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, flood 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), the City markets these coverages with an eye on value (broadest coverage for the most competitive premium). 

The city continues to work to control losses and limit exposure through the Risk Committee and working with departments to identify potential exposures.  The total premiums proposed for this renewal cycle show a year-to-year increase of 2% from the current fiscal year.  This increase is not necessarily tied to any claims history or change in insured values at the City and is likely due to year-to-year adjustments in the insurance market

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
The City has not sought any changes to coverages for the coming fiscal year.  We continue to have discussions regarding our coverage needs on a going-forward basis.

For example, we have determined through continuing discussion that current City property insurance policies include some coverage for art installations either owned by the City, or owned by others that are within the custody and control of the City (during display).  The available coverage would be subject to the same Self-Insured Retention amounts as other physical property insured under our policies.

Similarly, we have had discussions concerning insurance coverage with respect to the ownership or contracted use of drones in support of City operations.  The benefit of video footage provided by drones has become apparent in emergency management and has further potential use in ongoing operations in community services, police and fire applications. Currently, there are specific exclusions in the City’s insurance policies with respect to owned aircraft.  The growth of the drone industry and the rules associated with their use at a federal and local level cause concern in the insurance industry and coverage questions continue to evolve.  At the moment, our recommendation is to continue to use contracted vendors for these services where the insurance carried by the drone operator would function as the primary coverage for incidents that may occur.

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 2017-2018, but direct the City Manager further.

I move to approve purchase of insurance policies for 2017-2018 and authorize the execution of required policy documents as recommended by the Contracts and Risk Manager.