Resolution No. 80240
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RESOLUTION NO. 8024
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
VERNON RATIFYING THE ACTIONS TAKEN REGARDING BOUND
COVERAGE FROM HARTFORD CASUALTY INSURANCE COMPANY
FOR EXCESS WORKERS' COMPENSATION INSURANCE
WHEREAS, on June 21, 1983, the City Council of the City of
Vernon adopted Resolution No. 5014 approving membership in the
Independent Cities Risk Management Authority ("ICRMA") which was
created to jointly exercise the power of municipalities to manage their
common risk for insurance and risk management purposes; and
WHEREAS, AON Risk Services provided informal brokerage
services for the ICRMA; and
WHEREAS, AON Risk Services recently recommended that members
of the ICRMA pursue independent quotes for excess workers'
compensation insurance due to the tight workers' compensation
linsurance market; and
WHEREAS, the City of Vernon's workers' compensation
insurance expired on July 1, 2002; and
WHEREAS, since time was of the essence, Joan Francone, Risk
Manager, requested Davis and Graeber Insurance Services, an
independent broker recommended by the City of Palm Springs, to market
the City's Workers' Compensation Application and obtained a quote for
lexcess workers' compensation insurance coverage; and
WHEREAS, on June 5, 2002, Joan Francone, Risk Manager,
submitted an Application for Excess Workers Compensation Policy for
the City of Vernon, subject to ratification by the City Council; and
WHEREAS, in order to meet the urgent need for excess
workers' compensation insurance coverage, Joan Francone, Risk Manager,
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administratively approved the issuance of a binder and the payment of
premiums to Hartford, subject to ratification by the City Council; and
WHEREAS, Hartford has issued Binder #13073, Policy No.
72XSWQX0931, for the period July 1, 2002 through October 1, 2002 for
excess workers' compensation insurance coverage with the understanding
that a policy will be issued for the period July 1, 2002 through
July 1, 2003; and
WHEREAS, the City Council desires to approve and ratify the
JBinder and the payment of premiums for the new excess workers'
compensation insurance coverage; and
WHEREAS, on July 9, 2002, the Finance Committee recommended
that the City Council approve the recommendation of Bruce V.
Malkenhorst, Director of Finance, dated July 3, 2002, that the City
Council ratify bound coverage with Hartford for 2002/2003; and
WHEREAS, the City Council of the City of Vernon has
determined that, pursuant to the provisions of subsection (a) of
Section 2.27 of the Vernon City Code, it is in the public interest and
necessity to ratify the bound coverage with Hartford Casualty Insurance
Company for excess workers' compensation insurance coverage.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE
CITY OF VERNON AS FOLLOWS:
SECTION 1: The City Council of the City of Vernon hereby
(finds and determines that the recitals contained hereinabove are true
land correct.
SECTION 2: The City Council of the City of Vernon hereby
ratifies the execution of the Application for Excess Workers
Compensation Policy by the Risk Manager on behalf of the City, a copy
of which is attached hereto as Exhibit "A" and made a part hereof.
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SECTION 3: The City Council of the City of Vernon hereby
approves and ratifies Binder 413073, a copy of which is attached
hereto as Exhibit "B" and made a part hereof and payments of premiums
for the new excess workers' compensation insurance coverage.
SECTION 4: The City Council of the City of Vernon hereby
authorizes the City Administrator to execute any and all documents
necessary for the purpose of securing the excess workers' compensation
insurance policy for, and on behalf of, the City of Vernon.
SECTION 5: The City Clerk of the City of Vernon shall
certify to the passage of this resolution, and thereupon and
thereafter the same shall be in full force and effect.
APPROVED AND ADOPTED this 24th day of July, 2002.
ATTEST:
BRUCE V. MALKENHORST, City Clerk
&Eq�NISC. MALB ��,G,May r
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STATE OF CALIFORNIA )
) ss
COUNTY OF LOS ANGELES )
I, BRUCE V. MALKENHORST, City Clerk of the City of Vernon, do
hereby certify that the foregoing Resolution, being Resolution No.
8024, was duly adopted by the City Council of the City of Vernon at an
adjourned regular meeting of the City Council duly held on Wednesday,
July 24, 2002, and thereafter was duly signed by the Mayor of the City
of Vernon.
(SEAL)
- 4 -
EXHIBIT
A
NN10572002`WED 10:29 AM DAVIS & GRAEBER INS SVCS, FAX NO. 909 798 6983 P.,02
ShIROY�h'S/ONS1194 ECOMM, 4AON
Application for Excess Workers Compensation Policy
1. Name of Applicant: CITY OF VERNON
(As shown on Self -Insurance Permit)
x. Address: 4305 SANTA FE AVE., VERNON, CA Zip: 90058 ^�
3. Federal Employer Identification Number.
4. Describe operations to be covered: ALL OPERATIONS OF THE MUNICIPALITY
(Include engineering report for each location and engineer's evaluation of the safety program')
S. Give locations of operations to be covered- CITY HALL COMPOUND 4305 SANTA FE AVE.; DIESEL/POWER
PLANT 2715 E. 50TH STREET;FIRE STATION #1 -.3375 FRUITLAND:AVE, STATION #2 —
4301 SANTA FE AVE., STATION #3 — 2800 SOTO AVE., STATION #4 — 4530 BANDINI BLVD.
6. Attach latrsttAnnual Financial Report:
7. Describe Occupational Disease exposures and steps taken to control these exposures: SAFETYEMPLOF 5 RECEIVE
INNOCULATIONS FOR T BAND BLOODBORN PATHOGENS ON ANNUAL OR AS NEEDED BASIS.
S. Indicate any substantial or unusual changes in operations that are planned or have taken place in the past five years: NONE
9. bate qualified as a self -insured: 01-01-1979
10. Are there other states or jurisdictions included for self-insurance that would not be covered
by the insurance requested by dais application? Dyes ■ No
If yes, please list.
11. Current Coverage: 7 / 1 /O1 — 7 / 1 /02 Irtsurrr, CONTINENTAL CASUALTY
Specific Limit: W/Q STATUTORY Retention: $325 , 000
Aggregate Limit: EL $ 2 , 000 , 000 Retention Factor %:
12. Coverage Desired: SAME OR BEST OPTION F-ffective Daft:
Specific Limit: Retention:
Aggregate Limit: __ Retention Factor %:
ERC 2151 M Page i o/ 4
JUN-06-2002`WED 03:02 PM DAVIS & GRAEBER INS SVVCS FAX NO. 909 798 6983 P. 02
13, Give the following information regarding each state or jurisdiction:
/irmarp snace is needed. use separate paee.)
"
WL,
Code
Classification
Number of
nplgyees
Grass
Payroll
Manual
Ratcs
Prernium
14, Give 5-year prior experience information for each state to be included in the proposed coverage:
State Total In imp Indemnity Medical Medical. 'Valuation
From To Gross Payroll Paid Unpaid paid Unpaid Date
*Include allocated claims expenses as part of indemnity
15. Give the following information:
Claims in excess of $50,000 past 5 years: . �.
Claims in excess of $100,000 past 10 years:
(Use a separate page for full details)
Loss.Loss
Date
state
Number
Employees Involved
involved ,
is Lion of Loss
Total Estimated Cost
raid
Reserve
Total
8110 2151 M Page 2 of 4
JUN-05-2002`WED 10.29 AM DAVIS & GRAEBER INS SVCS, FAX N0, 909 798 6983 P. D3
16, Provide details of any OSHA or State OSHA violation.within the past Stlyears: nqr z
17. Does the applicant have any employees who may be subject to the Longshoremen and Harbor Workers Act,
Jones Act or Federal Employee's friability Act? O Yes 16 No
It yes, explain:
Unless endorsed, our policy does not include federal acts coverage.
I& Do the operations of the applicant include Volunteer or Donated, LAW Q Yes 4 No
It' yes, explain:
19. Dots applicant now (or have future plans to) own, tease or charter watancrafV Q Yes 8 No
Ityes, describe watercrrtft, use, number of crew members, passenger capacity and whether craft is owned, leased or chartered,
20. Does applicant own, lease, or charter aircraft? Q Yes *No
If yes, Aircraft Supplemental Quesdommire mist be completed
21. Complete the following information on owned or leased vehicles -
INCLUDES PICK UP'S
a. Number of: passenger can 60 trucks 79 tractors 11
22.
b, Number of commercial vehicles: owned by applicant 0 by owner -operator 0
c. Is applicant responsible for W.C. coverage on owner -operators? NO Q Yx o
If no, does applicant obtain certificate of W.C. insurance from such operator? YES
d, With respect to commercial vehicles: N/A
1. States in which vehicles operate:
2. Average number of persons in each unit:
3. Does applicant transport chemicals, hazardous materials, explosives, explosive material or
flammable material? 0 Yes 16 No
If yes, provide full details.
Does applicant provide any means of tarasportaaon for employees to or from the workplace?
If yes, please describe the type of conveyance, frequency of trips and number of employees
(total number and number per conveyance involved).
Q Yes d No
ERG 2151 M Page 3 of 4
JUH- M0 2002 ` WED 10 : 30 AM DAV I S & GRAEBER INS SVCS, FAX NO. 909 798 6983 ; , P. , 04
23. Service Company Information:
(If no service company complete a Self Administration Questionnaire)
& Loss prevention services
1. Name of service company
2. Address of service company
3. (dive details of kind and frequency of services that will be frnished by service company
b_ Claims handling services
1. Name of service company COLEN AND LEE
2. Present contact and title MARTIN VEGA, CLAIMS ADMINISTRATOR
3. Address of service company 1470 SO. VALLEY VISTA DR. „4130
DIAMOND BAR, CA 91765
4. Give details of kinds of service that will be furnished by service company RECEIVES AND ADMINISTERS ALL
WQRKERS' COMPENSATION CLAIMS
c. Are claims handled to conclusion? Q Yes Q No
If no, gave details.
d. 'What is normal length of service contract? FEES REVIEWED ANNUALLY. CONTRACT SINCE 1989
e. Does applicant a$= to let the excess carrier know about any change in the service company or in the kind or amount of
services to be performed by the service company? YES
24. Describe applicant's oven lo$s prevention program and medkd facilities for treating injuries: jiPR _---
PROGRAM IN PLACE AND AGGRESSIVELY MANAGED. MEDICAL FACILITY IS TECHNIMED VERNON,
3364 E. SLAUSON AVE., VERNON,90058, (323) 584-7242
25. Is a full-time doew used? Q 'Yes V No
If no, what facility is available? TECHNIMED VERNON
Are registered nurses used? NO
I have read all of the responses shown in this application, and each such response is true, accurate and compkie,1
anderstand that Employers Reinsurance Corpora&& w#1 rely upon these responses to snake decLoons concerning
the policy requested by this 4pp&a&jL
d RISK MANAGER
DataApplicant's Signature Title -
ERC 2151 M Page 4 of 4
INDEPENDENT CITIES RISK MANAGEMENT AUTHORITY
EXCESS WORKERS' COMPENSATION AND EMPLOYERS' LIABILITY
RENEWAL APPLICATION
l . Name of City: Vernon
Address: 4305 Santa Fe Ave. Vernon CA 90058
2. Does the City own, rent, lease, or charter any aircraft or watercraft? Yes ❑ No
If yes, please complete an aircraft/watercraft questionnaire.
3. Name and address of claims handling company: Colen and Lee 1470 South Valley Vista Dr.
Suite 30
Diamond Bar. CA 91765
4. Desired Self -Retained Limit (SIR): $400,000 ❑ $500,000 ❑
5. ESTIMATED ANNUAL PAYROLL:
CLASSIFICATION CODE 2002-2003 ESTIMATED PAYROLL
AIRCRAFT PATROL
7424
$0
CLERICAL
8810 _
$1,25,573
ELECTRICAL LIGHT & POWER
7539
$2,659,566
FIRE FIGHTERS
7706
$5,490,660
HOUSING AUTHORITIES
9033
$0
MUNICIPAL -laborers
9420
$1501,079
MUNICIPAL -other than laborers
9410
$2696,125
POLICEMEN
7720
$4,193,018
STREET/ROAD CONSTRUCTION
5507
0
VOLUNTEER FIREMEN (number of volunteers)
7707
$0
VOLUNTEER POLICEMEN (number of volunteers) 7722
$0
WATER DEPARTMENT
7520
$970,636
OTHER: GAS
_
$463,731_
TOTAL ANNUAL PAYROLL:
$ 20,220,388
REPRESENTATION:
It is represented that the information contained herein is true, and that it shall be the basis of the policy of
insurance should any insurer evidence its acceptance of this application by issuance of a policy.
Signature: ��iN-d'�� Date:
Title: ?22T:T� Phone Number:r�-;z.3.2y``t�'
Aon Risk Services
Aircraft Questionnaire, Rev, 12/00
EXHIBIT
4
PARTNERSSPECIALTY
INSURANCE SERVICES, LL,C.
�E
6/27/02 BINDER # 13073 Page 1 of 2
In accordance with your instructions, we have effected insurance as follows:
Insured: City of Vernon Producer: Davis & Graeber Insurance Services
4305 Santa Fe Ave 470 E. Highland Ave.
Vernon, CA 90058 Redlands, CA 92373
Binder Period: 07/01/02 to 10/01/02 12:01 Standard Time at above location(s)
Policy Period: 07/01/02 to 07/01/03 12:01 Standard Time at above location(s)
Insurer Hartford Casualty Insurance Company Admitted
Policy #
72XSWQX0931
Coverage
Excess Workers Compensation
Limits
Coverage A: $50,000,000
Coverage B: $1,000,000/$1,000,000
Deductibles
SIR including claim expense: $500,000
Rate:
.3460 based payroll of $20,220,388
Premium
$ 69,963.00 25 % Minimum Earned Premium in the event of cancellation.
Broker Fee 500.00
Total $ 70,463.00
Conditions
Coverages included in quote:
Required State Amendatory Endorsements
SIR combining loss and claim expense
SIR combining Part I and Part II for loss
Other States Coverage
Voluntary Compensation
Foreign Voluntary Compensation
Delete Commutation Clause
Subject to:
1) Hartford's Per Location Questionnaire must be completed within 30 days of effective date.
2) Detailed loss reports will be sent to the company on a quarterly basis. Company will need to be
added to the TPA's distribution list so that the loss reports are sent automatically.
3) Receipt of a fully executed contract between insured and TPA within 45 days of effective date.
4) Depending on the TPA chosen, a claim audit may be required.
The insured's current TPA does not qualify for Hartford's program. The insured must contract with
one of the following Hartford approved TPA's and we must receive written confirmation of the TPA
insured has chosen within five days of binding:
Large National TPA's: Cambridge Integrated/Martin Boyer, Crawford and Company, Frank Gates,
GAB, Gallagher Bassett, Sedgwick & Company, Gates McDonald.
2450 Colorado Avenue, Suite 200
Santa Monica, CA 90404
Phone: (310) 586-4700 Fax: (310) 586-4750
License # OD40510
` PARTNERS SPECIALTY
i
INSURANCE SERVICES,LLC.
6/27/02 BINDER # 13073 Page 2 of 2
CONDITIONS cont..
Company Owned TPA's: Specialty Risk Services -Hartford, Constitution State Services
Company -Travelers, Helmsman -Liberty, RSKCo-CNA, ESIS-Kemper, PMA, Wausau, Chubb.
Date of issuance: June 27, 2002 PARTNERS SPE TY INSUR S IC LC
Signature:
Marc Rotter
Forms applicable are subject in all respects to the terms, conditions and limitations of the policy(ies) or
certificate(s) in current use by the company, unless otherwise specified.
CONDITIONS: The policy premium stated on the front page of this binder is due and payable to
Partners Specialty Insurance Services, LLC within (20) days of the effective date of the binder.
Failure of the insured to make timely payment of premium shall be considered a request by the insured for
the company to cancel. In the event of such cancellation by the company for non-payment of premium,
the minimum premium shall be immediately due and payable. Non-payment cancellation shall be
rescinded at the discretion of the company if the insured remits the full premium due within (10) days.of
receiving the cancellation notice upon company verification that the subject of this insurance is in proper
insurable condition.
This binder is based upon written correspondence and/or telephone advices from the insurer(s) stated on
this binder and is issued by Partners Specialty Insurance Services, LLC without liability whatsoever
as an insurer. This binder will be terminated and superseded upon delivery of formal policy(ies) or
certificates issued to replace it.
CANCELLATION: This bfndermay be cancelled bythe insured by surrender thereof to Partners
Specialty Insurance Services, LLC or any of its authorized agents, or by mailing to Partners
Specialty Insurance Services, LLC written notice stating when thereafter the cancellation shall be
effective. The insurance under this binder cannot be cancelled flat; earned premium must be paid for the
time insurance has been in force. This binder may be cancelled by the insurer(s) or by Partners
Specialty Insurance Services, LLC on behalf of the insurer(s) by mailing to the insured at the address
stated on this binder, written notice stating when, not less than FIVE (5) days thereafter, such
cancellation shall be effective. The mailing of notice as aforesaid shall. be sufficient proof of notice.
Delivery of such written notice either by the insured, the insurer(s), or by Partners Specialty Insurance
Services, LLC shall be equivalent to mailing. In the event of cancellation by the insured, the earned
premium will be computed short rate, the minimum premium shall be due and payable by the insured
regardless of any conditions of the binder to the contrary, and if cancelled by the insurer, the earned
premium will be computed pro rata.
THIS BINDER MAY NOT CONFORM TO THE TERMS AND CONDITIONS REQUESTED.
2450 Colorado Avenue, Suite 200
Santa Monica, CA 90404
Phone: (310) 586-4700 Fax: (310) 586-4750
License # OD40510
SUPPORTING
DOCUMENTS
Davis and Graeber Insurance Services - Q U O T E # 13073 D
Excess Workers Compensation
We are pleased to offer the following quotation for your review:
INSURED: City of Vernon
POLICY PERIOD: 7/1/02 to 711/03
4305 Santa Fe Ave, Vernon, CA 90058
INSURER: Hartford Casualty Insurance Company Admitted
COVERAGE:
Excess Workers Compensation
LIMITS:
Coverage A: $50,000,000 all options
Coverage B: $1, 000, 000/$1, 000, 000
DEDUCTIBLE:
SIR including claim expense: $500,000
CONDITIONS:
Coverages included in quote:
SIR combining loss and claim expense
SIR combining Part I and Part II for loss
Other States Coverage
Voluntary Compensation
Foreign Voluntary Compensation
Delete Commutation Clause
Subject to:
1) Hartford's Per Location Questionnaire must be completed within 30 days of effective date.
2) Detailed loss reports will be sent to the company on a quarterly basis. Company will need to be
added to the TPA's distribution list so that the loss reports are sent automatically.
3) Receipt of a fully executed contract between insured and TPA within 45 days of effective date.
4) Depending on the TPA chosen, a claim audit may be required.
The insured's current TPA does not qualify for Hartford's program. The insured must contract with
one of the following Hartford approved TPA's and we must receive written confirmation of the TPA
insured has chosen within five days of binding:
Large National TPA's: Cambridge Integrated/Martin Boyer, Crawford and Company, Frank Gates,
GAB,
Gallagher Bassett, Sedgwick & Company, Gates McDonald.
Company Owned TPA's: Specialty Risk Services -Hartford, Constitution State Services Company -
Travelers, Helmsman -Liberty, RSKCo-CNA, ESIS-Kemper, PMA, Wausau, Chubb.
PREMIUM: $ 69,963.00 RATE: $ .3460 based payroll of $20,220,388
S.L. Broker Fee 500.00
Total $ 70,463.00
This quotation is valid for 30 days. 25 % Minimum Earned Premium in the event of cancellation.
1 CRMA
EXCESS WORKERS' COMP. & EMPLOYER'S L
Marketina Overview
sv
Carder
Ra n9
ACE American Insurance
A (XII) UCould
.
not get adequat
Company
for an account this siz(
based on losses anyw
AIG National Insurance
A++ (XV)
Company
Core is insurance Company
A IX
Declined to uote oli(
Declined to quote bas,
Discover Reinsurance Co.
A (VII)
Employers Reinsurance Co.
A++ (XV)
Declined to quote this
Declined to quote polio
Fireman's Fund Insurance
A (XIV)
Com an Aliianz
Genesis Insurance. Company
A++ (XV)
Declined to quote; if q
$5MM in limits
Insurance Co. of the West
A IX
No longler writing new
Kemper Casualty insurance
A (XV)
Declined to quote this
Company
Midwest Employers Casualty
A (X)
Too large; rate for m
Company
California is usuallY s
Municipal Mutual Insurance
NR-2 (IV)
Not approached due
Company
Liberty Mutual
A+ XV
Declined to uote ba,
Legion Insurance Company
A- (IX)
Too large; no appetite
in California
Professional Underwriters
A (XV)
Declined to quote poll
Zurich American Insurance
municipalities in Calii
St. Paul Fire and Marine
A+ (XV)
Declined to quote trit
Insurance Company
Wexford (Continental
A (XV) - '
Declined to quote gr(
Casualty Company)
individual cities with
minimum $100,000 E
pool was $1,000,OOC
remium
Safetv National Insurance Co.
A 111
Declined to write mu
State Compensation
B+ (XIII)
Not approached due
Insurance Fund of California
reinsurance coverage NA
probably would pass
IV
i
.e and fire
NA
;d on losses
NA
hype risk
NA
;e and fire
NA
joting, $1MM SIR with
NA
business fornia in Cali
NA
type of risk in California
NA
nicipai accounts in
NA
weral times hi her
o A.M. Best Rating
NA
;ed on losses
NA
for municipal accounts
NA
ice and fire or
NA
Mia
;type of risk
NA
rup as a whole; quoted
Sktached
ee
iifferentiai SIRS and
remium. Indication for
SIR at close to same
lici al accounts in CA
A
to A.M. Best Rating
!NA
Am
Name Payroll
Retention
Premium
Rate Percentage
of Police/Fire
Alhambra
Arcadia
Azusa
Baldwin Park
Bell
Chino
Colton
Culver City
Downey
El Monte
ElSegundo
Fullerton
Glendora
Hawthorne
Hermosa Beach
Huntington. Park
Indio
Inglewood
Lynwood
Manhattan Beach
Monrovia
Monterey Park
Redondo Beach
San Fernando
Upland
Vernon
West Covina
Whittier
23.9 million
18.7 million
17:9 million.
10.8 million
6.0 million
18.2 million
18.4 million
40.9 million
27.7 million
26.8 million
24.5 million
39:9 million
15.9 million
20.7million
8.7 million
11.6 million
8.5 million
45.7 million
8.7 million
18.2 million.
15.7 million
19.9 million
29.6 million
7.7 million
16.6 million
20.2 million
28.0 million
22.8 million
000,vuv---
500,000
178,71.0
0.9580
50% .
500,000
119,210
0.6642
28%
500,000
110,000
1.0150
56%
500,000
100,000
1.6640
60%
750,000
104,630
0.5754
36%
750,000
100,000
0.5436
44%
1,000,000
211,780
0.5178
44%
750,000
145,230
0.5250
52%
750,000
151,495
0.5660
48%
750,000
196,955
0.8054.
49%
1,000,000
241,880
0.6067
47%�
500,000
120,990
0.7605
33%
500,000
142,875
0.6896,r-
38%
500,000
100,000
1.1440
52%
500,000
150,660
1.2960 .
63%
500,000
100,000
1.1-800
38%
1,000,000
235,965
0.5163
39%
500,000
100,000
1.1500
0%0
500,000
149,245
0.8179
49%
500,000
129,715
0.8242
53%
500,000
139,280
0.6997 ..
46%
750,000
156,010
0.5272
44%
500,000
100,000
1.2990
35%
500,000
152,920
0.9212
54%
750,000
118,500
0.5860
48%
750,000
148,910
0.5327
54%
750,000
129,930
0.5702
40%
Option to Pool only:
Bell, Glendora, Hermosa Beach, Indio, Lynwood, Manhattan Beach and San
Fernando
Retention:
$500,000
Premium::
$445,945
Individuat Premiums:
Bell
$36,319
Glendora
$96,169
Hermosa Beach
$52,852
Indio
$51,210
Lynwood
$52,567
Manhattan Beach
$110,279
San Fernando
$46,549.
67
4
CITY COUNCIL
LEONIS C. MALBURG
Mayor
THOMAS A. YBARRA
Mayor Pro—Tem
WM. "BILL" DAVIS
Councilman
H. "LARRY" GONZALES
Councilman
W. MICHAEL MCCORMICK
Councilman
BRUCE V. MALKENHORST
City Administrator/City Clerk
FAX (323) 826-1438
Finance Committee
City of Vernon
Honorable Members:
CITY HALL
4305 SANTA FE AVENUE, VERNON, CALIFORNIA 90058
TELEPHONE (323) 583-8811
July 3, 2002
EDUARDO OLIVO
City Attorney
FAX: (562) 869-1883
KEVIN WILSON
Director of Community Services & Water
FAX: (323) 826-1435
KENNETH J. DeDARIO
Director of Municipal Utilities
FAX: (323) 826-1425
STEVEN E. PARKER
Fire Chief
FAX: (323) 826-1407
BRUCE W. OLSON
Police Chief
FAX: (323) 826-1481
6- \va
A
The City's Workers Compensation insurance expired on July 1, 2002.
Due to the competitive workers' compensation rates in the insurance
market, AON Risk Services, Brokers for the Independent Cities Risk
Management Authority (ICRMA), released all cities from its Broker of
Record status and recommended that cities pursue independent quotes.
Most of the referred carriers offered very high Self -Insured Retention
(SIR) limit deductibles. Mr. Ross Jones of Davis and Graeber, an
independent broker recommended by the City of Palm Springs, marketed
the City's workers compensation application and obtained a quote from
Hartford Insurance for Excess Worker's Compensation Insurance with a
premium of $69,963.00 plus Broker fees of $500.00 and the SIR of
$500,000.00.
This has been reviewed by the Risk Manager and City Attorney and it is
hereby recommended that the City Council ratify bound coverage with
Hartford Insurance at a total premium of $70,463.00 for 2002/2003.
BVM/gm
y truly yours,
bl, N4U4v cars 7`
Bruce V. Malkenhorst A
Director of Finance
MEMORANDUM
RISK MANAGEMENT/PERSONNEL
TO: Bruce V. Malkenhorst, City Administrator
FROM: Joan Francone, Risk Manager/Personnel Assistant
DATE: June 27, 2002
SUBJECT: WORKERS' COMPENSATION INSURANCE RENEWAL
JULY 1, 2002 / JUNE 30, 2003
As a result of the tight workers' compensation insurance market, AON Risk Services, Brokers for
the Independent Cities Risk Management Authority (ICRMA), released all cities from its Broker
of Record status and recommended pursuit of independent quotes. Most carriers that AON
submitted the application information to either were not interested in writing the account at all,
or were interested in it with only very high SIR limits (deductibles) of $1,000,000 and high
premiums. The companies that were approached are summarized in the Marketing Overview
page attached.
Based on their efforts, AON could only recommend Wexford Insurance at a premium for the
City of $118,500 plus brokers fee, which totaled approximately $125,000. The SIR was
$750,000. Last years premium was $26,474 with an SIR of $350,000.
Risk Management then consulted Davis and Graeber Insurance Services, an independent broker
recommended by the City of Palm Springs. There was no method used in contacting Davis and
Graeber, however, time was of the essence since the City's insurance was to expire July 1, 2002.
Ross Jones of Davis and Graeber, marketed the City's workers compensation application and was
able to obtain a quote from Hartford Insurance for Excess Workers' Compensation Insurance
with a premium of $69,963 plus Broker fee of $500. The SIR is $500,000.
Based on the above, it is recommended that Council ratify bound coverage with Hartford
Insurance at a total premium of $70,463 effective July 1, 2002 for 2002/2003. Broker in the
transaction to be Davis and Graeber Insurance Services.
JF/cc
Enclosures
From: Ross Jones [rjones@davisandgraeber.com]
Sent: Wednesday, June 26, 2002 4:05 PM
To: Francone, Joan
Subject: RE: Excess Workers Compensation Insurance quotations:
Hartford Hartford
Excess.doc Excessmpd
Please be advised that we have bound coverage for the Excess
Workers Compensation Insurance with a $50,000,000 Coverage A & $1,000,000 Coverage B:
and a $500,000 SIR at a rate of: $.3460 with a Premium of $69,963. plus S.L. Broker fee of $500.
Binder and billings will be sent by U.S. Mail.
Attached please find the Hartford Excess Workers' Compensation questionnaire.
Please advise your choice of a TPA from the approved list of TPA: I have requested the Hartford
to forward to me the qualification for TPA approval. I have also talked to Bernie and informed him
I will forward to him the Hartford information as soon as I receive it.
I have sent the attachments in both "Word and Word Perfect" both are the same, just different
word processors.
Thank you for you business, I look forward to working with you. If you have any questions please
give me a call or leave an email.
A.
From:
Orosco, Gloria
Sent:
Wednesday, June 26, 2002 10:50 AM
To:
Francone, Joan
Cc:
Giron, Nelly
Subject:
RE: Workers comp premium for 2002/2003
joan: have you prepared anything for bruce to take to Council or the finance committee. i think
since time is of the essence the sooner you get something in writing to him the sooner we can
proceed to get legislative approval
-----Original Message -----
From: Francone, Joan
Sent: Wednesday, June 26, 2002 9:36 AM
To: Malkenhorst, Bruce Sr.
Subject: Workers comp premium for 2002/2003
I may be able to slash our workers comp premium by over $50,000 but Hartford Ins has a
third party administrator list(TPA) that does not include Colen and Lee. The list does include
very reputable claims administration firms, however. I have contacted Bernie Colen of Colen
and Lee to advise that the City may change TPAs and for him to check out the Hartford Ins.
list, how to get on it. According to our agreement with Colen and Lee, there is a 60 day
termination clause.
As you may recall, the List I showed you from AON Risk Services quoted a premium of
$118,000. plus brokers fee which would have totaled about $124,000. 1 contacted an
independent broker recommended by the Risk Manager for the City of Palm Springs.
Brokers name is Davis and Graeber. The agent's name is Ross Jones. He is the person
coming in with the Hartford quote of $70,000.
We are down to the wire on this workers comp premium because of sky rocketing costs. The
entire ICRMA pool is in a state of shock. Our situation is like the little guy (Davis and
Graeber) out maneuvering the big guns (AON RISK SERVICES and MARSH RISK
SERVICES). I will have all details on which way to proceed by tomorrow and will need your
ok to bind coverage with Hartford.
Will keep you advised.
f
D(;
4
Davis & Graeber Insurance Services, Inc. Lic. #0186657
470 E. Highland, P.O. Box 40, Redlands, CA 92373-0007 • Tel (909) 793-2373 • Fax (909) 798-6983
July 9, 2002
Joan Francone
City of Vernon
4305 Santa Fe Ave.
Vernon, CA 90058
Re: Excess Workers Compensation Policy
Effective 07/01 /02 to 07/01 /03
Dear Joan:
Enclosed is a Binder of Insurance for your new Excess Workers Compensation Policy.
This is a temporary insurance contract and has been issued pending receipt of your policy
from the company.
Please note that this binder has been issued for a ninety -day period. If your policy is not
received by the expiration date shown on this form, an extension will be sent.
Robert Reeves will be working with Ross Jones as your Account Coordinator. Should you
have any questions, please feel free to call us.
Thank you for placing your insurance with Davis and Graeber Insurance Services. We
look forward to working with you.
Sincerely,
A
Epi Hammons, CISR,CPSR
Commercial Marketing Department
slo
Enc.
Internet: www.davisandgraeber.com � E-Mail: tlgis@davisandgraeber.com
�3`f'sr PARTNERS SPECIALTY
tkl ,
INSURANCE SERVI CES, LLC.
6/27/02 BINDER # 13073 Page 1 of 2
In accordance with your instructions, we have effected insurance as follows:
Insured: City of Vernon Producer: Davis & Graeber Insurance Services
4305 Santa Fe Ave 470 E. Highland Ave.
Vernon, CA 90058 Redlands, CA 92373
Binder Period: 07/01/02 to 10/01/02 12:01 Standard Time at above location(s)
Policy Period: 07/01/02 to 07/01/03 12:01 Standard Time at above location(s)
Insurer Hartford Casualty Insurance Company Admitted
Policy # 72XSWQX0931
Coverage Excess Workers Compensation
Limits Coverage A: $50,000,000
Coverage B: $1,000,000/$1,000,000
Deductibles SIR including claim expense: $500,000
Rate: .3460 based payroll of $20,220,388
Premium $ 69,963.00 25 % Minimum Earned Premium in the event of cancellation.
Broker Fee 500.00
Total $ 70,463.00
Conditions Coverages included in quote:
Required State Amendatory Endorsements
SIR combining loss and claim expense
SIR combining Part I and Part II for loss
Other States Coverage
Voluntary Compensation
Foreign Voluntary Compensation
Delete Commutation Clause
Subject to:
1) Hartford's Per Location Questionnaire must be completed within 30 days of effective date.
2) Detailed loss reports will be sent to the company on a quarterly basis. Company will need to be
added to the TPA's distribution list so that the loss reports are sent automatically.
3) Receipt of a fully executed contract between insured and TPA within 45 days of effective date.
4) Depending on the TPA chosen, a claim audit may be required.
The insured's current TPA does not qualify for Hartford's program. The insured must contract with
one of the following Hartford approved TPA's and we must receive written confirmation of the TPA
insured has chosen within five days of binding:
Large National TPA's: Cambridge Integrated/Martin Boyer, Crawford and Company, Frank Gates,
GAB, Gallagher Bassett, Sedgwick & Company, Gates McDonald.
2450 Colorado Avenue, Suite 200
Santa Monica, CA 90404
Phone: (310) 586-4700 Fax: (310) 586-4750
License # OD40510
PARTNERS SPECIALTY
6/27/02
CONDITIONS cont..
INSURANCE S.ERVICES,LLC,
BINDER # 13073
Page 2 of 2
Company Owned TPA's: Specialty Risk Services -Hartford, Constitution State Services
Company -Travelers, Helmsman -Liberty, RSKCo-CNA, ESIS-Kemper, PMA, Wausau, Chubb.
Date of issuance: June 27, 2002 PARTNERS SPE TY INSUR SIf fIVIC LC
Signature: / V /t.( -IV A(_W W111.J _
Marc Roder
Forms applicable are subject in all respects to the terms, conditions and limitations of the policy(ies) or
certificate(s) in current use by the company, unless otherwise specified.
CONDITIONS: The policy premium stated on the front page of this binder is due and payable to
Partners Specialty Insurance Services, LLC within (20) days of the effective date of the binder.
Failure of the insured to make timely payment of premium shall be considered a request by the insured for
the company to cancel. In the event of such cancellation by the company for non-payment of premium,
the minimum premium shall be immediately due and payable. Non-payment cancellation shall be
rescinded at the discretion of the company if the insured remits the full premium due within (10) days of
receiving the cancellation notice upon company verification that the subject of this insurance is in proper
insurable condition.
This binder is based upon written correspondence and/or telephone advices from the insurer(s) stated on
this binder and is issued by Partners Specialty Insurance Services, LLC without liability whatsoever
as an insurer. This binder will be terminated and superseded upon delivery of formal policy(ies) or
certificates issued to replace it.
CANCELLATION: This binder -may be cancelled by the insured by surrender thereof to Partners
Specialty Insurance Services, LLC or any of its authorized agents, or by mailing to Partners
Specialty Insurance Services, LLC written notice stating when thereafter the cancellation shall be
effective. The insurance under this binder cannot be cancelled flat; eamed premium must be paid for the
time insurance has been in force. This binder may be cancelled by the insurer(s) or by Partners
Specialty Insurance Services, LLC on behalf of the insurer(s) byi mailing to the insured at the address
stated on this binder, written notice stating when, not less than FIVE (5) days thereafter, such
cancellation shall be effective. The mailing of notice as aforesaid shall, be sufficient proof of notice.
Delivery of such written notice either by the insured, the insurer(s), or by Partners Specialty Insurance
Services, LLC shall be equivalent to mailing. In the event of cancellation by the insured, the earned
premium will be computed short rate, the minimum premium shall be due and payable by the insured
regardless of any conditions of the binder to the contrary, and if cancelled by the insurer, the earned
premium will be computed pro rata.
THIS BINDER MAY NOT CONFORM TO THE TERMS AND CONDITIONS REQUESTED.
2450 Colorado Avenue, Suite 200
Santa Monica, CA 90404
Phone: (310) 586-4700 Fax: (310) 586-4750
License # OD40510
CITY ADMINISTRATOR/CITY CLERK'S
INTER -OFFICE MEMORANDUM
DATE: July 30, 2002
TO: Cindy Calzada, Secretary
FROM: Nelly Giron
Assistant to the Chief Deputy City Clerk
RE: Resolution Nos. 8024, 8025, and 8032
Per your request, transmitted herewith are copies of the above
referenced, approved on July 24, 2002.
:gm
From: Orosco, Gloria
Sent: Wednesday, June 26, 2002 1:34 PM
To: Francone, Joan
Subject: RE: Workers comp premium for 2002/2003
i guess what I'm trying to avoid is any "ratification" of agreements because of our f ailure to advise
the council of any changes. what i need to know is, if in fact you make a change in
administrators/contractors for any reason including a cost savings we need to be advising the
council. I'm working hard at this point w/trying to make Nelly aware of processes that need to be
followed in order to keep us out of the "line of fire" and avoid any unnecessary "red tape" due to
our failure to advise the the council or finance committee ahead of time.
please call me if you need additional input.
thanks
-----Original Message -----
From: Francone, Joan
Sent: Wednesday, June 26, 2002 11:46 AM
To: Orosco, Gloria
Subject: RE: Workers comp premium for 2002/2003
Skip it. Don't have anything, yet.
Sent: Wednesday, June 26, 2002 11:35 AM
To: Francone, Joan
Cc: Giron, Nelly
Subject: RE: Workers comp premium for 2002/2003
YES BUT IF THERE is any contract going to be required and if so then we must
submit it to the appropriate legislative body for approval. if not then we can skip this
part.
-----Original Message -----
From: Francone, Joan
Sent: Wednesday, June 26, 2002 11:03 AM
To: Orosco, Gloria
Subject: RE: Workers comp premium for 2002/2003
I believe everything was included in the RM budget unless there is something I
am unaware of.
inal
Sent: Wednesday, June 26, 2002 10:50 AM
To: Francone, Joan
Cc: Giron, Nelly
Subject: RE: Workers comp premium for 2002/2003
joan: have you prepared anything for bruce to take to Council or the
finance committee. i think since time is of the essence the sooner you
get something in writing to him the sooner we can proceed to get
legislative approval.
-----Original Message -----
From: Francone, Joan
Sent: Wednesday, June 26, 2002 9:36 AM
To: Malkenhorst, Bruce Sr.
Subject: Workers comp premium for 2002/2003
1 may be able to slash our workers comp premium by over $50,000
but Hartford Ins has a third party administrator list(TPA) that does not
include Colen and Lee. The list does include very reputable claims
administration firms, however. I have contacted Bernie Colen of
Colen and Lee to advise that the City may change TPAs and for him
to check out the Hartford Ins. list, how to get on it. According to our
agreement with Colen and Lee, there is a 60 day termination clause.
As you may recall, the list I showed you from AON Risk Services
quoted a premium of $118,000. plus brokers fee which would have
totaled about $124,000. 1 contacted an independent broker
recommended by the Risk Manager for the City of Palm Springs.
Brokers name is Davis and Graeber. The agent's name is Ross
Jones. He is the person coming in with the Hartford quote of
$70,000.
We are down to the wire on this workers comp premium because of
sky rocketing costs. The entire ICRMA pool is in a state of shock.
Our situation is like the little guy (Davis and Graeber) out
maneuvering the big guns (AON RISK SERVICES and MARSH
RISK SERVICES). I will have all details on which way to proceed by
tomorrow and will need your ok to bind coverage with Hartford.
Will keep you advised.