HomeMy WebLinkAboutAgenda Statement 1985/04/16 Item 11 COUNCIL AGENDA STATEMENT
Item 11
Meeting Date 4/16/85
ITEM TITLE: Resolution 1/7 f, Approving Liability Insurance Policy with Planet
Insurance Company and Appropriating $146,088 from
the Public Liability Trust Fund
SUBMITTED BY: Director of Finance0 (4/5ths Vote: Yes X No )
REVIEWED BY: City Manager f(-< ,
The San Diego County Cities Risk Management Authority recently received notice of
cancellation of its liability insurance policy from Planet Insurance Company.
Chula Vista's insurance coverage is canceled along with the cities of Coronado,
Del Mar, Escondido, Lemon Grove, National City, Oceanside, Santee and Vista.
Planet offered to reinsure all of the cities, with the exception of Escondido,
at much higher premiums.
RECOMMENDATION:
That Council approve the new insurance policy with Planet Insurance Company and
appropriate funds from the Public Liability Trust Fund.
BOARDS/COMMISSIONS RECOMMENDATION: Not Applicable.
DISCUSSION:
The San Diego County Cities Risk Management Authority (JPA) received liability
insurance coverage from Planet as of October 1 , 1984. Planet has now given
notice to the JPA of mid-term cancellation and has offered a new policy with
changes in coverage and premium rates.
Changes in Coverage
The current policy offers broad form coverage including insurance for inverse
condemnation, discrimination, and subsidence. This coverage will be eliminated
from the new policy.
Chula Vista's "annual aggregate stop loss" of $300,000 is also eliminated from
the new policy. In the past, the City was required to pay up to $100,000 per
claim, but would not have to pay more than $300,000 during the policy year, no
matter how many claims were made. The new policy does not have an "annual aggregate
stop loss". This means that if the City has six claims exceeding $100,000, the
City must pay $600,000 before the insurance carrier pays anything.
Increases in Premiums
Under the current policy, the City of Chula Vista pays an annual premium of $63,000.
With the new policy, the City is receiving $6 million in liability insurance
coverage for a premium of $147,088, an increase of 133%. The City's self-insured
retention (SIR) of $100,000 remains the same. In addition, the JPA as a whole is
seeking excess liability insurance coverage up to $20 million. The JPA has gone
out to bid for this excess coverage and Chula Vista's share of the cost for this
coverage is estimated not to exceed $25,000.
Form A-113 (Rev. 11/79)
Item 11
Meeting Date 4/16/85
Page 2
The other cities in the JPA are facing increases in premiums as follows:
City % Increase
Chula Vista 133
Coronado 477
Del Mar _O_
Escondido Excluded from new policy.
Lemon Grove 46
National City 263
Oceanside 243
Santee 292
Vista 139
The City of Del Mar, considering its size and experience, has an unusually
high premium under the current policy so no increase was proposed with the
new policy.
JPA Action
The JPA is sending letters to the Legislative Judiciary Committees, the League
of California Cities, and to our San Diego County Senators and Assemblymembers
emphasizing our disastrous insurance problem and requesting legislators to
take action to relieve the crisis.
The JPA has also instructed our insurance brokers, Robert F. Driver Company,
to go out for new insurance bids on behalf of the JPA. The bids are expected
to be received by May 31 , 1985. However, with the current situation in
California regarding the "deep pocket" legal doctrine and the growing willingness
of juries in civil cases to assess huge damage awards against municipalities,
the JPA can expect to receive no more than three bids, if that many. And
there is a good chance that the new bids will not be substantially better
than the new policy with Planet.
FISCAL IMPACT:
The new policy with Planet is effective April 1 , 1985, and the premium payment
is due May 1 , 1985.
The amount to be appropriated from the City's Public Liability Trust Fund is
as follows:
Premium for coverage of $6 million $147,088
Premium for excess coverage to $20 million 25,000 : -Crf
Subtotal $172,088 k Ii �
Less credit for premium paid on canceled policy (26,000)
Total appropriation $146,088
z;
Staff recommends appropriating $146,088 from the Public Liability Tru t Funds :
unappropriated balance of $978,000. r, e