CA Review JRT
Meeting Date: June 20, 2023
To: Mayor and City Council
From: Scott Chadwick, City Manager
Staff Contact: Ed Garbo, Risk Manager
[email protected] or 442-339-2471
Subject: Purchase of property insurance coverage for fiscal year 2023-24 Districts: All
Recommended Action
Adopt a resolution approving the purchase of $100 million of property insurance through Aon Insurance for fiscal year 2023-24 in an amount not to exceed $575,000.
Executive Summary
The city is purchasing its annual property insurance coverage, in the amount of $100 million through Aon Insurance for fiscal year 2023-24 in an amount not to exceed $575,000.
The city moved its property insurance coverage to Aon two years ago because it was able to provide higher limits and broader coverage than previous brokers and programs.
The policy period will run from July 1, 2023, to June 30, 2024.
This purchase must be approved by the City Council under Carlsbad Municipal Code Section
3.28.040 (D)(1) because the cost exceeds $100,000 per agreement year.
Fiscal Analysis
The fiscal year 2023-24 premium for Aon property insurance coverage is not to exceed $575,000. This represents a $114,802 increase over last year’s actual cost. The premium will be paid with funds from the FY 2023-24 Risk Management Internal Service Fund. Sufficient funds have been requested in the FY 2023-24 budget for this premium.
Options
The market for property insurance, including cyber coverage, has remained exceedingly unstable for the last several years. If the purchase of excess liability coverage through Aon is rejected, the city will have to attempt to obtain coverage in the open market. This will likely result in a more expensive premium for less coverage than what is being proposed, or a possible lapse in coverage while other alternatives are investigated.
Next Steps
Staff will create a purchase order for Aon’s payment.
June 20, 2023 Item #2 Page 1 of 3
Environmental Evaluation
This action does not require environmental review because it does not constitute a project within the meaning of the California Environmental Quality Act under California Public Resources Code Section 21065 in that it has no potential to cause either a direct physical change or a reasonably foreseeable indirect physical change in the environment.
Exhibits
1. City Council resolution
June 20, 2023 Item #2 Page 2 of 3
RESOLUTION NO. 2023-172
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD, CALIFORNIA, APPROVING THE PURCHASE OF $100 MILLION OF PROPERTY INSURANCE THROUGH AON INSURANCE FOR FISCAL YEAR 2023-2024 IN AN AMOUNT NOT TO EXCEED $575,000
WHEREAS, the City Council of the City of Carlsbad, California has determined that it desires to renew its annual property insurance through Aon; and
WHEREAS, Aon has negotiated a renewal of $100 million of property insurance coverage for the next fiscal year beginning July 1, 2023, and concluding on June 30, 2024, for an annual premium in an amount not to exceed $575,000.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Carlsbad, California, as follows:
1.That the above recitations are true and correct.
2.That the purchase of $100 million of property insurance coverage through Aon, effective July 1, 2023, to June 30, 2024, is hereby approved in the amount not to exceed $575,000.
PASSED, APPROVED AND ADOPTED at a Regular Meeting of the City Council of the City of Carlsbad on the 20th day of June, 2023, by the following vote, to wit:
AYES:
NAYS:
ABSTAIN:
ABSENT:
Blackburn, Bhat-Patel, Acosta, Burkholder, Luna.
None.
None.
None.
KEITH BLACKBURN, Mayor
SHERRY FREISINGER, City Clerk
(SEAL)
Exhibit 1
June 20, 2023 Item #2 Page 3 of 3
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