Resolution No. 2010-081RESOLUTION NO. 2010-81
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
VERNON APPROVING AND AUTHORIZING THE PURCHASE OF
PROPERTY INSURANCE, EXCESS LIABILITY INSURANCE AND
EXCESS WORKERS' COMPENSATION INSURANCE FROM.VARIOUS
INSURERS THROUGH ARTHUR J GALLAGHER & CO.
WHEREAS, the City's current Commercial Insurance Program
consisting of a property insurance policy for utilities and non -
utilities (including flood and equipment breakdown), an excess
liability policy (including primary and secondary liability coverage),
and an excess workers' compensation insurance policy, expires on July
1, 2010; and
WHEREAS, the City used the services of Arthur J. Gallagher &
Co. Insurance Brokers of California, Inc. ("Arthur J. Gallagher") to
act as the City's broker to structure and obtain the appropriate
insurance coverages; and
WHEREAS, in light of the current economy and the need to
reduce our current fiscal year budget, the Risk Manager by memo dated
June 10, 2009, has recommended that the City maintain the same levels
of property insurance coverage for 2010-2011 as maintained in the
current fiscal year; and
WHEREAS, the Risk Manager has further recommended -that the
certain.components of the Commercial Insurance Program be purchased
from various insurers through Arthur J. Gallagher based on the quotes
provided by Arthur J. Gallagher, exclusive of surplus lines taxes and
fees, as follows: (1) property insurance from Travelers Property
Casualty Company at a quoted cost of $312,490.00; (2) boilers and
machinery property insurance from Travelers Property Casualty Company
at a quoted cost of $72,001.00; (3) excess liability primary insurance
layer from Everest National Insurance Company at a quoted cost of
$93,200.00; (4) excess liability secondary insurance layer from Starr
Indemnity & Liability Company at a quoted cost of $38,800.00; (5)
excess workers, compensation insurance from New York Marine and
General Insurance Company at a quoted cost of $118,391.00
(collectively, the "Commercial Insurance Program Policies") for a
total quoted cost of $634,882.00 plus surplus lines taxes and fees, if
applicable; and
WHEREAS, the City Council of the City of Vernon has
determined that, pursuant to the provisions of subsection (b)(1) of
Section 2.27 of the Vernon City Code, it is in the public interest and
necessity to approve the purchase of the Commercial Insurance Program
Policies through Arthur J. Gallagher.
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
and correct.
SECTION 2: The City Council of the City of Vernon hereby
approves the purchase of the Commercial Insurance Program Policies
through Arthur J. Gallagher.
SECTION 3: The City Council of the City of Vernon hereby
authorizes the City Administrator, or his designee, to execute any and
all documents necessary for the purpose of securing the Commercial
Insurance Program Policies on behalf of the City of Vernon and to
take whatever actions are deemed necessary or desirable for the
purpose of implementing and carrying out the purposes of this
Resolution and the transactions herein approved or authorized.
2
SECTION 4: The City Council of the City of Vernon hereby
approves the payment of the annual premium for each of the Commercial
Insurance Program Policies at the quoted cost herein itemized, for an
estimated total amount of $634,882.00 plus surplus lines taxes and
fees, if applicable.
SECTION 5: The City Council of the -City of Vernon hereby
directs the City Clerk, or her designee to send a copy of this
Resolution to:
Arthur J. Gallagher & Co.
Insurance Brokers of California, Inc.
Attn. Nasreen Kopecky, Account Manager
15 Enterprise, Suite 200
Aliso Viejo, CA 92656
SECTION 6: The City Clerk of the City of Vernon shall
certify to the passage, approval and adoption of this resolution, and
the City Clerk of the City of Vernon shall cause this resolution and
the City Clerk's certification to be entered in the File of
Resolutions of the Council of this City.
APPROVED AND ADOPTED this 21st day of June, 2010.
ATT T:
Willard G. YTY
chi, ity Clerk
Name: Hilario Gonzales
Title: Mayor / Ma-y4)x— _Pro em
3
STATE OF CALIFORNIA )
) ss
COUNTY OF LOS ANGELES )
I, Willard G. Yamaguchi, City Clerk of the City of Vernon, do
hereby certify that the foregoing Resolution, being Resolution -
No. 2010-81, was duly passed, approved and adopted by the City Council
of the City of Vernon at a regular meeting of the City Council duly
held on Monday, June 21, 2010, and thereafter was duly signed by the
Mayor or Mayor Pro-Tem of the City of Vernon.
Executed this day of June, 2010, at Vernon, California.
(SEAL)
k
4
OFFICE OF THE CITY CLERK
4305 Santa Fe Avenue, Vernon, California 90058
Telephone (323) 583-8811
June 22, 2010
Arthur J. Gallagher & Co.
Insurance Brokers of California, Inc.
ATTN: Nasreen Kopecky, Account Manager
15 Enterprise, Suite 200
Aliso Viejo, CA 92656
Re: Property Insurance, Excess Liability Insurance and Excess Workers' Compensation
Insurance from Various Insurers
Dear Ms. Kopecky:
Transmitted herewith is a copy of Resolution No. 2010-81 that was approved by City Council on
June 21, 2010.
If you have any questions regarding this matter, please call Mr. Willard Yamaguchi at (323) 583-
8811 ext. 175.
Very ruly yours,
WILLARD G. YAova
City Clerk
WGY:dj
Enclosure
c: Ana Barcia
Resolution No. 2010-81
E,cfusivefy Industrial
RECEIVED
JUN 17 2010
CITY CLERK'S OFFICE
JUN 1 6 2010
a:o4
STAFF REPORT
Risk Management
DATE: June 16, 2010 6
TO: Honorable Mayor and City Council
FROM; Willard G. Yamaguchi, Risk Manager
RE: Policy Renewal for 2010-11
Property
The City has property insurance policy for utilities and non -utilities for direct physical loss or
damage, including flood and equipment breakdown. Travelers Property Casualty Company is -
the underwriter. For 2009-10, the cost of the premium for property insurance is $322,490, and
$75,510 for boiler and machinery. The policies will expire on July 1, 2010.
For 2010-11, Risk Management obtained a quote from Travelers Property Casualty Company
("Travelers") for property at $312,490, and $72,001 for boiler and machinery. This represents a
3.4% reduction in premium cost. To date, other carriers have declined to quote due to the
changes on the City's schedule of property values. Please note that all bids are exclusive of
surplus lines taxes and fees.
Liability
The City's excess liability policies will expire on July 1, 2010. Total coverage is $20 million,
with primary and secondary layers of $10 million each, with a $2 million self retention.
Presently, Everest National Insurance Company ("Everest") insures the City for both the primary
and secondary layers.
For 2010-11, Risk Management obtained quotes from Everest, also written under Starr
Indemnity &Liability Company ("Starr"), and Lexington Insurance ("Lexington"). Ironshore
Insurance declined to quote.
Everest's bid stayed flat for the primary layer at $93,200, and Starr's bid for the secondary layer
at $38,800. The total premium for the two layers is $132,000. Lexington's quote came in at
$157,000.
Workers Compensation
The City's excess workers compensation policy will expire on July 1, 2010. The City is insured
for $50 million, with a $1 million self -retention. Currently, coverage is provided by New York
Marine and General Insurance Company ("New York"). The cost of the premium is $133,657.
For 2010-11, Risk Management obtained a quote from the current carrier, New York at
$118,391. This is an 11% reduction in premium cost. ACE and Safety National declined to
quote.
New York also provided quotes for lower self insured retentions:
• $168,527 for a self retention of $750,000
$209,344 for a self retention of $500,000
Fiscal Impact
Sufficient funds have been budgeted for this expense.
Recommendation
Risk Management recommends the purchase of the following insurance policies:
Property- Travelers at $312,490, and $72,001;
Liability- Everest for the primary layer at $93,200 and Starr for the secondary layer at
$38,800; and
• Workers Compensation- New York at $118,391.
All bids are exclusive of surplus lines taxes and fees.
WGY/ab
cc: Donal O'Callaghan
Of vgR
to11N
JUN 1 0 2010
Inter Office Memorandum
Risk Management RECEIVED
DA: June 10, 2010 JUN 1 0 2010
TO: Donal O'Callaghan, City Administrator CITY CLERKS OFFICE
FR: Willard G. Yamaguchi, Risk Manager
RE: Policy Renewal for 2010-11
Property
The City has property insurance policy for utilities and non -utilities for direct physical loss or
damage, including flood and equipment breakdown. Travelers Property Casualty Company is
the underwriter. For 2009-10, the cost of the premium for property insurance is $322,490, and
$75;510 for boiler and machinery. The policies will expire on July 1, 2010.
For 2010-11, Risk Management obtained a quote from Travelers Property Casualty Company
("Travelers") for property at $312,490, and $72,001 for boiler and machinery. This represents a
3.4% reduction in premium cost. To date, other carriers have declined to quote due to the
changes on the City's schedule of property values. Please note that all bids are exclusive of
surplus lines taxes and fees.
Liability
The City's general liability policies will expire on July 1, 2010. Total coverage is $20 million,
with primary and secondary layers of $10 million each, with a $2 million self retention.
Presently, Everest National Insurance Company ("Everest") insures the City for both the primary
and secondary layers.
For 2010-11, Risk Management obtained quotes from Everest, also written under Starr
Indemnity & Liability Company ("Starr"), and Lexington Insurance ("Lexington"). Ironshore
Insurance declined to quote.
Everest's bid stayed flat for the primary layer at $93,200, and Starr's bid for the secondary layer
at $38,800. The total premium for the two layers is $132,000. Lexington's quote came in at
$157,000.
Workers Compensation
The City's excess workers compensation policy will expire on July 1, 2010. The City is insured
for $50 million, with a $1 million self. -retention. Currently, coverage is provided by New York
Marine and General Insurance Company ("New York"). The cost of the premium is $133657.
For 2010-11, Risk Management obtained a quote from the current carrier, New York at
$118,391. This is an 11% reduction in premium cost. ACE and Safety National declined to
quote.
New York also provided quotes for lower self insured retentions:
$168527 for a self retention of $750,000
$209,344 for a self retention of $500,000
Fiscal Impact
Sufficient funds have been budgeted for this expense.
Recommendation
Risk Management recommends the purchase of the following insurance policies:
• Property- Travelers at $312,490, and $72,001;
• Liability- Everest for the primary layer at $93,200 and Starr for the secondary layer at
$38,800; and
• Workers Compensation- New York at $118,391.
All bids are exclusive of surplus lines taxes and fees.
WGY/ab