Finance & Insurance Committee Item 7-1 June 10, 2019 - - PowerPoint PPT Presentation

Finance & Insurance Committee Item 7-1 June 10, 2019

Finance & Insurance Committee Item 7-1 Slide 2 June 10, 2019

Review the Current Program Provide premium costs for this year’s Insurance Renewal

Objectives

Finance & Insurance Committee Item 7-1 Slide 3 June 10, 2019

Self-Insured Retentions Claims Programs to Manage Self-Insured Retentions Liability / Property Workers’ Compensation Excess and Specialty Insurance Coverages

Finance & Insurance Committee Item 7-1 Slide 4 June 10, 2019

General Liability $25 million Workers’ Compensation $ 5 million Property Damage* Self-Insured

* Excluding Stand Alone Property Insurance Policy

Self-Insured Retention

Finance & Insurance Committee Item 7-1 Slide 5 June 10, 2019

Liability & Property

Risk Management Unit Third Party Claims Administrator MWD General Counsel

Workers’ Compensation

Workers’ Compensation / Medical Unit Third Party Claims Administrator MWD General Counsel

Finance & Insurance Committee Item 7-1 Slide 6 June 10, 2019

Excess Insurance

General Liability $75 million Workers’ Compensation Statutory Limits Public Official, Directors & Officers Liability $65 million Fiduciary & Employee Benefit Liability $60 million

Finance & Insurance Committee Item 7-1 Slide 7 June 10, 2019

In Million Dollars

Excess Coverage SIR AEGIS 1st Layer EIM 2nd Layer Coverage Limits

General Liability 25 35 40 100 Fiduciary and Employee Benefit Liability 25 35 25 85 Directors & Officers Liability 25 25 40 90

Associated Electric & Gas (AEGIS) Energy Insurance Mutual (EIM) Self-Insured Retention (SIR)

Finance & Insurance Committee Item 7-1 Slide 8 June 10, 2019

Actuarial Study, Insurance Broker and Staff Reviews Metropolitan’s operations and risks remain stable Embedded safety programs in operations Environmental, Health & Safety training and monitoring Claims Management Programs Access to Capital

Finance & Insurance Committee Item 7-1 Slide 9 June 10, 2019

Specialty Insurance

Aircraft Liability $25 million Aircraft Hull Assessed Value Property Damage Assessed Value up to $25 million Crime $ 5 million Special Contingency * $ 5 million Travel Accident * $ 250,000

* 3-year duration coverages last purchased 2016/17 are up for renewal

Finance & Insurance Committee Item 7-1 Slide 10 June 10, 2019

2019/20 Outlook

12.6% Overall Cost Increase

Market Factors Causing Expected Cost Increase over FY2018/19 Portfolio Adjustments and Renewal Timing

to

$1.12 million $1.26 million

Finance & Insurance Committee Item 7-1 Slide 11 June 10, 2019

2019/20 Outlook Market Factors Causing Expected Cost Increase

• ver FY2018/19

Impact of hurricane and wildfire losses on the insurance market Recent surge in law enforcement and road design liability losses

Finance & Insurance Committee Item 7-1 Slide 12 June 10, 2019

2019/20 Outlook Non-Market Caused Cost Increase Renewal of 3-year duration policies Continuity Credits Additional Fiduciary and Employee Benefit Liability Coverage

Finance & Insurance Committee Item 7-1 Slide 13 June 10, 2019

3-year Policies Purchase $31,686 Continuity Credit $42,081 Recommended Purchase of Additional Excess Fiduciary Coverage $30,960 Total $104,727

Non-Market Caused Cost Increase

Finance & Insurance Committee Item 7-1 Slide 14 June 10, 2019

Excess Insurance Premiums (in dollars)

Premium Costs

Excluding Continuity Credits and Additional Excess Fiduciary Coverage

2018/19 Actual 2019/20 Quoted 2019/20 % Change Without 3-year policies

1,175,231 1,196,530 2%

With 3-year policies

1,175,231 1,226,430 4%

Finance & Insurance Committee Item 7-1 Slide 15 June 10, 2019

Excess Insurance Premiums (in dollars)

Coverage Type 2018/19 Actual 2019/20 Quoted 2019/20 % Change General Liability 658,119 689,505 5% Public Officials Directors & Officers Liability 247,603 289,684 17%

Finance & Insurance Committee Item 7-1 Slide 16 June 10, 2019

Excess Insurance Premiums (in dollars)

Coverage Type

2018/19 Actual 2019/20 Quoted 2019/20 Cost Change 2019/20 % Change

Option 1

Fiduciary and Employee Benefit Liability

45,604 76,564 30,960 68%

Option 2

Fiduciary and Employee Benefit Liability

45,604 45,604 0%

Finance & Insurance Committee Item 7-1 Slide 17 June 10, 2019

Excess Insurance Premiums (in dollars)

Coverage Type

2018/19 Actual 2019/20 Quoted 2019/20 % Change

Workers’ Compensation 112,940 109,158 (3%) Aircraft Hull & Liability 41,501 50,230 21% Crime 10,957 9,814 10%

 Property

1,944 2,435 22%

 Stand alone coverage will continue for OC-71, SD-7 & SD-11

Finance & Insurance Committee Item 7-1 Slide 18 June 10, 2019

Excess Insurance Premiums (in dollars)

Coverage Type

2016/17 Actual 2019/20 Quoted 2019/20 % Change

 Special Contingency

4,489 4,263 (5%)

 Travel Accident

23,157 27,423 18% Premium Costs 27,646 31,686 14.6%

 3-year policies purchased in 2016/17 are up for renewal

Finance & Insurance Committee Item 7-1 Slide 19 June 10, 2019

Premium Comparison by Fiscal Year

$1,148,248* $1,128,977

Quoted 2019/20

$1,129,546 $1,118,668 Actual 2014/15 Actual 2016/17 Actual 2015/16

$1,259,176*

Actual 2018/19 $1,120,335 Actual 2017/18

* Includes renewal cost of 3-year duration policies for Travel Accident and Special Contingency policies

$1,228,216*

Option 1 Option 2

Finance & Insurance Committee Item 7-1 Slide 20 June 10, 2019

Premium Comparison by Fiscal Year

1,100,000

Purchased 3-year coverage for Travel Accident and Special Contingency: 2010/11 2013/14 2016/17 2019/20 Includes costs for renewal and additional coverage for Fiduciary Liability.

1,500,000

Finance & Insurance Committee Item 7-1 Slide 21 June 10, 2019

Approve up to $1.26 million to renew

excess and specialty insurance coverages, and extend $35 million Excess Fiduciary coverage over the Deferred Compensation Programs

Option 1 Impact

Within the $1.3 million budget, resulting in an approximate $140,508 cost increase compared to FY 2018/19

Finance & Insurance Committee Item 7-1 Slide 22 June 10, 2019

Approve up to $1.23 million to renew

excess and specialty insurance coverages.

Option 2 Impact

Within the $1.3 million budget, resulting in an approximate $109,508 cost increase compared to FY 2018/19

Finance & Insurance Committee Item 7-1 Slide 23 June 10, 2019

Approve up to $1.26 million to renew

excess and specialty insurance coverages, and extend $35 million Excess Fiduciary coverage to the Deferred Compensation Programs

Option 1