REPORT/RECOMMENDATION TO THE BOARD OF SUPERVISORS
OF SAN BERNARDINO COUNTY
AND RECORD OF ACTION
May 24, 2022
FROM
VICTOR TORDESILLAS, Director, Department of Risk Management
SUBJECT
Title
Renewal of Primary General Liability Insurance for Specified Human Services Departments
End
RECOMMENDATION(S)
Recommendation
1. Approve the renewal of a primary general insurance policy for the following specified Human Services Departments, through Public Risk Innovation, Solutions, and Management, as recommended by Alliant Insurance Services, Inc., with $3 million coverage limit, inclusive of $500,000 self-insurance retention and a total premium cost of approximately $3,437,000, for the period of July 1, 2022 through July 1, 2023 as follows:
a. Human Services Administration (Including Transitional Assistance, Children and Family Services, and Children’s Network)
b. Department of Aging and Adult Services
c. Department of Child Support Services
d. Preschool Services Department
e. Veterans Affairs
2. Authorize the Director of Risk Management to execute the binding order on behalf of the County.
(Presenter: Victor Tordesillas, Director, 386-8621)
Body
COUNTY AND CHIEF EXECUTIVE OFFICER GOALS & OBJECTIVES
Operate in a Fiscally-Responsible and Business-Like Manner.
Pursue County Goals and Objectives by Working with Other Agencies and Stakeholders.
FINANCIAL IMPACT
Approval of this item will not result in additional Discretionary General Funding (Net County Cost). The total premium of approximately $3,437,000 will be paid from the Department of Risk Management’s (DRM) Human Services (HS) liability self-insurance fund (4122), and will be recovered through Board of Supervisors (Board) approved rates charged to the specified County departments. Sufficient appropriation and revenue will be included in DRM’s 2022-23 Recommended Budget.
BACKGROUND INFORMATION
DRM administers the County’s self-insurance programs for public liability and workers’ compensation claims as well as procures excess insurance policies to provide additional protection for the County by transferring risk at the upper limits of the programs. Alliant Insurance Services, Inc., the County’s insurance broker, has recommended that the County renew the County’s primary general liability insurance policy through Public Risk Innovation, Solutions, and Management (PRISM), the insurance carrier that provides coverage. The specified HS departments have a separate primary general liability coverage below the County’s excess program because of the high frequency and severity of claims associated with these departments’ functions. Retaining and paying losses up to the County’s $3 million self-insured retention (SIR) significantly impacts the budgets of the HS departments. In order to mitigate the impact, DRM was able to procure a buy-down option with a substantially lower self-insurance retention since 2003-04.
Currently with this insurance program, the specified HS departments will only be obligated to pay up to $500,000 versus $3 million per claim. If a loss exceeds the limits provided under this coverage, the countywide excess general liability program will provide excess coverage up to $50 million.
In 2014 and in 2016, the Board approved a Joint Powers Authority (JPA) Agreement and a Memorandum of Understanding, respectively, between the County and California State Association of Counties - Excess Insurance Authority (CSAC-EIA), which granted eligibility for the County to purchase excess general liability insurance through CSAC-EIA shared limits program known as the General Liability I Program. In 2020, CSAC-EIA changed its name to PRISM.
On June 8, 2021 (Item No. 78), the Board approved the renewal of a primary general liability insurance program, for a total premium of approximately $2,984,000, for the period of July 1, 2021 through July 1, 2022.
DRM recommends the renewal of the primary general liability insurance policy for specified HS departments to protect the financial assets of the County from liability exposures resulting from the daily activities and services provided by the specified HS departments. The recommended renewal of the primary general liability insurance policy for specified HS departments will maintain the current coverage limits of $3 million, inclusive of the SIR of $500,000. The total premium cost of approximately $3,437,000 represents an increase of $461,064 or approximately 15.5% over last year’s final premium cost of $2,975,936, due to a continued difficult insurance market for the public sector overall, frequent and large jury verdicts, and year-over-year increases in losses within the pooled insurance group.
DRM is partnering closely with Human Resources, County Counsel, and County departments to evaluate liability with each case and either appropriately defend the case or attempt to reach a mutually agreeable settlement.
Recommendation No. 2 will authorize the Director of Risk Management to execute the binding order on behalf of the County to expedite the process to set in place the renewed coverage, without any lapse in coverage or the need to go back to the Board for additional signatures.
PROCUREMENT
As a member of the JPA, the County is eligible to purchase general liability insurance through the PRISM shared limits options. This eliminates the need for a County-facilitated procurement process, resulting in financial savings to the County through volume discounts, shielding from insurance market swings, minimizing risk and uncertainty at renewal time. PRISM also provides legislative advocacy and other risk control tools to all its members.
REVIEW BY OTHERS
This item has been reviewed by County Counsel (Laura Crane, Principal Assistant County Counsel, 387-5455) on April 28, 2022; Purchasing Department (Bruce Cole, Supervising Buyer, 387-2148) on April 28, 2022; Human Resources (Diane Rundles, Director, 387-5572) on April 28, 2022; Finance (Sofia Almeida, Administrative Analyst, 387-4378) on May 7, 2022; and County Finance and Administration (Paloma Hernandez-Barker, Deputy Executive Officer, 387-5423) on May 7, 2022.