
$105,333. Central National Insurance Company of Omaha submitted low bid of
$37,500 far umbrella coveraye. These costs exceeded the budyetary commitment of
$67,350 by 375,483.
Attached is a letter from Creaser Price Insurance Company delineating some of the
causes for the ma!°ked increase in premium.
Financial Statement: Appropriate and authorize the expenditure of $75,483
romp i:he unappropriated surplus of the General Fund. These appropriations should
be carried in Fund O1, Activity 1700, and Account 5?_33.
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Agreement Resolution Ordinance Plat Other X
Environmental Document; Attoched Submitted on
STAFF RECOMMENDATION:
Approve resolution.
BOARD/COMMISSION RECOMMENDATION:
COUNCIL ACTION ` ~
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Form A-113 (Rev 5-~~'!!i)
creaser, EXHIBIT
INSURANCEprlce
400 THIRD AVENUE • BOX 1355 • CHULA VISTA, CA 92012 • TELEPHONE (714) 420-7070 ~-
August 12, 1975
City of Chula Vista
City Finance Office
276 Fourth Avenue
Chula Vista, CA 92010
Gentlemen:
Enclosed is the bill for the new public liability insurance
coverage for the City effective June 19, 1975-1976.
The excess liability policy is not yet in, but we should have
that for delivery within the next few days. The premium for
renewal of these two policies is $142,833.00.
I would like to briefly review the reason for this substantial
increase in premium as follows:
During the three years of insurance with Pacific Indemnity
Company the City paid $100,157.00 in premiums. In that period
of time Pacific Indemnity Company paid $24,004.00 in losses
and paid $22,026.00 in loss adjustment and legal expenses plus
they are still holding reserves for unpaid losses in the amount
of $28,125.00.
I have reviewed each one of these losses with their claims
manager as of August 11, 1975 and believe the reserve figures
to be reasonable which brings the total incurred losses to a
figure of $74,156.00.
The year 1974-1975 under Imperial Insurance Company amounted
to a premium of $32,012.00 for the short term during which time
$6,067.00 were paid in losses, $2,450.00 where spent in loss
adjustment cost and $27,650.00 is being held as a reserve for
unpaid losses. This results in total incurred losses for that
period in the amount of $36,167.00.
There are currently 13 law suits in progress amounting to a
great deal of money but which are reserved under the above
figures.
The experience of losses has deteriorated markedly in the past
five years for all public agencies, and similar cost increases
are pretty standard within the area of public entity insurance
coverages. I would like to point out one particular problem
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August 12, 1975
Page 2
and that is the fact that many of the claims that are in suit
don't reach a climax for many years after the date of the ac-
cident and during that period of time the claims are often
found to be underreserved because of inflation and the much
higher judgements beinq afforded today.
rAe are investigating other means of insuring the City and
hopefully soon will arrive at the best possible long range
plan to keep these costs at a reasonable level.
Sincerely yours,
CREASER, $RI~ INSURANCE
r
Charles S. `Sfiippeyr ~ ~
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Enclosure
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