Exh 8A~•,
AGENDA ITEM #8A
~+ SEPTEMBER 9, 2002
CITY OF ATLANTIC BEACH .
~* CITY COMMISSIONER MEETING
STAFF REPORT
~°" ITEM: Approve renewal of City Insurance (excluding Employee Benefits) as
. indicated below.
SUBMITTED BY: George Foster, Human Resource Manager
DATE: ~ September 9, 2002
~, ~ - ,
w BACKGROUND: The City hired a consultant, Waters Risk Management, to bid non-benefit
insurance to be effective October 1, 2002. Only 2 proposals were received
~ : for each major line of insurance with the exception of3 proposals received
for Law Enforcement Statutory Benefits and Boiler/Machinery Coverage.
-a Based upon a review these proposals, both the consultant and staff are
~ recommending renewal as follows:
6.
,~.,, Twe 10/O1/O1 10/01/02
' RMA Automobile 48,654 60,603 + 24.56
RMA Property 41,163 77,574 +88.46
""' RMA General Liability 46,601 48,233 + 3.50
RMA Crime/Dishonest 810 790 - 2.50
RMA Pub Off & Emp Liab 25,434 29,965 + 17.81
~r*+ RMA Environmental. 28,093 28,930 + 2.98
RMA Workers' Comp 179,981 256,096 + 42.29
~• ' RMA Fiduciary- 3,520 4,005 + 13.79
LB Bryan Police Statutory 810 948 + 17.04
~"""'
~` - Totals: 375,066 507,144 +35.21
~"" ATTACHMENTS: 1. Bid Summary
2. Explanation of Premium Increases
3. Summary of coverage changes
~~±
E,
~' ISSUES: In reviewing the City's insurance renewal, it was determined that the City
does not have Flood or Terrorism Insurance. A review of records indicated
r~ that the Cit did reviousl c
y p y arry Flood Insurance as late as 1994/1995.
Staff is obtaining premium information on these coverages which will be
„., provided to the Commission upon receipt.
FUNDING.: As insurance renewal rates are not normally received until September, an
A.~ estimate OF $528,249 is included within the budget. Although this
~ ` estimate is sufficient to pay the above premium, additional funds maybe
~:
required for claim deductibles.
RECOMMENDATION: Approve renewal of the City's insurance, effective October 1, 2002, as
indicated above.
e
CITY MANAGER:
~~"+
• AGENDA ITEM #8A
,~„ SEPTEMBER 9, 2002
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AGENDA ITEM #8A
t""
SEPTEMBER 9, 2002
EXPLANATION OF PREMIUM INCREASES
;, ,
""~ The City's insurance premiums for property, liability, and Workers' Compensation have
_~ risen primarily due to the economic effect of the September 11th tragedy which includes
insurance losses and reduced investment earnings. The estimated losses to the insurance
industry have been estimated as high as 75 billion dollars. As a result, all major insurance
companies are experiencing significantly higher reinsurance costs and more restrictive
• terms and conditions within these reinsurance policies. Florida is also especially hard hit
., due to the high probability of catastrophic loss resulting from a hurricane. Furthermore,
• rQ ert owners in the coastal re ions are feelin the hi her costs and hi
p p Y g~ g g gher deductibles
~,,,, more than those in the interior regions.
`~ a Increases to the City's exposure base also played a part in higher premiums. The City has
~ increased property values by $3,100,000 and the financial expenditures have risen about
~ 10%
~3
~* Workers' Compensation insurance costs have been affected by the recent amendment
` adding municipal police officers to the Heart and Lung Presumption Law: It is common
belief that this amendment will cause the volume and severity of police related claims to
"""" significantly increase. Consequently, the rate for this classification code has increased from
7.22% to 10.68%. As 27% of the City's payroll is in the police code, this change alone had
an approximate +18% impact on the overall Workers' Compensation premium.
The change to the City's Workers' Compensation modification factor based upon the City's
Workers' Compensation claims experience also contributed to the Workers' Compensation
premium increase. This factor (multiplier) increased from 0.84 in 2001 to 1.14 in 2002 and
F- increased the premiums accordingly.
COVERAGE CURRENT EFFECTIVE
10/O1/O1 10/01/02
Property Deductible $1,000 $2,500
Wind deductible 1% 2~/a
Inland Marine deductible ' $500 . ~ $2,500
Terrorism No exclusions Excluded
Coverage for Business Income and $400,000 $250,000
Extra Ex enses
Crime Faithful Performance Under employee Not included
dishonesty
General Law Enforcement Liability Included Under separate
Liability policy
Failure to supply $250,000 limit Limit of Policy
Sewer Back Up No Fault Negligence
Only
Inverse Condemnation $1,000,000 $100,000
Herbicide & Pesticide S raying- $250,000 None
Law Deductible $0.00 $10,000 per
Enforcement occurrence
Liability
Automobile Physical damage deductible $S00 $1,000
Liability &
Physical
Damage
Employment Non-monetary suit defense Included Excluded
Practice
Liability Bodily injury, mental anguish, mental Included Excluded
injury, etc.
Personal injury, defamation, libel and Excluded Included
slander
Terrorism No exclusion Excluded.
Invasion of Privacy Excluded Included
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Public Deductible per occurrence $5,000 $10,000
Officials
Liabilty Aggregate $1,000,000 shared Separate
with Employment aggregate
Practice Liability
Criminal, malicious, or intentional acts Not applicable to Absolute
exclusion "vicarious" exclusion
liability of an
insured for
conduct of another
Leased employees Excluded Included
Independent Contractors Excluded Included
Breach of Contract Excluded Included
Non-monetary suit coverage $10,000 per suit Strict exclusion
$50,000 aggregate
Inverse condemnation Excluded $10,000 limit
above
deductible
Terrorism No exclusion Excluded
Insured vrs Insured No exclusion Excluded
a-,