RES 77185 - Laserfiche WebLink

At the request of the Council in 1974, we placgd on their behalf a $5,000,000.00 Umbrella Liability policy. We continue to feel that these are minimum limits that a City today should carry., If anything, higher limits should be discussed. However, the market for Excess/ Umbrella Liability insurance is more devestated than the primary Lia- bility market. Because of continued surplus and reserve problems existing in the insurance industry, the availability of high limits of Liability ~s extremely scarce. Anytime a situation such as this does exist, the price can only go up. We have placed your $5,000,000.00 Umbrella Liability coverage with Maine Bonding and Casualty Company for an annual premium of $98,320.00. This is in comparison with their 1976 annual premium of $25,350.00. The present undesirability of Municipal Liability insurance coverage and the general unavailability of high limits of Liability contributes to this sharp increase. However, we can only urge you to continue to carry this coverage. To reduce the coverage would be unwise. In total, the City's Commercial Insurance Renewals for 7/1/77 to 7/1/78 is $270.620.00. This reflects a 260%.increase over premiums paid in 1976. To compare this with other Cities, the City of Hayward had a premium increase of 300% to 350% for the corresponding period. Other Cities nearby are experiencing the same sharp increases. We do not feel it appropriate to quote total premiums for other Cities without their permission, however we can only assure you that we have checked with other municipalities to be sure that we are in the proper premium range. in negotiating for your renewal coverage, we did encounter wide diver- gence in premium size. Originally, the renewal premium for the basic Special Multi-Peril policy was $200,300.00 at lower limits. Through negotiation, we were able to reduce the premium to its' present level. The Umbrella market was even more unstable. We received quotations of $195,000.00 and $225,000.00 for Umbrella Liability coverage only. In other words, it is possible that your total insurance renewal premium could have been $400,000.00. At the request of Council Members and Staff, we also looked into the possibility of a Self-Insured Program. In talking to experts in the field, total self-insurance for a City the size of Pleasanton would be unwise. The reserve pool that must be set up to fund a self-insured program would be more substantial than the premium currently being quoted. Also, a full-time loss prevention staff must be hired or contracted for. Loss adjustment services must also be contracted for. This would add another financial burden. The long term possible gain would be in the event the City had good experience in their self-insured program. Then, the pool would not have to be replenished each year in the same fashion that it is funded the first year. However, we must always be conscious that there could be a $2,000,000.00 - $5,000,000.00 claim successfully made against the City. In this event, the pool would be immediately depleted and an additional taxpayer burden would occur. This would raise serious Liability questions at Council level. (3)