TITLE
Recommendation to authorize City Manager to purchase excess workers' compensation insurance for the period of July 1, 2006 through July 1, 2007, from the California State Association of Counties and California Public Entities Excess Insurance Authority (CSAC-CPEIA), through Driver-Alliant Insurance Services, for a total premium of $374,221; and
Authorize City Manager to execute the Memorandum of Understanding (MOU) between the City of Long Beach and the California State Association of Counties Excess Insurance Authority to join the Joint Power Authority (JPA) for excess workers' compensation insurance placement. (Citywide)
DISCUSSION
Maintenance of excess workers' compensation insurance is important to protect
the City from the negative financial consequences of potential catastrophes
involving multiple employee injuries or deaths from occurrences such as major
fires, police activities, terrorist attacks and earthquakes during work hours.
In 2002, in order to receive the lowest rates available, the City entered into a Joint
Powers Agreement with California Public Entity Excess Insurance Authority
(CPEIA-JPA) to purchase excess workers' compensation insurance under the
California State Association of Counties' (CSAC's) insurance program for California
public entities. The California Association of Counties will be absolving the CPEIA.
This will allow all cities, school districts, and special districts to join the CSAC-EIA.
The restructure is occurring because of the large growth in the CPEIA requiring
CSAC to manage two JPAs and to give CPEIA members a greater voice in the
governance of the organization. There are no disadvantages to the City of Long
Beach in joining the CSAC-EIA as the City does not pool risk with the organization.
There are significant advantages to the City of Long Beach to join the CSAC-EIA
including voting rights and the opportunity to sit on EIA committees, which were
rights the City of Long Beach did not have in the CPEIA.
This year, CSAC-CPEIA has submitted a premium renewal estimation of $374,221,
with a $4 million self-insured retention. This represents a 13 percent increase
over last year's premium with a $1 million decrease in the City's self-insured
retention. Despite major workers' compensation reform, underwriters are still
reluctant to make significant reductions in excess premiums for public entities
because of the large police/fire and earthquake exposure. Our broker, Driver-
Alliant Insurance Services, marketed the City's line of insurance to several insurers
and all have declined to submit quotes because of current concentration of
insurance policies in the Los Angeles/Long Beach area and the significant
earthquake exposure.
This matter was reviewed by Principal Deputy City Attorney Barbara De Jong and
Budget Management Officer David Wodynski on June 12,2006.
TIMING CONSIDERATIONS
City Council action is requested on June 20,2006, to allow the City to officially bind
insurance coverage by the renewal date of July 1, 2006 and to allow the City to
enter into an MOU with the CSAC-EIA.
FISCAL IMPACT
The total premium cost is $374,221 for the period of July I, 2006 through July 1,
2007. Funding has been budgeted in the Insurance Fund (IS 390) and in the
Department of Human Resources (HR). There is no cost to enter into the MOU
with the CSAC-EIA. The costs of workers' compensation insurance are allocated
to all funds based upon department staffing and experience, with approximately 70
percent allocated to the General Fund.
SUGGESTED ACTION
Approve recommendation.
Respectfully Submitted,
KEVIN BOYLAN |
APPROVED: |
DIRECTOR OF HUMAN RESOURCES |
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GERALD R. MILLER |
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CITY MANAGER |