HomeMy WebLinkAbout6/19/2002 - STAFF REPORTS (19) DATE: June 19, 2002
TO: City Council
FROM: Risk Manager via Director of Procurement and Contracting
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 PHYSICAL DAMAGE
(CALEASE) INSURANCE.
RECOMMENDATION:
It is recommended that the City Council adopt the Resolution approving the City's
insurance renewals effective July 1, 2002.
SUMMARY:
Although the July 1, 2002, renewals reflect an increase over last year's premiums, the
increases were not as high as were projected. It should be noted that the City's property
schedule values increased over four percent (4%) and the City purchased $1,130,290 in
additional vehicles, reflecting a twenty-six percent (26%) increase in the City's insured
vehicle schedule.
BACKGROUND:
The City's Broker of Record, Ross Jones of Davis & Graeber, delivered July 1` renewal
quotations and marketing summaries on June 4, 2002. In the currenthard market,
achieving our deadline at renewal prices less than what many entities and companies are
currently experiencing was a major achievement.
Following is a summary of last year's premiums, this year's lowest quoted price and the
anticipated (budgeted) projections:
COVERAGE FROM Budgeted
DAVIS&GRAEBER Premium 7/1101 through 6130102 Premium 7/1/0 through 6/30/03 Amount
1) Quake/Flood
Primary Level $98,160 $126,036 $147,225
Insurance Company Affiliated FM Insurance Co Affiliated FM Insurance Co.
Best's Rating A+XV A+XV
Deductible 5%of Values/$25,000 Minimum 5%of Values/$25,000 Minimum
Limits $2,500,000
$2,500,000
2) All-Risk Property $96 016 $123,911 $144,028
Loss Control Audit Fee $ 2,200
Insurance Company Affiliated FM Insurance Co. Affiliated FM Insurance Co
Best's Rating A+XV A+XV
Deductible $5,000
$10,000
Property Schedule $181,796,385 $190,144,504
3) Airport Liability $28,875 $42,649 $48,381
Insurance Company ACE USA ACE USA
Best's Rating A+IX A+IX
Deductible $1,500 $1,500
Limits $50,000,000
$50,000,000
Continued:
DAVIS&GRAEGER Premium 7/1/01 through 6/30/02 Premium 7/110 through 6/30103 Budgeted Amount
4) Boiler/Machinery $28,913 $28,913 $43,370
Insurance Company Travelers Travelers
Best's Rating A+XV A+XV
Deductible 25,000/Cogen;$5,000/AII other 25,000/Cogen, $5,000/AII other
Limits $25,000,000 $40,000,000
5) Crime Insurance $3,971 $3,971 $3,971
Insurance Company Hartford Fire Insurance Co. Hartford Fire Insurance Co.
Best's Rating A+XV A+XV
Employee Theft$10,000; Employee Theft$10,000
Deductible All other$1,000 All other$1,000
Limits $11000,000 $1,000,000
6) Aero Squadron/
Cessna 182P $3,597 $4,897 $10,000
War Coverage
Option Not Included $648 $ 2,666
Insurance Company ACE USA ACE USA
Best's Rating A IX A IX
Deductible $1,000 $500
Limits $5,000,000 $5,000,000
COVERAGE FROM
ICRMA Premium 7/1/01 through 6/30/02 Premium 7/1/02 through 6/30/03 Budgeted Amount
7)General Liability $182,904 $278,006 $292,000
Independent Cities Risk Independent Cities Risk
Insurance Company Management Authority Management Authority
Best's Rating Risk Sharing Public Entity Pool Risk Sharing Public Entity Pool
Self-Insured
Retention $300,000 $300,000
Limits $20,000,000 $20,000,000
8) Auto Physical
Damage Program $18,961 $25,487 $22,568
Insurance Company Royal Ins.(through ICRMA) Royal Ins. (through ICRMA)
Best's Rating A VIII A VIII
Deductible $5,000 $20,000
Limits $4,258,064 $5,388,354
TOTALS $462,802 $634,618 $715,709
NETINCREASE/ 40% increase 37%
(DECREASE) over previous year $171e 706 ($81,191)
Many insurance policies are excluding "Acts of Terrorism." The All-Risk Property renewal
(item number 2) from Affiliated FM Insurance Companyinciudes Acts of Terrorism.
There is a caveat to that inclusion: "If a government sponsored alternative risk transfer
vehicle is initiated,"Affiliated FM has the right to remove the City's terrorism coverage.
The Airport Liability backup documentation provides an optional War Coverage premium.
The recommendation above (item number 3) does not include the War Coverage option.
The War Coverage option would increase the premium seventy-four percent (74%) and the
Palm Springs Airport has excellent security in place. Additionally, if the City were to
purchase the war 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,
because a city-owned property loss is a prerequisite for filing a claim for any revenue
losses. For this reason, the benefit of war coverage inclusion does not seem to warrant the
large increase to purchase this option.
Davis & Graeber submitted an alternate quote for the City's Liability Insurance currently
provided by the Insurance Authority (ICRMA). ICRMA's renewal (item number 7) is
projected to be $278,006, based upon Board ratification atthe June 12, 2002 ICRMA
Itha
Board Meeting. (The backup documentation reflecting the Board's action will be provided
for distribution to the City Council on June 14, 2002) ICRMA was able to procure a three-
year policy in 1999, which was before the hardening of the insurance marketplace. The
third and final year is 2002/2003. Unless the current marketplace radically changes, the
ICRMA renewal rates in 2003/2004 will undoubtedly increase significantly.
Sufficient funds are available in the Risk Management insurance premium account
numbers (5904) 48640 (General Liability Insurance), 48665 (Aircraft Liability), 48670
(Crime/Fidelity Insurance), 48675 (Airport Liability), and (5905) 48651 (Cal-Lease
Insurance), 48655 (Earthquake Insurance), 48692 (Boiler/Machinery Insurance), 48690
(Property Insurance).
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NANCY JO MCI SH, ARM, MPA
Risk Manager ll//
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HAROLD E. GOOD, CPPO
Director of Procurement and Contracting
APPRO
City Manager
Attachments: 1. Quotation Packet from Davis & Graeber
2. Resolution approving Carriers and Premiums
REVIEWED BY DEPT. OF FINANCE
10A X
Insurance Proposal
for
City oSprings'
Palm
June 1, 2002
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
Ithil
Property All Risk
Named Insured: City of Palm Springs
Policy Term: July 1, 2002 to July 1, 2003
Insurance Carrier: Affiliated FM Insurance Company (A+ XV) Admitted
Coverage: All Risk including Earthmovement and Flood covering Real Property, Personal Property,
Extra Expense, Rental Income, Gross Earnings excluding Ordinary Payroll and including
Extensions of Coverage applying to locations on schedule.
Limit: $191,000,000(The Company's total limit will not exceed more than$191,000,000 as a result
of any one loss, disaster or occurrence, regardless of the number of perils, coverages or
locations involved.)
Sublimits: Earthmovement: $2,500,000
Flood: $2,500,000
Off Premises Power: $1,000,000
Extra Expense: $2,000,000
Acts of Terrorism: $ 100,000
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 unless 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 occurs,subject to a rninium deductible amount
of$50,000 per occurrence. 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 interruption 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. $2,500 Electronic data Processing
5. $10,000 All Other Losses
Conditions: The following forms will be attached at policy issuance:
Special Conditions. 1.Excludes Crime,Boiler&Machinery and all third party liability coverages.
2. EQSL is included to policy limits.
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 Acet Engineer Farrell Fatemi at 818-227-2289.
1ImC
Annual Premium: $2499947.00
S 2,200.00 Inspection /Audit Fee
$252,147.00 Annual Premium
Property Premium: $1239911.00
DIC $2,500,000 Primary $126,036.00
Marketing Summary:
Carriers: 1. Affiliated FM - Quoted
2. Great American - Can not write the All Risk, quake $59,100 per mil, $147,750
3.Westchester Fire- must have Terrorism Excluded
4. RLI- Declined cannot write quake/flood
5. Royal Indemnity- Declined because of age and losses
6. Empire Fire & Marine - Could not meet June 1, deadline
7. Commonwealth - Could not compete with current rate
CITY OF PALM SPRINGS
PROPERTY COVERAGE QUOTATION
Affiliated FMInsurance Company
1.TERMS AND CONDITIONS:
A. Policy Term:
July 1,2002 to July 1,2003
B.NAMED INSURED:
City of Palm Springs,and its wholly or majority owned subsidiaries and any interest which may now exist or hereinafter
be created or acquired which are owned,controlled or operated by any one or more of those named insureds.
C.POLICY LIMIT:
This company's liability will not exceed the respective Limits of Liability shown elsewhere for the coverages involved.
However,in no event will the company's total limit exceed$180,000,000 as a result of any one loss,disaster or occurrence,
regardless of the number of perils,coverages or locations involved.
D.INSURANCE PROVIDED:
All risks,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:
As per schedule on file dated 05/09/2002
E.SUB-LIMITS:
The following sub-limits will apply on a per occurrence basis and are inclusive of,not in addition to the above limit(s).The
annual aggregate limit of this company's liability for loss or damage caused by Earth Movement and Flood will not exceed
the annual aggregate limit as specified below in any one policy year.The policy year will begin at the inception date of this
policy and be concurrent with the anniversary dates of this policy.
1. $2,500,000 Earth Movement
2. $2,500,000 Flood
3. $1,000,000 Off Premises Power
4. $2,000,000 Extra Expense
5. $100,000 Acts of Terrorism(Annual aggregate limit in any one policy year)
F.EXTENSIONS OF COVERAGE SUB-LIMITS:
The following sub-limits will apply on a per occurrence basis and are inclusive of,not in addition to the above limit(s).
1. $100,000 Fire Fighting Materials and Expenses
2. $100,000 Professional Fees
3. $100,000 Expediting Expenses
4. $100,000 Trees,Shrubs,Plants and Lawns limit$1,000 per item
5. $250,000 Pavements and Roadways
6. $50,000 Land and Water Clean Up Expense
7. $50,000 Installation Floater
8. $500,000 Newly Acquired Property
9. $500,000 Unnamed Locations Coverage
10. $250,000 Fine Arts
it. S250,000 Accounts Receivable
12. $250,000 Valuable Papers and Records
13. $100,000 Electronic Data Processing,Data and Media
14. $5,000,000 Coverage A: Demolition&Increased Cost of Construction
Included in A: Coverage B:Demolition&Increased Cost of Construction
15. $500,000 Errors and Omissions
16. $100,000 Transit Coverage
The above Extensions of Coverage Sub-limits will be the maximum payable for property damage and business interruption
(if applicable),or any combination thereof.
With respect to Items:
7.Installation Floater
8.Newly Acquired Property
9.Unnamed Locations,the specified sub-limit is the maximum amount payable in any one loss or occurrence and can not
be combined with any other limits or sub-limits in this policy.
G.DEDUCTIBLE AMOUNT:
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 unless 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 occurs,subject to a minium
deductible amount of$50,000 per occurrence.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 interruption 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. $2,500 Electronic data Processing
5. $10,000 All Other Losses
H.SPECIAL TERMS AND CONDITIONS:
1.Vacancy Clause
Permission is given for the Insured to cease operations and for the following location(s)to remain vacant for more than 60
days,provided that the Insured maintains:
1)Fire protection; and
2)Watch and alarm service;
As existed prior to the discontinuance of normal operations.
As per schedule,if any.
2.Flood Exclusion
Coverage for the peril of flood, as provided by the Flood Endorsement attached to this policy,is excluded at any location
situated in:
1. Any flood zone or area designated by the Federal Emergency Management Agency (FEMA) as subject to a flood
frequency up to and including the 500 year frequency,or
2.Any flood zone or area for which FEMA has not yet determined the flood hazard frequency or has not yet classified or
designated as being in or out of a flood zone,or any area outside the United States.
The peril of flood is covered in an area protected by dams,levees,dikes,or walls which:
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a.Protect such areas from at least the level of the 500 year flood, and have no such openings or flood gates,and
b.Were built by and are either maintained or inspected by the Army Corps of Engineers.
3.Library Books.Periodicals,and Rare Books
Section G.,General Conditions, 14.Basic Valuation,of Form No.PRO AR 2100 is amended to include:
11.Library Books,Periodicals and Rare Books
a.Library Books and Periodicals will be valued at the lesser of:
1.The value designated for each book and periodical(including the cost of re-shelving and processing)as
shown in the declarations; or
2.The cost to repair or restore the article to the condition that existed immediately prior to the loss.
b.Rare Library books will be valued at the lesser of:
1. The cost to repair or restore the rare book on the schedule to the condition that existed immediately
prior to the loss.
2.The cost to replace the rare book; or
3.The value designated for the rare book on the schedule of Rare Books on file with this company,if not
scheduled,the value designated for each rare book as shown in the declarations.
In case of loss or damage to an article that is part of a pair or set,this company will pay the full amount of the value of such
pair or set only if:
a.The damaged article cannot be repaired or restored to its condition before the loss; and
b.The Insured surrenders the remaining article or articles of the pair or set to the company.
4.Historical Replacement Cost Wording
With respect to buildings which are declared by a local, state or federal authority to be of historical significance or of
historical value,such rebuilding,repairing or replacement shall be with material,workmanship processes,technologies and
designs publicly available within the current marketplace and shall not include the cost of creating outdated, archaic or
antiquated materials,workmanship,processes,technologies or design.
5.Acts of Terrorism
This Policy covers insured physical loss or damage caused by or resulting from Terrorism.
In any action,suit or other proceedings where the Company alleges that physical loss or damage is limited by this Additional
Coverage,th burden of proving that such physical loss or damage is not limited by this Policy shall be upon the Insured.
Section H.,Definition,of Form No.PRO AR 2100,is amended to include:
Terrorism is defined as any act,including but not limited to the use of force or violence and/or the treat thereof,of any
person or group(s) of persons, whether acting alone or on behalf of or in connection with any organization(s) or
government(s),committed for political,religious,ideological or similar purposes including the intention to influence any
government and/or to put the public,or any section of the public,in fear.
It is understood and agreed that the financial impact from the physical loss or damage caused by terrorist acts cannot be
carried by the general insurance industry alone.In the spirit of assistance,this policy continues to provide through the Acts
of Terrorism Additional Coverage, a limited amount of coverage for terrorist acts. However, City of Palm Springs (the
Insured),agrees to allow Affiliated FM Insurance Company to remove terrorism coverage from the policy,no earlier than
30 days following the availability of a government sponsored alternative risk transfer vehicle that covers acts of terrorism
or the anniversary date of this policy,whichever comes first.
I.Index of Forms:
The following forms are made part of this policy:
Title Form No. Edition
Declarations S-1 (7/02)
All Risk Property Coverage PRO AR 2100 (1/99)
Business Interruption Endorsement Extra Expense PRO EE 2260 (1/99)
Business Interruption Endorsement Rental Income PRO RI 2250 (1/99)
Business Interruption Endorsement
Gross Earnings Excluding Ordinary Payroll PRO GE 2210 (1/99)
Earth Movement Endorsement PRO EM 2300 (1/98)
Flood Endorsement PRO FL 2310 (1/98)
Off Premises Power Endorsement PRO OPP 2320 (1/99)
California Amendatory Endorsement 6488 (6100)
Application of Policy to Date and Time Recognition PRO DTR 2400 (11/00)
2. Special Ouote Conditions:
a.Excludes Crime,Boiler&Machinery and all third party liability coverages. (Boiler&Machinery quote is available)
b.If Boiler&Machinery is quoted and not ordered,Affiliated FM will not provide Joint Loss Agreements.
c. Coinsurance does not apply subject to receipt dated/signed statement of values and BI worksheet from insured and
acceptance of reported values by the Company.
it.EQSL included to policy limit
e. Sewer back-up included
I.Debris removal$5,000,000 or 25% of loss,whichever is greater.
g.EDP Equipment included under Personal Property(Includes electrical/mechanical breakdown)
It.Newly acquired property(120 days)
This quote does not address any coverage items not mentioned above or not provided for in the specified coverage forms.
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DISPLAY HISTORY INFO BY POLICY NUMBER - AFF PROPERTY
PAGE 0001
CITY OF FA1,M SPRINGS FOL# OOTD228 MOD 00
3200 E. TAHQVITZ CA14YONt44y POLICY EFF 07/01/99
PALM SPRINGS CA POLICY EXP 07/01/00'
PLEASE IDENTIFY CLAIM BY PLACING THE CURSOR UNDER CLAIM4 ********
CLAIM L3575 SYS: LOC 001.1 TYPE FIR--LOCATION
EVENT SEQ 001 STATID 45D'96 CAUSE SXPOSURE-FIRE
LOSS DATE 06/06/00 INDEX NO 0897$1-20 GROSS PAID 320690.80
ST arjs CLOSED NET PAID
CLAIM SYS LOC TYPE
EVENT SEQ STATID CAUSE
'Li5ss DATE INDEX NO GROSS PAID
STATUS NET PAID
CLAIM SYS' .LOC TYPE
EVENT SEQ STATID CAUSE
LOSS DATE INDEX NO GROSS PAID
STATUS NET PAID
PF1 LINQ PF2 NEXT VG PF3 PREY PC PF4 HISTORY BY CLAIM'#
PV5 KISTORY BY CLAIM* WITH REINSURANCE PF6 DOLLAR SUDO=Y BY LOSS
Sent By: PARTNERS SPECIALTY; 3105864750; May-30-02 4:40PM; Page 10/11
05/30/2002 12:bb Nta-tWj-nioa W.LvlvmLc Ln ...
DISPLAY HISTORY INFO BY POLICY NUMBER - AFF PROPERTY
PAGE 0001
CITY OF PALM SPRINGS POL# DOTD430 MOD 00
3200 E. TAkOUtTZ CANYON WAY POLICY EFF D7/01/00
PALM SPRINGS CA POLICY SXP 07/01/01
*kxxxxxnx* PLEASE IDENTIFY CLAIM BY PLACING TEE CURSOR UNDER CLAIM#
CLAIM L3602 SYS' LOC 00.18 TYPE FIRE-LOCATION
EVENT SEQ 001 STATID 45290 CAUSE EXPOSURE--FIRE
LOSS DATE '07/26/00 =EX NO 000000.00 GROSS PAID 28309.29
STATUS CLOSED NET PAID'
CLAIM SYS LOC TYPE
EVZ"NT SEQ STATID CAUSE
LOSS DATE INDEX NO GROSS PAID
STATUS NET PAID
.'CLAIM SYS. LOC TYPE
EVENT SEQ STATID CAUSE
LOSS DATE ' INDEX NO GROSS PAID
STATUS NET PAID
PF1 LINQ PF2 NEXT PG PF3 PRSV PG PF4 HISTORY BY CLAIM#
PFS HISTORY BY CLAIM* WITH REINSURANCE PF6 DOLLAR SUMMARY BY LOSS
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, 2002 to July 1, 2003
Insurance Carrier: Ace USAIWEST Westchester Fire (A+ IX) Admitted
Coverages: Special Airport Liability
Limits:
Bodily Injury & Property Damage $50,000,000 CSL each aircraft/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 Hangarkeepers $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/$50,000,000
Fire 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 required Included
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
Three Year Policy Endorsement (Offered subject to a annual review)
Premium: $42,649.00 War Coverage: $31,784.00
Ah /�.
Boiler & Machinery
Named Insured: City of Palm Springs
Policy Term: July 1, 2002 to July 1, 2003
Insurance Carrier: Travelers Indemnity Company (A+XV) Admitted
Limits: $40,000,000 Per Accident
Sublimits: Ammonia Contamination: $250,000 .
Brands & Labels $250,000
Business Income: $8,000,000
(No coverage at Co-Gen Plants)
Spoilage: $250,000
Off Premises Service Interruption: $250,000
Ordinance or Law: $250,000
Newly Acquired Locations: $1,000,000 90 days
Error in Description: $1,000,000
Expediting Expense: $250,000
Extra Expense: Included with BI
Hazardous Substance: $250,000
"Media" $25,000
Water Damage: $250,000
Deductibles: $5,000 All Other Objects
$25,000 Co-Generation Plants
Business Income: 24 Hours
Extra Expense: 24 Hours
Spoilage: 10% of loss w/min $5,000
Off-Premises Service Interruption: 24 Hours
Ammonia Contamination: $5,000
Premium: $28,913 Annual Premium
Crime Bond
Named Insured: City of Palm Springs
Policy Term: July 1, 2002 to July 1, 2003
Insurance Carrier: Hartford Fire Insurance Company (A+IX) Admitted
Coverages 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)
Premium: $3,971
Aircraft Liability
Named Insured: City of Palm Springs
Policy Term: July 1, 2002 to July 1, 2003
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: $5,000,000/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 Cancelation 60 days Non-Payment 10 days
Date Exclusion & Writeback
Annual Premium: $4,897.00 War Coverage: $648.00
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Public Entity Excess Liability
Named Insured: City of Palm Springs
Policy Term: July 1, 2002 to July 1, 2003
Insurance Carrier: Insurance Company of the State of Pennsylvania (A++XV) Admitted
Coverages: Special Excess Liability for Public Entities
Limits: $10,000,000 each occurrence or Wrongful Act or Employee Benefits Wrongful Act;
$10,000,000 separate annual aggregate for Products Completed Operations, Errors
& Omissions Liability (Other than Personal Injury Offense Wrongful Acts)
and Employee
Benefit Liability, inclusive of Loss
Adjustment Expenses and Costs.
Deductibles: $300,000 retained limit each Occurrence or Wrongful Act or Employee
Benefits Wrongful Act- inclusive of loss adjustment expenses and costs.
Conditions: 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.
Premium: $227,640.00 (Rate: Adjusted at a rate of 5.1950 per capita based on a
estimated population of 43,819)
Excess Liability
Named Insured: City of Palm Springs
Policy Term: July 1, 2002 to July 1, 2003
Insurance Carrier: Royal Surplus Lines Insurance Company (A+Vx) Non-Admitted
Coverages: Excess Liability for Public Entities
Limits: $10,000,000 excess $10,000,000 excess underlying and/or SIR
Deductibles:
Conditions: Coverage Unimpaired Aggregate, Service of Suit Clause
Subject to review and acceptance of underlying terms.
Exclusions: Physicians, Surgeons, Dentists Exclusion, War or Terrorism,
Employment Practices Liability,Automobile Racing.
Premium: $105,415.00
$ 3,425.99 State Taxes & Fees
$108,840.99 Annual Premium
Marketing Summary:
Carriers: 1. Discover Re - Do not use a Public Entity Form- greatly reduced coverages.
2. Columbia Casualty-Declined to quote - pricing
3. Westchester Fire - Excess only- must have Terrorism Excluded
4. Munich-American Risk- Could not meet June 1 deadline.
5. Crum& Forester- $1 mil total capacity- no re-insurance.
6. Genesis - Quoted $1 mil/$2 mil limit w/$300,000 SIR at $325,725.
7. Zurich Re- Could not compete at this level.
ICRMA
Executive Summary
The insurance industry faced troubling issues prior to the events of September l I". The second
quarter 2001 financial results showed record low investment yields, record high natural catastrophe
losses, declining policyholder surplus, and continued high loss cost trends and adverse loss
development from prior accident years. The first half 2001 increased premium rates were not
enough to show a material improvement relative to the prior year. The catastrophic events of
September Wi further pushed the industry into a chaotic state with significant changes
implemented immediately in the last quarter of 2001 with lasting effects into 2002 and beyond,
including;
Restricted capacity. Property and Aviation are realizing the most drastic constriction of available
coverage limits. The carriers writing excess liability appeared to have the capacity, but were not
liberal in offering their full line. By year-end, statutory excess workers compensation limits were
offered by only a handful of markets nationally and fewer, in California.
Return to the basics of underwriting. Underwriters are requiring detailed submissions and are
performing extensive analysis before offering coverage proposals. Without sufficient lead-lime and
complete information, underwriters are declining to make an offer of coverage.
Investment returns no longer supporting poor underwriting results:
"Underwriting is going to be more important because interest rates are going to be lower and we
won't have investment returns to fall back on. In fact, they may be at an all-time law," lamented
Dan Carmichael,president and chief executive officer of Ohio Casualty.
With new capital entering the industry, some question if underwriters will stay the course:
"When the going gets tough and the markets soften, middle-market companies throw underwriting
out the window and give business away," said Edmund Kelly, chairman, president and CEO of
Liberty Mutual Group. "The industry has destroyed more capital through mismanagement than
terrorists ever did. "
Flight to quality. Buyers consider financial standing of insurer/reinsurer paramount to their decision
to bind coverage. In addition, third parties such as banks may influence customers' choice of insurer
by accepting only carriers having an acceptable security rating. Increased demand for insurance at a
time when rates are high will benefit insurers/reinsurers with the highest security rating.
Increased pricing. Where industry-wide premiums had already increased 10% at June 30, 2001,
businesses were seeing significantly higher premiums by year-end. For 2002, Fitch Rating has
projected a 20% increase in net written premiums by commercial lines carriers and a 30% increase
in net written premiums in the reinsurance sector. In specific industries and lines of business, there
are entities facing triple digit increases.
Coverage restrictions. Insurers are mandating increased deductibles, policy exclusions, and sub-
limits for certain exposures. Terrorism is the coverage most broadly excluded. Following
Am
Trealy Capacity: Several large retail insurers who exhausted their treaty insurance are only
willing to offer either a substantially reduced net line capacity or have tilled their treaty holes
and once again are offering their capacity on select occupancy classes. The cost for replacement
capacity is at multiples of expiring rates while, at the same time, terms and conditions of cover
are more restrictive with exposures such as Terrorism being either excluded entirely or severely
sub-limited. These increased costs and coverage restrictions are being passed along to the
ultimate, base-line consumer—the insured.
Facultative Capacity: In an understandable "flight to quality," many retail insurers have limited
their purchase of facultative reinsurance to only the most financially stable reinsurance-
providers meeting stringent "security acceptance" measures. In many instances this position has
forced retail insurers to offer only `het line" capacity as pricing for quality reinsurance is either
prohibitive or the capacity is simply not available from qualified resources. As with treaty
capacity, carriers purchasing facultative reinsurance on either a risk exposure specific basis or
for an internal layer, are passing on the significantly higher costs and imposing coverage
restrictions such as Terrorism into the policy.
Risk Quality & Catastrophic. Exposures: Retail and ieinsurer capacity authorizations are now,
more so than ever before, directly tied to the quality and availability of the underwriting data
presented to carriers for their review and consideration. Similarly, the amount of catastrophic
exposure (i.e., California earthquakes; Japanese earthquakes; coastal wind; etc.) plays a
substantial role in capacity authorizations as capacity for these perils in the retail and
reinsurance community has been reduced.
The availability of "Blanket" limit capacity has been virtually eliminated following the September
Ilth attack. Although this capacity was dwindling before the World Trade Center tragedy, it
abruptly disappeared in the wake of the disaster. Similarly, large loss limit quota share programs are
exceedingly difficult if not impossible, in some cases to achieve as both insurers and reinsurers seek
to isolate their capacity lines to those areas where they feel most comfortable (i.e., Primary, Excess
of loss, etc.). As such, large quota share placements are being replaced in favor of layered structures
where$500MM to $lBillion of capacity is stretching the limits of the market for many accounts.
�e��za/!llrtd'envaittng�l�sr4es
While all underwriting issues have been subject to increasing scrutiny as the market has hardened
since September 11, 2001, in the current market the following topics are of primary concern:
• Underwriting Data: The need for comprehensive and accurate underwriting data is more acute
than ever. Accurate reporting of exposures is absolutely essential as carriers are likely to either
deny or substantially limit their participation on risks where an accurate picture of the exposure
base can not be ascertained. Time element exposures represent a particular focal point as
underwriters now request Business Interruption worksheets on a location-by-location basis.
Without all of the required underwriting information, the carrier will not quote.
• Manuscript Forms: Broker manuscript forms are under review by many carriers and several
insurers are now mandating utilization of company forms as a condition for capacity to be
authorized This has caused greater deliberation in negotiating policy wording jar layered or
AO
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Since September 11, 2001, the marketplace continues to change and evolve. The following
summarizes the more significant developing issues and trends (hat are re-defining the Property
Insurance Marketplace:
Insured loss Overview
Overall, loss projections and formal business positions of most major insurers and reinsurers are
continuing to evolve as we move farther into 2002- Estimates of the total cost to the insurance
industry have varied Significantly amongst insurers and reinsurers alike. While initial loss
projections suggested the World Trade Center tragedy may result in a total loss in excess of $40
billion, over the past several weeks some have projected a range of between $30 billion and $70
billion. Insured commercial property and business interruption losses are estimated at $18.5 billion
(Morgan Stanley Rescatch-November 28, 2001).
Several carriers' originally estimated loss figures have migrated upwards significantly. Carrier
losses from the World Trade Center tragedy could further increase substantially if the courts rule
against Swiss Ra's request that the event be considered one occurrence and not two occurrences.
Further, as other insureds not subject to Ground Zero loss begin to report time element and
contingent time element losses the total property insurance loss will continue to grow. As such,
estimates of the aggregate loss as well as individual insurers'/reinsurers' share of the World Trade
Center loss are still substantially speculative and will remain so for the short term future as insurers
more fully assess their liabilities.
precing
Prior to September Il'i', property rating was hardening substantially. Current market conditions
rating certainly appear to be the hardest the global property arena has ever witnessed. For insureds
with catastrophic exposures, insurance carriers are relying on complex modeling to determine
adequate program rating. Many insurers and reinsurers alike are refusing to release capacity for
risks where such rating can not be done. In addition, many carriers will not release quotations any
earlier than 30 days prior to renewal due to catastrophic exposure concerns.
"Expiring" base rating is no longer a "benchmark" for pricing; most major accounts are being
totally re-underwritten. New business opportunities are now being quoted on a case-by-case basis.
In the post-disaster market, rate increases have vaned widely from 301/b - 300%. Coverage areas not
directly affected by the World Trade Center events, such as catastrophe earthquake and coastal
windstorm, are also experiencing dramatic rate increases greater than were imposed pre-September
IIth as carriers attempt to re-price their entire book of business in preparation of 2002 treaty
renewals.
Capacity
All major insurers and reinsurers have readjusted their capacity positions. Where incumbent carriers
have provided substantial positions in expiring programs, significant capacity reductions are being
encountered at renewal as insurers have lost both facultative and treaty support.
The availability of both retail and reinsurer capacity can be summarized as a function of three
primary driving factors: adequate /remaining treaty capacity of major retail insurers following the
September 11 d' tragedy, the availability of facultative reinsurance, and ultimate risk quality.
Am
Congress's failure to pass legislation that would help insurers handle future terrorism claims, the
NAIL has agreed on language for terrorism policy exclusions filed by ISO. Per ISO's December 21,
2001 press release, "After consulting with insurance regulators, ISO subsequently amended its
filing to narrow the application of the terrorism exclusion by establishing a $25 million threshold
for insured damage from an incident of terrorism for the exclusion to take effect. The threshold does
not apply to cases of terrorism using nuclear, chemical, or biological materials. ISO's terrorism
exclusion endorsement for liability coverage provides an additional threshold for serious physical
injury to 50 or mote persons. If either threshold is exceeded, the exclusion would be invoked and
the policy would not provide coverage for any loss."
• As of January 7, 2002, 36 states (including California) and two jurisdictions have said that they
will approve optional exclusions of terrorism risks in commercial insurance polices, per AM
Best.
New Capital to industry. Increased pricing, restrictive terms and a demand for capacity has
attracted approximately $24 billion of new capital to the marketplace. Approximately $7 billion
capital was created by the Bermuda marketplace as noted by chart below:
1,600,0M,000 ■ White Mountain Insurance
1
•20(),000,ow Group,Ltd.
y 000 0w OOD a Arch Capital Group,Ltd.
t
800,000,000 ,�5� ❑ Endurance Specialty
Insurance,Ltd,
600,ow,000
El DaVincl Reinsurance,Ltd.
400,000,000
200pOOO,000 ■ Axis Specialty,Ltd.
0 a Allied World Assurance Co.,
Targeted New Capital Ltd.
While the overall insurance industry appears financially well prepared to respond to this
catastrophe, the fiscal solvency and security of individual insurers will bear watching on a case-by-
case basis and some insurance lines, most notably Property, Aviation, and Workers' Compensation,
will be particularly hard-hit. But with challenge comes also creativity; approximately $24 billion of
new capacity has entered the industry and product innovation will provide new solutions of lasting
duration.
Furthermore, now more than ever, client and broker relationships will become the driving force
that leads to the best pricing and product that is available in the marketplace. Clients need to
brace for dramatic increases in most coverage lines with the understanding that the trend will,
hopefully, be short-lived.
Property Insurance
The Property Insurance Market continues to slowly recover from the events of September 11, 2001.
As a result of capacity reductions by most carriers in preparation of their 2002 treaty renewals, the
upper limits of Maximum Foreseeable Loss estimates upon which many coverage programs were
designed are now unavailable to many insureds.
Am
quota shared placenreitrs due to the znrr-eased potential for rtun Cnrzcurrencv of policy wordzizg
which may need to be accepted in order to complete large program limit requuemenls.
• Subhnzits: All traditional sublimity are under review with insurance carriers seeking legitimate
rationale to support high limits requested. Time Element exposures continue to be a focal point
with Contingent Business Interruption and are now receiving special attention Other problem
areas are Civil Authority, Terrorism and Cyber Liability. In most instances, Terrorism, Cyber
Liability and Mold are being completely excluded by the carriers.
• Deductibles/SIRS: Carriers are pressing insureds to increase retentions across the board by
issuing coverage authorizations with significantly higher deductibles and broader exclusions.
ICRMA is extremely fortunate in light of the current marketplace to have one year remaining on a
three-year rate guarantee program with an estimated premium of$971,575. There are currently no
markets that were willing to quote this risk against the incumbent, Insurance Company of the State
of Pennsylvania. All carriers suggested that they would have higher retentions, much higher
premiums, and were not interested in quoting the risk just as an exercise when they could not be
competitive.
Although 1CRMA's excess liability coverage has been renewed, it may be interested to know that
increases in general liability rates are now running an average of 100% for most insureds with good
to moderate loss records and, that is only for this year. Additionally, retentions are also increasing
dramatically. These increases are purely market driven and any increase in exposures an insured
might experience or bad loss experience will drive renewals up even more. Coverage enhancements
that, in the past, were offered gratis are now being underwritten and priced accordingly. Excess
casualty generally follows the underlying layers in terms of increases except where minimum
premiums apply per million and these are being strictly enforced. Placements with very high limits
are having difficulty filling in the top layers.
ICRMA Coverage Recommendations
1. Complete final year of coverage with Insurance Company of the State of Pennsylvania for
excess liability coverage. The total estimated premium is $971,575 and the brokerage fee is
$150,000 for a total cost of S1,121,575.
2. Revise applications and information concerning risk exposures by December of 2002 for an
early start of marketing in a very hardened and depressed market.
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Weighted Risk Percentage Worksheet
PRlNL: 70%-30%
Actual Adjusted Adjusted Capped Weighted
2001 SIR 2001 Payroll Loss Risk
C SIR Total Factor Payroll Pcta. Pctg_ Petp
Alhambra 250k $21,346,929 85.4% $18,230,277 5.5420/a 10.295% 6.9580A
Arcadia 500k $18,296,615 60.7% $11.106,045 3.376% 2.4900/6 3.110%
Azusa 500k $18.529,521 60.7% $11,247,419 3.419% 0.015% 2.398%
Baldwin Park 250k $10,516,800 85.4% $8,981,347 2.7300,E 4.520% 3.267%
Bell look $5,655,200 119.7% $6.769,274 2.058% 3.8960/D 2.609%
Chino 250k $19,105,052 85.4% $16,316,714 4.960% 2.256% 4.149%
Colton 500k $19,126.353 60.7% $11,609,696 3,529% 3.835°/h 3.621%
El Monte 250k $26,782,244 85.4% $22,872,036 6.953% 4,615% 6.252%
El Segundo 400k $20,409,248 68.6% $14,000,744 4.256% 2.299% 3.669%
Glendora 300k $11,996,238 78.8% $9,453,036 2.874"/, 2.319% 2.7070A
Hawthorne 250k $19,631,360 85.4% $16,765,173 5.096% 3.474°/a 4.610%
Hermosa Beach 250k $8,724,539 85.4% $7,450,756 2,265% 2.263% 2.264%
Huntington Park 250k $11,305,701 85.4% $9,655,069 2.935% 11.716% 5.569%
Indio look $7,711,588 119.7% $9,230,771 2.806% 3.747% 3.088%
Lynwood 200k $8,102,36B 93.6% $7,583,815 2,305% 8.818% 4.259%
Manhattan Beach 250k $16,193.388 85.4% $13,829,153 4.204% 5,387% 4.5599E
Monrovia 300k $15,289,924 78.8% $12,048,460 3.662% 0.087% 1690%
Monterey Park 250k $19,234,874 85.4% $16.426,582 4.993% 2.670% 4.296%
Palm Springs 300k $22,013,638 78.8% $17,346,747 5,273% 2.3250% 4.389%
Redondo Beach 50ok $30,273,029 60.7% $18,375,729 5.68601, 3.5189/, 4.966%
San Fernando 250k $7,456,824 85.4% $6,368,128 1.9369U 1.699"/0 1.865%
South Gate 250k $19,585,307 85.4% $16,726,706 5.085% 4.391% 4.877%
Upland 500k $15.730,553 60.7% $9,548,446 2.903% 0,025% 2.039%
West Covina 250k $26,163,561 85.4% $22,343,681 6.792% 13312% 8.748%
Whittier 500k $24,190,555 60.7% $14,683,667 4.464°h 0.027% 3.133%
ICRMA Totals $423,312,397 n/a $328,968,472 100.0009E 100.000% 1 100.00m
Culver City 1,000k $39,328,187 37.7-A $14,826,726
Downey 1,000k $26,987,493 37.7% $10,174,285
Fullerton 1,000k $39,583,229 37.7% $14,922,877
Inglewood 1,000k $42,971,012 37.7% $16,200,072
Vernon 11000k $18,841,157 37.7% $7.103.116
Non-Risk Sharers Totals §767,711,078 S6
3027,076-
$59 $392,195,549
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1CRMA Liability Program Member Contributions 70-30 Worksheet
Actual Excess Adjusted Prof. Weighted Risk Calculated Actual Actual 01-02102-03
Payroll Insurance Payroll Services Rlsk Sharing 2002-03 2000 2001 2001-02 Pctg.
city Pctg. Premium Pctg. Premium Pctg. Premium PREMIUM Premium Premium Change
Alhambra 3.611% $ 48,150 4.648% $ 397417 6.96E%. $ 303,000 $ 390,568 $233,474 $271,951 43.62%
Arcadia 3.096% $ 41,270 2.832% $ 24,013 3.110% $ 136,256 $ 200,539 .t•3'$1'51413';;..':;t'$167,907, 19.43°h
r . . .
Azusa 3.135°A $ 41,795 2.866% $ 24,319 2.398% $ 104,279 $ 170,393 $117.539 $122,005 39.66%
Baldwin Park 1.779% $ 23,722 2.290% $ 19,419 3.207% $ 142,081 $ 186,223 $113.056 $123,474 50.01%
Bell 0.957% $ 12,756 1.726% $ 14,636 2.609% $ 113,467 $ 140,860 $83.345 $114.264 23.26%
Chino 3.232% $ 43,093 4.160% $ 35,278 4.149% $ 180,407 $ 258,778 $150,154 $164,628 57.19%
Colton 3.236% $ 43,144 2.960% $ 25,102 3.621% 3 157,458 $ 226,702 $124.782 $128.554 76.57%
Culver City 6.654% $ 88,709 3.780% $ 32,058 0.0000A $ - $ 120,767 $112,960 $109.827 9.96%
Downey 4.566% $ 60,873 2.594% $ 21,999 0.000% $ - $ 82,872 $88,365 $82,582 0.35%
El Monte 4.531% $ 60,410 5.832% $ 49,454 6.252°A $ 271,860 $ 381,724 $218,830 $24B,794 53.43%
El Segundo 3.4539/0 $ 46,035 3.670% $ 30,272 3.8690A $ 169,646 $ 235,853 $169,151 $211.854 11.33°A
Fullerton 6.6DT% S 89,284 3.805% $ 32,266 0.000% $ - $ 121,550 � 70 U24`s '$1 I5,114 5.59°A
��,•s... .+ .,
Glendora 2.030% $ 27,059 2.410% $ 20,439 2.7070A $ 117,727 $ 166,226 $117,443 $121.808 35.64%
Hawthorne 3.321% $ 44,281 4.275% $ 36,249 4.610% $ 200,464 $ 280,994 $158,686 $182.689 53.81%
Hermosa Beach 1.4760/a $ 19,679 1.9o0% $ 16,110 2.264% $ 98,467 $ 134,266 $104,189 $126.914 5 79%
Huntington Park 1.913% $ 26,501 2.462% $ 20,876 5.569% $ 242,192 $ 288,669 $138,382 $186.700 54.56%
Indio 1.305% $ 17,394 2.354% $ 19,959 3.088% $ 434,304 $ 171,667 $123,603 $135.302 26.87%
Inglewood 7.270% $ 96,926 4.131% $ 36,028 0.000% $ - $ 131,963 $151,185 $145.247 -9.15%
Lynwood 1.371% $ 18,276 1.934% $ 46,398 4.2590A $ 186.211 $ 219,886 '��;i$.10.7i639 as?,$>57,301 39.79%
,Manhattan Beach 2.740% $ 36,526 3.526% $ 29,901 4.559% $ 198,241 $ 264,668 $170,813 $204.373 29.50%
Monrovia 2.587% $ 34,488 3.072% $ 26,051 2.5900A $ 112.623 $ 173,162 $147,269 $146.374 18.30%
Monterey Park 3.254% $ 43,386 4.188% $ 35,517 4.2960A $ 186,842 $ 265.746 $189.706 $193,280 37.49%
Palm Springs 3.724% $ 49,654 4.423% $ 37,507 4.389% $ 190,845 $ 278,006 NIA $182.349 52.46%
Redondo Beach 5.122% $ 68,284 4.685% $ 39,732 4.966% $ 215,940 $ 323,956 $231,949 $237.832 35.210A
San Fernando 1.262% $ 16,820 1.624% $ 13,769 1.855% $ 81,087 $ 111,676 $80.249 $87,323 27.89%
South Gate 3.314% $ 44,179 4.265% $ 36,166 4.8770A $ 212,072 $ 292,417 $282,711 $290,771 0.57%
Upland 2.661°A $ 35,482 2.435% $ 20,646 2.0390A $ 88,685 $ 144,813 $120,127 $123,283 17.460A
Vernon 3.188% $ 42,498 1.811c/o $ 16,358 0.0000A $ $ 57,856 $59,354 $59.410 -2.620A
West Covina 4.4260/a $ 59,016 5.697% $ 48,311 8.748% $ 380,426 $ 487,762 $281,955 $345.971 40.9801Q
Whittier 4.093% $ 54,664 3.744% $ 31,749 3.133% $ 136,233 1 $ 222,646 1 $169,248 $164.520 35.27%
ICRMA
EXCESS LIABILITY PROGRAM PROPOSAL
Named Insured: Independent Cities Risk Management Authority
Policy Term: July 1, 2002 to July 1, 2003
Insurance Carrier: Insurance Co. of the State of Pennsylvania (Admitted)
A.M. Best's Rating: A++ (XM
Coverage Provided: Excess Public Entity Liability to include General Liability,
Automobile Liability, Employment Practices Liability,
Public Officials Errors & Omissions and Police
Professional Liability
Limits: $19 Million
Retained Limit: Excess of ICRMA's $1 million self-insured retention
Form: Following Form Specific Excess Liability - Occurrence
Terms and Conditions: • Defense outside limits of liability
• Completed supplemental application required on
dam/reservoir and bus/transit exposures
• $10,000,000 sublimit provided for Electromagnetic
Field Liability for the City of Fullerton
• Delete exclusions Y condemnation/inverse
• Delete exclusion X subsidence
• Delete exclusion Z dam failure
• Delete exclusion AA AIDS
• Final Year of Three-year rate guarantee subject to no
material change in exposure or an increase of 15% or
more in payroll and loss ratio does not exceed 50% at i
prior to policy anniversary
• Confirmation of no known pollution sites '
A copy of the policy is attached.
Projected Payroll: $591.083,475
Annual Installment: $1,121,575 (includes Broker's Fee)
Am
K3? M
INDEPENDENT CITIES RISK
MANAGEMENT A 'T ORIT'Y
PROPERTY INSURANCE PROPOSAL
JULY 19 2002 TO JULY 19, 2003
Presented by: ;
William S. Deeb, Relationship Manager
Noel Silverman, Relationship Specialist
Aon Risk Services Inc. of Southern California
707 Wilshire Blvd., Suite 5500
Los Angeles, CA 90017
(213) 630-3210
Acw
Independent Cities Risk Management Authority
Liability Insurance Program
Marketing Summary
Liability Program
A.M. Best =
Carder' Rating ::-Response. r -: Pietriiffm
C.V. Starr(Insurance A++ (XV) Final Year of Three-year rate guarantee $971,575
Company of the State of subject to no material change in exposure or
Pennslyvania) an increase of 15% or more in payroll and
loss ratio does not exceed 50%at prior to
policy anniversary
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INSURANCE BINDER
CALIFORNIA AUTOMOBILE PHYSICAL DAMAGE PROGRAM
Account Name: City of Palm Spring
Mailing Address: 3200 E. Tahquitz Canyon Way, Palm Springs, CA 92262
Binder Term: 7/l/02 to 10/1/02
Policy Term: 7/l/02 to 7/1/03
Coverae"imits/D ed ucti bl e:
Coverage: Automobile/Mobile Equipment Physical Damage
Including Comprehensive and Collision
Limit(s): 'Values Reported $5,388,350
(Per Schedule on Pile)
Deductible: $5,000
Annual Premium: $25,487
Instructions to Company:
Bind Coverage
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With Royal Insurance Company of America
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Date: I
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Authorized Representative:
This Binder R cJjecnve for the perrod seI ford?above bul vball cease al suclr rune pnl,�7,may be issued
CAPP
2002-2003 Program Summary
Name Deductible Values Total Base Hate Total PremlUm Rate Collision Ohly Coll,Only Premium
City of Alhambra $5,000 $3,119,811 0.473 $14,757 0.454 $14,164
$10,000 0,43 $13,415 0.413 $12,885
$25,000 0.25 $7,800 0.202 $6,302
City of Arcadia $5,000 $4,018,912 0.473 $19,009 0.454 $18,246
$10,000 0.43 $17,281 0.413 $16,598
$25,000 0.25 $10,047 0.202 $8,118
City of Colton $5,000 $4,536,627 0.473 $21,458 0.454 $20,596
$10,000 0.43 $19,507 0.413 $18,736
$25,000 0.25 $11,341 0.202 $9,164
City of Downey $5,000 $6,054,000 0.473 $28,635 0.454 $27,485
$10,000 OA3 $26,032 0.413 $25,003
$25,000 0.25 $15.135 0,202 $12,229
City of Fullerton $5,000 $6,640,994 0.473 $40,872 0.454 $39,230
$10,000 0.43 $37,1561 0.413 $35,687
$25,000 0.25 $21,602 0.202 $17,455
City of Hawthorne $5,000 $4,131,394 0.473 $19,541 0.454 $18,757
$10,000 0.43 $17,765 0,413 $17,063
$25,000 0.25 $10,328 0.202 $8,345
City of Hermosa Beach $5,000 $2,545,938 0.473 $12,042 0.454 $11,559
$10,000 0.43 $10,948 0.413 $10,515
$25,000 0,25 $6,365 0.202 $5,143
City oflndio $5,000 $2.234,593 0.473 $10,570 0.454 $10,145
$10,000 0.43 $9,609 0.413 $9,229
$25,000 0.25 $5,5B6 0.202 $4,514
City of Monrovia $5,000 $5,363,013 0.473 $25,367 0.454 $24,348
$10,000 0.43 $23,061 0.413 $22,149
$25,000 0.25 $13,408 0.202 $10,833
City of Monterey Park $5.000 $1,841,633 0.473 $B,711 0.454 $8,361
$10,000 0.43 $7,9191 0,413 $7,606
$25,000 0.25 $4,604 0.202 $3,720
M onterey Peninsula Air ort Auth o rity $5,000 $847,674 0.473 $4,009 0.454 $3,848
$10,000 0.43 $3,645 0.413 $3,601
$25,OD0 0.25 $2,119 0.202 $1,712
City of Palm Springs $5,000 $5,388,350 0.473 $25,467 0.454 $24,463
$i0,000 0.43 $23,170 $22,254
$25,000 0.25 $13,471 0.2140.413 $10,B84
CAPP
2002-2003 Program Summary
ERedondoeach $5,000 $5,106,991 0473 $24,156 0.454 $23,186
$10,000 043 $21,960 0.413 $21.092
$25,000 0.25 512,767 0.202 $YD,316
$5,000 $2,815,000 0473 $13,315 0.454 $12,780$10,000043 $12,105 0.4Y3 $Y1,626525,000 0.25 $7,038 0.202 $5,68fi$5,000 $15,381,700 0.473 $76,755 0.454 S73,833
$Y0,000 0.43 P0,141 0.413 $67,526
$25,0001 j 0.251 $42,454 0.202 $35,071
Total $5,000 Ded. $344,685 $331,000
Total $YO,OODDed. $294,207 $282734
Total $25,000 Ded. $184,066 $149,494
'City Purchases Rental Reimbursement Coverage-$2,500 per dayl$50,0 0maximum. $4,000 Additional Premium Included.
Au Ihomed Signature Date
RESOLUTION NO.
OF THE CITY COUNCIL OF THE CITY OF PALM
SPRINGS, CALIFORNIA, APPROVING 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 PHYSICAL DAMAGE (CALEASE) INSURANCE.
WHEREAS the City's, Airport Liability, Aero Squadron Aircraft, All-Risk Property,
Earthquake/Flood (Primary Level), Crime, Boiler & Machinery, General Liability,
and Auto Physical Damage (CaLease) Insurance coverages expire at midnight on
June 30, 2002; and
WHEREAS the City of Palm Springs joined the Independent Cities Risk
Management Authjority (ICRMA) on July 1, 2001; and participates in ICRMA's Auto
Physical Damage Insurance Program in addition to the General Liability Insurance
Program; and
WHEREAS 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 to solicit insurance proposals from qualified
carriers upon renewal of the City's policies; and
WHEREAS the City's Insurance Broker of Record provided insurance quotations
for the City's Airport Liability, Aero Squadron Aircraft, All-Risk Property,
Earthquake/Flood (primary level), Crime, Boiler & Machinery on June 4, 2002, and
ICRMA provided insurance quotations for the City's General Liability and Auto
Physical Damage (CaLease) on June 12, 2002.
NOW THEREFORE BE IT RESOLVED by the City Council of the City of Palm
Springs, approve the following insurance coverage renewals:
COVERAGE FROM DAVIS&GRAEBER Premium 7/1/02 throw h 6130/03
1)Quake/Flood Primary Level Premium $126,036
Insurance Company Affiliated FM Insurance Co.
Best's Rating A+XV
Deductible 5%of Values/$25,000 Minimum
Limits $2,500,000
2)A&Risk Property Ins.Premium $123,911
Plus Loss Control Audit Fee $ 2,200
Insurance Company Affiliated FM Insurance Co.
Best's Rating A+XV
Deductible
$10,000
Property Schedule/Limit of Coverage $190,144,504
Continued: FROM DAVIS &GRAEBER Premium 7/1/02 through 6/30/03
3)Airport Liability Insurance Premium $42,649
Insurance Company ACE USA
Best's Rating A IX
Deductible $1,500
Limits $50,000,000
4) Boiler/Machinery Premium $28,913
Insurance Company Travelers
Best's Rating A+XV
Deductible $25,000/Cogen;$5,000/AII other
Limits $40,000,000
5)Crime Insurance Premium $3,971
Insurance Company Hartford Fire Insurance Company
Best's Rating A+XV
Deductible $1,000
Limits $1,000,000
6)Aero Squadron Insurance Premium $4,897
War Coverage $ 648
Insurance Company ACE USA
Best's Rating A IX
Deductible $500
Limits $5,000,000
COVERAGE FROM ICRMA Premium 7/1102 through 6/30/03
7)General Liability Premium $278,006
Insurance Company Independent Cities Risk Mgmt Authority
Self-Insured Retention $300,000
Limits of Coverage $20,000,000
8)Auto Physical Damage Premium $25,487
Insurance Company Royal Insurance(through ICRMA)
Best's Rating A VIII
Deductible $5,000
Limits $5,388,354
TOTAL $634,518
ADOPTED this 19th day of June, 2002.
AYES:
NOES:
ABSENT:
ATTEST: CITY OF PALM SPRINGS, CALIFORNIA
By
City Clerk City Manager
REVIEWED &APPROVED AS TO FORM
I0Z