2014 2:00:00 PM

Monday, June 9, 2014 2:00 PM
Council Chambers, Legislative Bldg, 745 4th St., Sparks

General Business: 6.3

Title: Consideration and possible approval to purchase various commercial insurance policies to protect the financial interests of the City for the next policy periods and authorization for the Contracts and Risk Manager to execute agreements for those policies.

Petitioner/Presenter: Dan Marran, CPPO, C.P.M., Contracts and Risk Manager/Dan Marran, CPPO, C.P.M., Contracts and Risk Manager

Recommendation: Recommend approval to purchase commercial insurance policies to protect the financial interests of the City of Sparks for the next policy periods.

Financial Impact: $446,640.00

Total Costs: $446,640.00

Fund: Municipal Self-Insurance Account: 603065
Program: Admin/Premium (Non Claim) Transactions in Muni Ins Fund (050515)
Amount: $446,640.00 Budget Status: Over Budget (See Budget Correction Plan)

Budget Correction Plan:
This is a Fiscal 2015 item, approved at the June meeting for encubrance and payment after July 1st.

Business Impact (Per NRS 237):
A Business Impact Statement is not required because this is not a rule.

Agenda Item Brief: While most primary layers of risk exposure are self-insured, the City purchases commercial insurance policies to protect its financial interests against unpredictable, catastrophic losses. These policies include: Property & Contents (including boiler & machinery, auto physical damage and cyber liability), public agency general liability, employee dishonesty and tenant users liability. This agenda item authorizes the Contracts and Risk Manager to execute the necessary paperwork associated with these those policies.

Background: The City self-funds loss exposures that are predictable, where it is not cost effective to purchase commercial insurance, and where losses do not threaten its financial stability. However, there are potential issues that present significant exposure to the City's financial stability, are somewhat unpredictable, and lend themselves to being commercially insured. The lines of coverage which are commercially insured include: Property & Contents (including boiler & machinery, auto physical damage and cyber liability), public agency general liability, employee dishonesty and tenant users liability (to protect the city and protect those renting our facilities). With the assistance of its broker (Wells Fargo Insurance Services, USA), Management Services has marketed these coverages with an eye on value (broadest coverage for the most competitive premium).

Analysis:

The city continues to work to control losses and limit exposure through the Risk Committee and working with departments to identify potential exposures. In marketing the City policies this year, staff was challenged with an insurance market that had predicted increased premium rates of as much as 10%. In the case of City policies, we were able to negotiate increases that are below the market average. A spreadsheet detailing those commercial policies is attached. In Summary, premium changes from the previous policy period are as follows: Property/Boiler: Up 2% ($3,875) Public Entity General Liability: Up 5.5% ($13,056) Employee Dishonesty: Up 5% ($930) Tenant User Liability: Flat (No expense to City) The total estimated premium depicted on the attached spreadsheet may be adjusted upward or downward, depending on variations in actual exposures throughout the course of the policy year.

COVERAGE CHANGES: There are no coverage level changes proposed for this policy period.

Alternatives: 1. The City Council may approve the item as recommended. 2. The City Council may reject the recommendation of staff. 3. The City Council may choose not to approve the purchase of insurance policies for 2014-2015, but direct the City Manager further.

Recommended Motion: I move to approve purchase of insurance policies for 2014-2015 and authorize the execution of required policy documents as recommended by the Contracts and Risk Manager.

Attached Files:

Ins Cost Grid-Combined Fiscal 2015.pdf

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