TMWRF purchases commercial property coverage to protect against losses relating to its property and contents (including boiler and machinery exposures).  Additionally, a Pollution Liability policy is carried at the facility and renewed on a 3-year cycle which is not under consideration at this time as the next renewal will occur in Fiscal 2018.  General liability (to cover premises exposures and acts of its employees) is covered under the City’s master General Liability policies and programs.  General liability claims over $100,000 are handled via the City’s master general liability policy; claims under that amount are managed by Risk Management under the City’s self-funded liability program and the City Risk Management Committee.  A spreadsheet detailing the Commercial Property Policy is attached.  This policy is renewed annually.  

The city continues to work to control losses and limit exposure through the Risk Committee and working with departments to identify potential exposures.  In the case of City policies, we were able to negotiate premium rates that have remained flat (or better) due to a consistent lack of claim history at the facility.  However, the total cost of premium is going up this year.  A spreadsheet detailing those commercial policies is attached. 

As a condition of the property coverage, the insurance carrier performs a physical property appraisal of the facility.  Previous to this cycle, the most recent appraisal, completed by a previous insurer had been complete in 2010.  A full appraisal by the City’s current carrier was completed in November of 2015 that resulted in an increase of appraised value from $195.2M to an updated value of $234.8M (21.97%).  The premium rate for property coverage is calculated against the new value, resulting in the year-to-year increase in premium cost of $41,188 (19%).

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.

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 2016-2017, but direct the City Manager further.

I move to approve the purchase of various commercial insurance policies to protect the financial interests of the Truckee Meadows Water Reclamation Facility for the next policy periods in the amount of $253,256 and authorize the Contracts and Risk Manager to execute agreements for those policies.