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 Pollution Liability Insurance Program
End
RECOMMENDATION(S)
Recommendation
1. Approve the renewal of the County’s pollution liability insurance program, as recommended by Willis Towers Watson West Insurance Services, Inc., to provide $50,000,000 in coverage limits for each pollution condition and aggregated limits, in excess of a $1,000,000 self-insurance retention, $3,000,000 aggregate over three years, for a total premium not to exceed $1,245,867, for the period of July 1, 2023, through July 1, 2026, as follows:
a. $10,000,000 limit in excess of $1,000,000 self-insurance retention, for a premium not to exceed $415,272 with Chubb Insurance.
b. $15,000,000 limit in excess of $10,000,000 primary layer, for a premium not to exceed $495,600 with Tokio Marine Specialty Insurance Co.
c. $25,000,000 limit in excess of $15,000,000 secondary layer for a premium not to exceed $334,995 with Allianz Insurance.
2. Authorize the Director of the Department 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.
FINANCIAL IMPACT
Approval of this item will not result in the use of additional Discretionary General Funding (Net County Cost). The total premium not to exceed $1,245,867, will be paid from the Department of Risk Management’s (DRM) pollution liability insurance funds (4110 and 4124), and will be recovered through Board of Supervisors (Board) approved rates charged to County departments and Board Governed Special Districts. Sufficient appropriation is included in the DRM’s 2023-24 recommended budget and will be included in future recommended budgets.
BACKGROUND INFORMATION
The DRM administers the County’s self-insurance program for pollution and procures excess insurance policies for additional protection. On June 23, 2020 (Item No. 76), the Board approved the renewal of a pollution liability insurance program, for a total premium not to exceed $1,500,000, for the period of July 1, 2020, through July 1, 2023.
Approval of Recommendation No. 1 will provide a new three-year coverage period of July 1, 2023, through July 1, 2026, with a total renewal premium not to exceed $1,245,867. This represents a decrease of $14,223, or approximately 2%, over the previous policy final premium of $1,260,090 due to various reasons. Some of the reasons included an increase of $500,000 in the Self-Insured Retention (SIR), a new maximum coverage sublimit of $1,000,000 on Bioterrorism Decontamination coverage, and a new Odor Exclusion clause for all claims related to odors originating from dairies. The recommended renewal will maintain the overall coverage limits of $50,000,000 in aggregate as the expiring policy. The SIR will increase from $500,000 to $1,000,000 per occurrence and $3,000,000 aggregate over three years. Limits are for a three-year term and are not reinstated on an annual basis.
The DRM recommends the renewal of the pollution liability insurance program to protect the County’s financial assets from liability arising from the operation of waste water treatment plants, recycling facilities, underground storage tanks and other 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 the negotiations Willis Towers Watson West Insurance Services, Inc. (Willis Towers), the County’s broker, engages in with multiple insurance carriers on behalf of the County to develop the insurance coverage. Approval of Recommendation No. 2 will authorize the Director of Risk Management to execute the binding order on behalf of the County, ensuring a timely renewal process with no lapse in coverage for the County’s Pollution Liability Insurance Program.
PROCUREMENT
On November 16, 2021 (Item No. 62), the Board approved contracts with various insurance brokers, including Willis Towers, 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. Willis Towers was selected to be the County’s insurance broker for this program due to their experience and expertise in this market. Willis Towers approached new and existing markets for quotes, successfully obtaining a proposal for the Pollution Liability Insurance Program with the recommended carriers that maintains the same overall coverage limits as the expiring policies.
REVIEW BY OTHERS
This item has been reviewed by County Counsel (Laura Crane, Principal Assistant County Counsel, 387-5455) on June 2, 2023; Purchasing (Leo Gomez, Purchasing Manager, 387-2063) on June 2, 2023; Human Resources (Diane Rundles, Assistant Executive Officer, 387-5570) on June 2, 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.