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Home My WebLink About6/1/2005 - STAFF REPORTS (14) z U N t � z c f °tt°Pn�Eo�9p cq<IFOR��P City Council Staff Report DATE: June 1, 2005 Consent SUBJECT: Insurance Renewals for the City's Airport Liability, Aero Squadron Aircraft, All-Risk Property, Earthquake/Flood (Primary Level), Crime, Boiler & Machinery, Excess General Liability, and Auto Physical Damage (CaLease) Insurance FROM: David H. Ready, City Manager BY: Human Resources SUMMARY The City's insurance broker has provided renewal quotations for fiscal year 2005-06 coverage. Staff is requesting City Council approval of the Insurance Portfolio Renewal effective July 1, 2005. RECOMMENDATION: Adopt Minute Order No. , "APPROVING THE CITY OF PALM SPRINGS' INSURANCE RENEWALS FOR THE CITY'S AIRPORT LIABILITY, AERO SQUADRON AIRCRAFT, ALL-RISK PROPERTY, EARTHQUAKE/FLOOD (PRIMARY LEVEL), CRIME, BOILER & MACHINERY, GENERAL LIABILITY, AND AUTO PHYSCAL DAMAGE (CALEASE) RENEWAL EFFECTIVE JULY 1, 2005. STAFF ANALYSIS: The City of Palm Springs contracted with Davis & Graeber Insurance Services, Inc., a California Corporation, on October 1, 2001, to perform services as the City's Insurance Broker of Record and to solicit insurance proposals from qualified carriers upon renewal of the City's policies. Davis & Graeber has provided the City with July 1 renewal quotations and marketing summaries attached hereto. The July 1, 2005 renewals reflect an overall increase of 1.9% over last year's premiums; however this increase provides additional terrorism coverage as well as coverage for an increase of $32,760,306 in property values. Following is a summary of last year's premiums, and staffs recommendation for the July 1 renewals (based on the lowest quoted price and coverage): Item No. 2 . He City Council Staff Report June 1,2005--Page 2 Minute Order-Insurance Renewals Coverage Premium 7/1/04 through 6/30/06 Premium 7/1/05 through 6/30/06 Quake/Flood Premium $128,110 $118,113 Primary Level Terrorism Premium See All-Risk Premium Below Deductible 5% of Values/$50,000 Minimum 5% of Values/$50,000 Minimum Limits $2,500,000 $2,500,000 All-Risk Property Premium $146,318 $170,738 Terrorism Premium $11,913 Loss Control Audit Fee $2,000 $2,000 Deductible $10,000 $10,000 Property Schedule Values $208,239,694 $241,000,000 Airport Liability Premium $50,412 $50,412 Deductible $1,000 $1,000 Limits $50,000,000 $50,000,000 Boiler& Machinery Premium $9,500 Coverage is Included in All-Risk and Quake/Flood Premiums Deductible $10,000 $10,000 Limits $40,000,000 Crime Premium $4,198 $4,198 Deductible Employee Theft$10,000 Employee Theft$10,000 All Other$1.000 All Other$1,000 Limits $1,000,000 $1,000,000 Aero Squadron Premium (Cessna 182P) $5,893 $5,893 War Coverage Option $918 $918 Deductible $500 $500 Limits $5,000,000 $5,000,000 General Liability Premium $202,416 $202,831 Self-Insured Retention $800,000 Employment Practices $800,000 Employment Practices $400,000 All Other $400,000 All Other Limits $10,000,000 $10,000,000 Auto Physical Damage Premium $15,955 $8,345 Deductible $10,000 $5,000 Limits (CaLease Schedule) $3,798,878 $2,086,166 Total Premiums $564,802 $575,361 In comparison to last year, the recommended renewals came in with status quo coverage limits. The Quake/Flood premium reflects an 8.5% decrease in premium, along with an overall rate per million decrease (from $1,460.6439 in 2004 to $1,256.2821 in 2005) for both the Property and Quake/Flood premium quotes above. The Auto Physical Damage quote reflects an overall premium decrease of $7,610 with the deductible amount reduced by 50%. The Quake/Flood, All-Risk Property, and Boiler & Machinery quote is offered by Affiliated FM as one policy. The premium amount above reflects terrorism coverage for both certified and non-certified terrorism, which was not offered last year. Certified terrorism includes international instigated terrorism acts that are certified by the Secretary of the Treasury of the United States that take place within the territory of the United States. Non-Certified Terrorism includes events that occur in the United States when committed by individuals acting on behalf of foreign people or interests. City Council Staff Report June 1,2005--Page 3 Minute Order-Insurance Renewals The Airport Liability quote provides for optional War & Terrorism coverage. Staff's recommendation for renewal, however does not include the War & Terrorism coverage option because of the additional $37,500 in premium cost; and because of the excellent security that is in place at the Palm Springs Airport. In addition, if the City were to purchase the War & Terrorism coverage, lost revenue resulting from terrorist attacks at another (non-owned) location would not permit us to recover our losses under the terms of the policy, as a city-owned property a loss is a prerequisite for filing a claim for any revenue losses. As a result, the benefit of War & Terrorism coverage does not seem to warrant the premium increase to purchase this option. FISCAL IMPACT: Sufficient funds are available in the Risk Management insurance premium accounts (5904) 48640 (General Liability Insurance), 48665 (Aircraft Liability), 48670 (Crime/Fidelity Insurance), 48675 (Airport Liability), and (5905) 48651 (CaLease Insurance) 48655 (Earthquap Insurance), and 48690 (Property Insurance). Susan E. Mills David H. Ready, Citnager Director of Human Resour Attachments: 1. Insurance Proposal from Davis & Graeber 2. Minute Order Insurance Proposal for i Ci o Palm Springs � May 24, 2005 By Ross B. Jones Vice President Commercial Marketing Davis & Graeber Insurance Services, Inc. 470 E. Highland Avenue P.O. Box 750 Redlands, CA 92373 (909) 793-2373 Public Entity Excess Liability Named Insured: City of Palm Springs Policy Term: July 1, 2005 to July 1, 2006 Insurance Carrier: Insurance Company of the State of Pennsylvania (A++XV) Admitted Coverages: Special Excess Liability for Public Entities Limits: $10,000,000 Products & Completed Operations Hazard Aggregate $10,000,000 Errors & Omissions Liability Aggregate, other than Personal Injury Offense Wrongful Acts $10,000,000 Employee Benefit Liability Aggregate $10,000,000 Any One Occurrence or Wrongful Act in Excess of Retained Limit Deductibles: $400,000 SIR each Occurrence All other coverages. $800,000 SIR each Employment Practices Liability. Conditions: Act of Terrorism Retained Amount Endorsement including coverage for terrorism. Time Element Pollution Endorsement Premium Adjustment Endorsement 90 Days Notice of Cancellation, except for Non-Payment of Premium. Subject to: Claims audit to be performed during the year. Limits of Insurance Amendatory Endorsement Policy Territory Limitation Endorsement Retained Amount Endorsement Uninsured/Underinsured Motorist Exclusion Blanket Additional Insured Premium: $202,831.00 (Rate: Adjusted at a rate of $4.54535 per capita based on a estimated population of 44,200. Includes terrorism coverage charge of$2,008) 25% Minium Earned Premium in event of Cancellation -A .; r i Property All Risk Named Insured: City of Palm Springs Policy Term: July 1, 2005 to July 1, 2006 Insurance Carrier: Affiliated FM Insurance Company (A+XV) Admitted Coverage: All Risk, as defined and limited herein, on Real Property, Personal Property, Extra Expense, Rental Income, Gross Earnings excluding Ordinary Payroll and including Extensions of Coverage applying at the following locations on schedule with Company. Limit: $241,000.00 This Company's total limit will not exceed the respective Limits of Liability shown elsewhere for coverage involved. However in no event will the limit exceed$241,000.00 as a result of any one loss, disaster or occurrence, regardless of the number of perils, coverages or locations involved. Sub-limit: Earth Movement: $2,500,000 Annual Aggregate Flood: $2,500,000 Annual Aggregate Off Premises Power: $1,000,000 Extra Expense: $2,000,000 Ammonia Contamination(B&M) $250,000 Hazardous Substance(B&M) $250,000 Spoilage (B&M) $250,000 Deductible: The following deductible amounts shall apply to each claim for loss or damage under this Policy in the respective loss categories indicated: 1. Earth Movement: For each occurrence,this company will not be liable for loss or damage to insured property ruuess the amount of the loss or damage exceeds 5% of the combined value of property at the location where loss or damage occurs,in accordance with the valuation section of this policy and annual business interruption value as defined in the Business Interruption Endorsement attached to this policy at the time such loss or damage at the location where loss occur,subject to a minium deductible amount of$50,000 per location.If coverage is provided for more than one location,this deductible percentage or minium deductible amount will be calculated for and applied separately to each location. 2. $100,000 Flood(per occurrence for all coverages provided in this policy). 3. Off Premises Power Qualifying Period In the event of loss or damage covered by this policy,no coverage is provided unless the period of intemuption exceeds 24 hours beginning from the time of loss. If the period of interruption exceeds 24 hours,the loss will be calculated from the original time of loss,subject to the policy deductible. 4. $5,000 Electronic data Processing,no coverage is provided unless the period of interruption exceeds 48 hours. 5. $10,000 All Other Losses Special Conditions: The following forms will be attached at policy issuance: 1.Excludes Crime coverages. 2.EQSL is included to policy limits,with a 1%deductible of value of property per location 3. Sewer Back-up included. Debris removal$5,000,000 or 25%of loss 4.EDP Equipment included under Personal Property(includes electrical/mechanical breakdown) 5.Newly acquired property(120 days) Affiliated FM is available to assist the insured in completing recommendations for risk improvement developed as a result of inspections on this account.For more details and assistance,the insured can contact Account Engineer Farrell Fatemi at 818-227-2289. Annual Premium: $300,764.00 *Certified Terrorism premium: $7,942.00 Inspection Fee: $29000.00 *Non-Certified Terrorism: $3,971.00 Total Annual Premium: $302,764.00 Including Certified & Non Certified Terrorism $290,851.00 Without terrorism included Breakdown of Premium: Property Premium: $170,738.00 DIC & Flood$2,500,000 Primary $118,113.00 Rate 2005: $1,256.2821 per mil Rate 2004: $1,460.6439 per mil *Certified Terrorism: International instigated terrorism acts that are certified by the Secretary of the Treasury of the United States that take place within the territory of the United States. *Non Certified Terrorism: Events that occur in the United States when committed by individuals acting on behalf of foreign people or interests. Marketing Summary: Carriers: 1. Axis-pending 2. Traders & Pacific - can only look at 10 mil primary at this time 3. Essex-pending 4. Allianz-not interested in competing with Affiliated 5. United States Fire - pending 6. Travelers - declined due to current pricing and quake 7. Arch - pending 8. Landmark- not competitive 9. Westchester - pending 10. Chubb -pending 11. AIG-pending 12. Affiliated FM Pending markets want to quote closer to expiration date. Crime Bond Named Insured: City Of Palm Springs Policy Term: July 1, 2005 to July 1, 2007 Insurance Carrier: Hartford Fire Insurance Company (A+IX) Admitted Coverage Form: Crime Shield Limits: Public Employee Dishonesty per Employee: Limit Coverage Deductible $1,000,000 Employee Theft $10,000 $100,000 Forgery $1,000 $300,000 Theft, Disappearance & Destruction - In & Out$1,000 $50,000 Counterfeit Currency & Money Orders (No ded) i Premium: $ 4,198.00 Annual Payment i (3 - year fixed rate 2004 to 2007 ) Airport Liability Named Insured: City of Palm Springs Palm Springs International Airport and all other airport premises necessary and/or incidental to the operations of the Named Insured. Policy Term: July 1, 2005 to July 1, 2006 Insurance Carrier: Ace USA/WEST Westchester Fire (A+ IX) Admitted Coverage: Special Airport Liability Deductible: $1,000.00 Each Loss Limits: Bo"t bil" &Ptopetty.Damage $50,000,000 CSL each aitc4t/occurrence and in the aggregate with respect to: Products/Completed Operations $50,000,000 aggregate Personal/Advertising Injury $50,000,000 aggregate Airport Premises $50,000,000 Ground Hamgarkeepers $50,000,000 Any one occurrence/aircraft Premises Medical $5,000/person/$25,000 Per occurrence Independent Contractors $50,000,000 Incidental Control Tower Liability $50,000,000 Airshow Liability $1,000,000 primary excess of contractor $5,000,000 aggregate Mobile Equipment on airport premises $50,000,000 Excess auto liability off airport premises $1,000,000/ $50,000,00OFire Legal Liability $100,000 each occurrence Contractual Liability $50,000,000 Non Owned Aircraft Liability $50,000,000 Medical Malpractice Liability $50,000,000 aggregate War and Associated Perils Excluded Notice of Cancellation—90 days/10 for non payment Contingent Liquor Liability $50,000,000 Additional Insureds as requiredIncluded Excess Employers Liability $1,000,000 any one accident/ $50,000,000 occurrence Date Exclusion & Limited Writeback Included Passenger Misdirection Included Goods, Merchandise & Baggage other than as bailee for hire- Included Premium: $50,412. War & Terrorism Coverage: $37,500 Aircraft Liability Named Insured: City of Palm Springs Policy Tenn: July 1, 2005 to July 1, 2006 Insurance Carrier: Ace USA/WEST Westchester Fire (A+IX)Admitted Coverages: 1974 Cessna 182P N47PS Hull $75,000 Deductible: In Motion $500 Not In Motion $100 Limit of Liability: $5,000,000 Combined Single Limit Territory: USA, Canada,Mexico, Excludes Alaska Use: Business & Pleasure Pilots: Any properly certified pilot approved by the Named Insured's Chief Pilot Personal Injury: $5,000,0001 aggregate Automatic Attachment of Newly Acquired Aircraft, Temporary Use of Substitute Aircraft Spare Parts $10,000 Deductible: $250 each claim Non-Owned Aircraft Liability $5,000,000 Damage to Non-Owned Hangars and Contents $15,000 Aviation Products Liability for sale of aircraft, aircraft parts, maintenance, fuel, oil, equipment & services Independent Contractors Liability $5,000,000 Contractual Liability $5,000,000 Runway Foaming $5,000 Search & Rescue $5,000 Physical Damage to Non-Owned Aircraft $50,000 Deductible $1,000 Medical Payments $1,000/$4,000 Personal Effects/Baggage $1,000 each person Notice of Cancellation 60 days Non-Payment 10 days Date Exclusion & Writeback Annual Premium: $5,893.00 without War or Terrorism coverage War & Terr. Coverage: $918.00 $6,811 Total Annual with War & Terr. Coverage 2005 July 15t Insurance Renewal Marketing Summary Excess General Liability 1. Genesis - pending 2. RSUI — cannot compete on a lead basis, could possibly work in a higher layer. 3. Arch — cannot compete with needed pricing. 4. Axis — pending (last year could not compete with pricing) 5. Westchester- pending 6. St. Paul - pending 7. Munich — cannot compete on the pricing. 8. AIG - $202,831.00 Earthquake/Flood, Boiler & Machinery, and All-Risk Property 1. Axis - pending 2. Traders & Pacific— can only look at 10 million primary at this time. 3. Essex - pending 4. Allianz— not interested in competing with Affiliated FM. 5. United States Fire - pending ' 6. Travelers — declined due to current pricing and earthquake coverage. 7. Arch - pending 8. Landmark — not competitive 9. Westchester- pending 10. Chubb - pending 11. AIG - pending 12. Affiliated FM - $302,764.00 total for Earthquake/Flood, Boiler & Machinery, and All-Risk Property coverage. MINUTE ORDER NO. APPROVING THE CITY OF PALM SPRINGS' INSURANCE RENEWALS FOR THE CITY'S AIRPORT LIABILITY, AERO SQUADRON AIRCRAFT, ALL-RISK PROPERTY, EARTHQUAKE/FLOOD (PRIMARY LEVEL), CRIME, BOILER & MACHINERY, GENERAL LIABILITY, AND AUTO PHYSCAL DAMAGE (CALEASE) RENEWAL EFFECTIVE JULY 1, 2005. I, James Thompson, City Clerk of the City of Palm Springs, hereby certify that this Minute Order approving the City of Palm Springs' Airport Liability, Aero Squadron Aircraft, All-Risk Property, Earthquake/Flood (Primary Level), Crime, Boiler & Machinery, General Liability, and Auto Physical Damage (CaLease) Insurance Renewals effective July 1, 2005, in an amount not to exceed $575,361.00, was adopted by the City Council of the City of Palm Springs, California, in a meeting thereof held on the 1 st day of June, 2005. James Thompson, City Clerk