REPORT/RECOMMENDATION TO THE BOARD OF SUPERVISORS
OF SAN BERNARDINO COUNTY
AND RECORD OF ACTION
June 27, 2023
FROM
VICTOR TORDESILLAS, Director, Department of Risk Management
SUBJECT
Title
Renewal of Various Insurance Programs
End
RECOMMENDATION(S)
Recommendation
1. Approve the renewal of the following insurance programs and premiums, for the period of July 1, 2023, through July 1, 2024:
a. Aircraft Hull & Liability, with $100,000,000 per occurrence and aggregate limits, for a premium of approximately $290,597 with Starr Indemnity & Liability Co.
b. Airport Liability, with $100,000,000 per occurrence and aggregate limits, for a premium of approximately $33,206 with Starr Indemnity & Liability Co.
c. Inland Marine and Heavy Equipment, with $25,000,000 per occurrence and aggregate limits, for a premium of approximately $211,566 with CNA Insurance Company.
d. Business Auto Liability for San Bernardino County Fire Protection District, with $1,000,000 per occurrence and aggregate limits, for a premium of approximately $14,257 with Columbia Insurance Company.
e. Business Auto Liability (Category I), with $1,000,000 per occurrence and aggregate limits, for a premium of approximately $4,000 with National Liability Insurance Company.
f. Exporters Package Portfolio, with $1,000,000 per occurrence and aggregate limits, for a premium of approximately $2,500 with Great Northern Ins. Co.
g. Watercraft Hull and Indemnity, with $1,000,000 per occurrence and aggregate limits, for a premium of approximately $36,975 with Navigators Insurance Co.
h. Fiduciary Liability, with $10,000,000 per occurrence and aggregate limits, for a premium of approximately $90,138 with National Union Fire Insurance Company of Pittsburgh (first $5,000,000 layer) and Hudson Insurance Group ($5,000,000 in excess of the first layer).
i. Government Crime, with $15,000,000 per occurrence and aggregate limits, for a premium of approximately $79,263 with AIG Insurance Company (first $5,000,000 layer), and Hanover Insurance Group ($10,000,000 in excess of the first layer).
j. Museum Fine Arts, with $3,000,000 per occurrence and aggregate limits, for a premium of approximately $3,974, with Liberty Mutual Insurance Company.
2. Authorize the Director of Risk Management to execute the binding orders 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.
FINANCIAL IMPACT
Approval of this item will not result in the use of additional Discretionary General Funding (Net County Cost). The total aggregate premium of approximately $766,476 will be paid from the Department of Risk Management’s (DRM) liability funds and will be recovered through Board of Supervisors (Board) approved rates charged to County departments and Board Governed Special Districts. Sufficient appropriation and revenue are included in DRM’s 2023-24 Budget.
BACKGROUND INFORMATION
DRM administers the County’s self-insurance programs and maintains over 20 different lines of insurance policies to provide additional protection for the County. On June 14, 2022 (Item No. 73), the Board approved the renewal of the various insurance programs, for a total premium of approximately $765,764, for the period of July 1, 2022, through July 1, 2023.
The County has established contracts with four insurance brokers: Alliant Insurance Services, Inc, Arthur J. Gallagher & Co., James & Gable Insurance Brokers, and Willis Towers Watson Insurance Services. The Insurance brokers are responsible for conducting a thorough analysis of all current insurance programs to identify coverage overlaps and/or coverage deficiencies, and to compare and evaluate current programs against available insurance markets to determine if the current placements are the most cost-effective alternatives.
Approval of Recommendation No. 1 will provide a new one-year coverage period of July 1, 2023, through July 1, 2024, for the various insurance programs listed. The recommended renewal of the various insurance programs will increase the coverage limit for Museum Fine Arts by an additional $500,000 for a total of $3,000,000 per occurrence and aggregate limits. The coverage limits for the remaining expiring policies will maintain the existing coverage limits. The total aggregate premium cost of approximately $766,476 represents an increase of $51,640 or approximately 6.74% over last year’s final premium cost of $714,836. The DRM recommends the renewal of these insurance programs to protect the County’s financial assets from liability arising from the daily activities and services that the County provides.
A final premium amount will not be available until closer to the actual renewal date due to the complexity of negotiations that the County’s broker’s engages in with multiple insurance carriers on behalf of the County. Approval of Recommendation No. 2 will authorize the Director of Risk Management to execute the binding orders on behalf of the County to ensure a timely renewal process with no lapse in coverage.
PROCUREMENT
On November 16, 2021 (Item No. 62), the Board approved contracts with insurance brokers, including Alliant Insurance Services, Inc., Arthur J. Gallagher & Co. Insurance Brokers of California, Inc., and Willis Towers Watson Insurance Services, Inc., (Brokers), for the period of December 11, 2021, through December 10, 2026. DRM contracts with multiple Brokers to leverage the experience each holds in specific markets. The Brokers were selected to be the County’s insurance Brokers for these various insurance programs due to their experience and expertise in their respective markets. The Brokers marketed the various insurance programs for 2023-24, and approached new and existing markets for quotes, successfully obtaining proposals for these insurance programs for the coverage period of July 1, 2023, through July 1, 2024.
REVIEW BY OTHERS
This item has been reviewed by County Counsel (Laura Crane, Principal Assistant County Counsel, 387-5449) on June 1, 2023; Purchasing Department (Leo Gomez, Purchasing Manager, 387-2063) on June 5, 2023; Human Resources (Diane Rundles, Assistant Executive Officer, 387-5572) on June 5, 2023; Finance (Ivan Ramirez, Administrative Analyst, 387-4020) on June 8, 2023; and County Finance and Administration (Paloma Hernandez-Barker, Deputy Executive Officer, 387-5423) on June 11, 2023.