REPORT/RECOMMENDATION TO THE BOARD OF SUPERVISORS
OF THE COUNTY OF SAN BERNARDINO
AND RECORD OF ACTION
June 23, 2020
FROM
LEANNA WILLIAMS, 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 Insurance Services West, Inc., formerly known as Willis Insurance Services of California, Inc., to provide $50 million in coverage limits for each pollution condition and aggregated limits, in excess of a $500,000 self-insurance retention, for a total premium not to exceed $1.5 million, for the period of July 1, 2020 through July 1, 2023 as follows:
a. $25 million limit in excess of $500,000 self-insurance retention, for a premium not to exceed $1 million with Chubb Insurance.
b. $25 million limit in excess of $25 million primary layer, for a premium not to exceed $500,000 with Philadelphia Insurance Co.
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.
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 $1.5 million, will be paid from the Department of Risk Management’s (DRM) pollution liability insurance funds (4110 and 4124), and will be recovered through Board approved rates charged to County departments and Special Districts. Sufficient appropriation is included in the DRM’s 2020-21 recommended budget.
BACKGROUND INFORMATION
The recommended renewal of the pollution liability insurance program will maintain the same coverage limits of $50 million and a self-insurance retention (SIR) of $500,000 as the previous policy. Limits are for a three-year term and do not reinstate on an annual basis. The total triannual premium of $1.5 million represents an increase of $285,782, or approximately 23.54% over the previous policy premium of $1,214,218, mainly due to an increase in claim losses and hardening of the insurance market for public entities.
The DRM recommends the renewal of the pollution liability insurance program to protect the financial assets of the County from pollution exposures resulting from the daily activities and services that the County provides; thus, meeting the County goals of operating in a fiscally-responsible and business-like manner.
PROCUREMENT
On June 13, 2017 (Item No. 91), the Board approved the renewal of a pollution liability insurance program, for a total premium not to exceed $1,214,218, for the period of July 1, 2017 through July 1, 2020.
On December 5, 2017 (Item No. 55), the Board approved contracts with insurance brokers, including Willis Insurance Services of California, Inc., for the period of December 11, 2017 through December 10, 2020. Willis Towers Watson Insurance Services West, Inc. f/k/a Willis Insurance Services of California, Inc., successfully marketed the pollution liability program and approached new and existing markets for quotes, as follows:
|
|
|
|
|
|
|
Response |
|
Insurance Co. |
Primary |
Excess |
|
Allianz |
Declined - 3 Year Term |
Quoting |
|
Allied World |
Declined - Water Products |
Considering |
|
Ascot |
Declined - 3 Year Term |
Quoting |
|
Aspen |
Declined to Quote - Term & Cover |
Considering |
|
AXA XL (Catlin) |
Declined to Quote - Class |
Quoting |
|
Axis |
Soft Declined - Appetite |
Soft Declined - Appetite |
|
Beazley |
Declined - Water Products |
Declined - Water Products |
|
Berkley |
Declined - Water Products |
Declined - Water Products |
|
Berkshire |
No Reply |
No Reply |
|
CHUBB (ACE) |
Quoted - Incumbent |
N/A |
|
GAIC |
Declined - Water Products & Term |
Considering |
|
Ironshore/Liberty |
Verbal Decline - Term & Water Products |
Silent |
|
Nautilus/Sompo |
Declined - Water Products & Term |
Declined - Water Products & Term |
|
Navigators/Hartford |
Declined - Products & Term |
Declined - Products & Term |
|
One Beacon |
Declined - Products & Term |
Declined - Products & Term |
|
Philadelphia / Tokio Marine |
Declined - Incumbent |
Quoting with Options |
|
Starr |
No Reply |
No Reply |
|
Zurich |
Declined |
Quoting |
|
Everest |
Waiting |
Waiting |
|
Evanston/Markel |
Considering |
Considering |
|
Freberg |
Declined |
Declined |
|
Argo / Colony |
Waiting |
Waiting |
Willis Towers Watson Insurance Services West, Inc. were able to present a proposal from the existing insurance carriers as follows:
|
Policy |
Insurance Co. |
Limits |
Premium (Including terrorism, taxes & fees) |
|
Primary Layer |
CHUBB (ACE) |
$25M xs $500,000 SIR |
$1,000,000 |
|
Excess Layer |
Philadelphia/Tokio Marine |
$25M xs $25M Primary Layer |
$ 500,000 |
|
|
|
TOTAL |
$1,500,000 |
The DRM recommends the renewal of the pollution liability insurance program with above-listed existing carriers as they are the only proposers to meet the County’s multi-year term and coverage requirements.
REVIEW BY OTHERS
This item has been reviewed by County Counsel (Teresa McGowan, Principal Assistant County Counsel, 387-5283) on May, 21, 2020; Purchasing Department (Bruce Cole, Supervising Buyer, 387-2148) on May 19, 2020; Finance (Joon Cho, Administrative Analyst, 387-5402) on June 3, 2020; and County Finance and Administration (Kelly Welty, Deputy Executive Officer, 387-4376) on June 3, 2020.