REPORT/RECOMMENDATION TO THE BOARD OF SUPERVISORS
OF THE COUNTY OF SAN BERNARDINO
AND RECORD OF ACTION
March 10, 2020
FROM
LEANNA WILLIAMS, Director, Department of Risk Management
SUBJECT
Title v
Renewal of Property Insurance through California State Association of Counties - Excess Insurance Authority
End
RECOMMENDATION(S)
Recommendation
1. Approve the renewal of the County’s Property Insurance coverage through the California State Association of Counties - Excess Insurance Authority (CSAC-EIA), with shared coverage limits of $600 million for “all risk” exposures and $200 million in excess of $600 million all risk for Arrowhead Regional Medical Center; $300 million for flood, $665 million for earthquake, and $750 million for terrorism, applicable to all County properties, for the period of March 31, 2020 through March 31, 2021, for a total premium not to exceed $7,180,000, which is due on July 1, 2020.
2. Authorize the Director of the Department of Risk Management to execute the binding order on behalf of the County.
(Presenter: LeAnna Williams, 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.
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 $7,180,000, is due in July 2020, and will be paid from the following Department of Risk Management (DRM) property insurance funds: County (4080), Special Districts (4088), and Flood Control (4106). The premium will be recovered through Board of Supervisor’s (Board) approved rates charged to County departments and Board-Governed Special Districts. Sufficient appropriation will be included in DRM’s 2020-21 recommended budget.
BACKGROUND INFORMATION
DRM seeks to renew the County’s property insurance through the California State Association of Counties - Excess Insurance Authority (CSAC-EIA) shared limits option, maintaining the same coverage limits. To expedite the process, the Director of DRM is requesting authorization to execute the binding order on behalf of the County. The renewal of property insurance through CSAC-EIA will protect the County’s capital investments for “all risk” exposures or catastrophes.
On March 25, 2014 (Item No. 49), the Board approved a Joint Powers Authority Agreement (JPA) and Memorandum of Understanding (MOU) between the County and CSAC-EIA, allowing the County to join the CSAC-EIA as a public entity member, and granting eligibility for the County to purchase property insurance through the shared limits option.
After approval of the JPA and MOU by the Board, the property insurance program has been renewed annually, most recently on May 21, 2019 (Item No. 103), the Board approved the renewal of property insurance through CSAC-EIA shared limits option, which shares the same coverage limits with other members of the JPA, for a total premium not to exceed $5,186,050, for the period of March 31, 2019 through March 31, 2020.
CSAC-EIA’s property coverage renews automatically on March 31st of each year and will not expire until a member leaves the program. The total premium for the proposed annual renewal, not to exceed $7,180,000, is based on total insurable values of $2,453,781,701 as of November 14, 2019, and includes all taxes and broker fees. The total premium represents an increase of $2,288,417 or approximately 46.78% over 2018-19 final premium cost of $4,891,583, mainly due to the insurance market experience of significant property losses as a direct result of recent catastrophic wildfires, earthquakes, hurricanes, and floods.
PROCUREMENT
As a member of the JPA, the County of San Bernardino is eligible to purchase property insurance through the CSAC-EIA 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, and providing legislative advocacy. Furthermore, in the event of a catastrophe, the shared limits would be supported by the Federal Emergency Management Agency (FEMA) reimbursements.
REVIEW BY OTHERS
This item has been reviewed by County Counsel (Teresa McGowan, Principal Assistant County Counsel, 387-5283) on January 27, 2020; Purchasing Department (Michelle Churchill, Supervising Buyer, 387-2070) on February 11, 2020; Finance (Joon Cho, Administrative Analyst, 387-5402) on February 14, 2020; and County Finance and Administration (Kelly Welty, Deputy Executive Officer, 387-4376) on February 19, 2020.