Finance & Insurance Committee Item 7-1 June 10, 2019 - PowerPoint PPT Presentation

Finance & Insurance Committee Item 7-1 June 10, 2019

Objectives Review the Current Program Provide premium costs for this year’s Insurance Renewal Finance & Insurance Committee Item 7-1 Slide 2 June 10, 2019

Self-Insured Retentions Claims Programs to Manage Self-Insured Retentions Liability / Property Workers’ Compensation Excess and Specialty Insurance Coverages Finance & Insurance Committee Item 7-1 Slide 3 June 10, 2019

Self-Insured Retention General Liability $25 million Workers’ Compensation $ 5 million Property Damage* Self-Insured * Excluding Stand Alone Property Insurance Policy Finance & Insurance Committee Item 7-1 Slide 4 June 10, 2019

Liability & Property Risk Management Unit Third Party Claims Administrator MWD General Counsel Workers’ Compensation Workers’ Compensation / Medical Unit Third Party Claims Administrator MWD General Counsel Finance & Insurance Committee Item 7-1 Slide 5 June 10, 2019

Excess Insurance General Liability $75 million Workers’ Compensation Statutory Limits Public Official, Directors & $65 million Officers Liability Fiduciary & Employee Benefit $60 million Liability Finance & Insurance Committee Item 7-1 Slide 6 June 10, 2019

In Million Dollars Excess Coverage SIR AEGIS EIM Coverage 1 st Layer 2 nd Layer Limits General Liability 25 35 40 100 Fiduciary and 25 35 25 85 Employee Benefit Liability Directors & Officers 25 25 40 90 Liability Associated Electric & Gas (AEGIS) Energy Insurance Mutual (EIM) Self-Insured Retention (SIR) Finance & Insurance Committee Item 7-1 Slide 7 June 10, 2019

Actuarial Study, Insurance Broker and Staff Reviews Metropolitan’s operations and risks remain stable Embedded safety programs in operations Environmental, Health & Safety training and monitoring Claims Management Programs Access to Capital Finance & Insurance Committee Item 7-1 Slide 8 June 10, 2019

Specialty Insurance Aircraft Liability $25 million Aircraft Hull Assessed Value Property Damage Assessed Value up to $25 million Crime $ 5 million Special Contingency * $ 5 million Travel Accident * $ 250,000 * 3-year duration coverages last purchased 2016/17 are up for renewal Finance & Insurance Committee Item 7-1 Slide 9 June 10, 2019

2019/20 Outlook 12.6% Overall Cost Increase Market Factors Causing Expected Cost Increase over FY2018/19 Portfolio Adjustments and Renewal Timing $1.12 million $1.26 million to Finance & Insurance Committee Item 7-1 Slide 10 June 10, 2019

2019/20 Outlook Market Factors Causing Expected Cost Increase over FY2018/19 Impact of hurricane and wildfire losses on the insurance market Recent surge in law enforcement and road design liability losses Finance & Insurance Committee Item 7-1 Slide 11 June 10, 2019

2019/20 Outlook Non-Market Caused Cost Increase Renewal of 3-year duration policies Continuity Credits Additional Fiduciary and Employee Benefit Liability Coverage Finance & Insurance Committee Item 7-1 Slide 12 June 10, 2019

Non-Market Caused Cost Increase 3-year Policies Purchase $31,686 Continuity Credit $42,081 Recommended Purchase of $30,960 Additional Excess Fiduciary Coverage Total $104,727 Finance & Insurance Committee Item 7-1 Slide 13 June 10, 2019

Excess Insurance Premiums (in dollars) Premium Costs 2018/19 2019/20 2019/20 Actual Quoted % Change Excluding Continuity Credits and Additional Excess Fiduciary Coverage 1,175,231 1,196,530 2% Without 3-year policies 1,175,231 1,226,430 4% With 3-year policies Finance & Insurance Committee Item 7-1 Slide 14 June 10, 2019

Excess Insurance Premiums (in dollars) Coverage Type 2018/19 2019/20 2019/20 Actual Quoted % Change General Liability 658,119 689,505 5% Public Officials Directors & 247,603 289,684 17% Officers Liability Finance & Insurance Committee Item 7-1 Slide 15 June 10, 2019

Excess Insurance Premiums (in dollars) 2018/19 2019/20 2019/20 2019/20 Coverage Type Actual Quoted Cost % Change Change Option 1 45,604 76,564 30,960 68% Fiduciary and Employee Benefit Liability Option 2 45,604 45,604 0 0% Fiduciary and Employee Benefit Liability Finance & Insurance Committee Item 7-1 Slide 16 June 10, 2019

Excess Insurance Premiums (in dollars) 2018/19 2019/20 2019/20 Coverage Type Actual Quoted % Change Workers’ Compensation 112,940 109,158 (3%) Aircraft Hull & Liability 41,501 50,230 21% Crime 10,957 9,814 10%  Property 2,435 1,944 22%  Stand alone coverage will continue for OC-71, SD-7 & SD-11 Finance & Insurance Committee Item 7-1 Slide 17 June 10, 2019

Excess Insurance Premiums (in dollars) 2016/17 2019/20 2019/20 Coverage Type Actual Quoted % Change  Special Contingency 4,489 4,263 (5%)  Travel Accident 23,157 27,423 18% Premium Costs 27,646 31,686 14.6%  3-year policies purchased in 2016/17 are up for renewal Finance & Insurance Committee Item 7-1 Slide 18 June 10, 2019

Premium Comparison by Fiscal Year Actual Actual Actual Actual Actual 2014/15 2015/16 2016/17 2017/18 2018/19 $1,128,977 $1,129,546 $1,148,248* $1,118,668 $1,120,335 Option 1 Option 2 Quoted $1,259,176* $1,228,216* 2019/20 * Includes renewal cost of 3-year duration policies for Travel Accident and Special Contingency policies Finance & Insurance Committee Item 7-1 Slide 19 June 10, 2019

Premium Comparison by Fiscal Year Purchased 3-year coverage for 1,500,000 Travel Accident and Special Contingency: 1,100,000 2010/11 2013/14 2016/17 2019/20 Includes costs for renewal and additional coverage for Fiduciary 0 Liability. Finance & Insurance Committee Item 7-1 Slide 20 June 10, 2019

Approve up to $1.26 million to renew Option 1 excess and specialty insurance coverages, and extend $35 million Excess Fiduciary coverage over the Deferred Compensation Programs Impact Within the $1.3 million budget, resulting in an approximate $140,508 cost increase compared to FY 2018/19 Finance & Insurance Committee Item 7-1 Slide 21 June 10, 2019

Approve up to $1.23 million to renew Option 2 excess and specialty insurance coverages. Impact Within the $1.3 million budget, resulting in an approximate $109,508 cost increase compared to FY 2018/19 Finance & Insurance Committee Item 7-1 Slide 22 June 10, 2019

Approve up to $1.26 million to renew Option 1 excess and specialty insurance coverages, and extend $35 million Excess Fiduciary coverage to the Deferred Compensation Programs Finance & Insurance Committee Item 7-1 Slide 23 June 10, 2019