CITY OF SAN MATEO
CITY OF SAN MATEO
Agenda Report
City Hall
330 W. 20th Avenue
San Mateo CA 94403
www.cityofsanmateo.org
Agenda Number: 8 Section Name: {{section.name}} Account Number: 10-1711 File ID: {{item.tracking_number}} TO: City Council
FROM: Prasanna W. Rasiah, City Attorney
PREPARED BY: City Attorney's Office
MEETING DATE: June 17, 2024
SUBJECT:
Fiscal Year 2024-25 General Liability and Property Insurance – Purchase Authorization RECOMMENDATION:
Authorize a staff committee comprised of the City Manager, the Finance Director, and the City Attorney to select the most cost-effective program to insure the City's general liability, property risks, and Library, and authorize the City Attorney to execute all required documents to purchase the selected insurance for fiscal year 2024-25.
BACKGROUND:
For the past 4 years, Council authorized a staff committee comprised of the City Manager, the Finance Director, and the City Attorney to select the most cost-effective program to insure the City’s general liability and property risks, and authorized the City Attorney to execute all required documents to purchase the selected insurance. The request for Council to authorize a committee in fiscal year 2020-21 was to allow the City to enroll in an organization called Public Risk Innovations, Solutions, and Management (PRISM), a joint powers authority comprised of dozens of government agencies, that provided coverage up to $25 million above a $1 million Self-Insured Retention (SIR) per occurrence, and a $1 million Individual Member Corridor Deductible (IMCD) that erodes over the course of the fiscal year in exchange for a premium discount for the excess liability insurance policy.
This remains a challenging insurance market. On the one hand, the property insurance market has improved such that its premium for property insurance will increase this year by an estimated 11.94%, versus the 43.7% increase that occurred in 2023. However, the premium increase for excess liability coverage is estimated at 57.4% - 68.9%, partly due to the state of the insurance market but also because of significant litigation that was settled. As always, the fluid circumstances of property coverage and cyber excess renewal are currently in review by the staff committee.
City of San Mateo 2024-2025 Insurance Budget Estimates
Coverage Expiring
Premium
Renewal
Premium
2024-2025
Budget Low
Estimate
2024-2025 Budget
High Estimate
% Change Low
Estimate
% Change High
Estimate
Library DIC $82,554 $95,350 $91,016 $99,684 10.3% 20.8% Excess Liability $1,038,771 $1,695,000 $1,635,000 $1,755,000 57.4% 68.9% Property, Boiler &
Machinery,
Environmental &
Cyber
$1,024,773 $1,147,186 $1,147,186 $1,147,186 11.9% 11.9%
CITY OF SAN MATEO
Crime Insurance $9,287 $10,003 $9,751 $10,216 5.0% 10.0% Property (Bridges) $125,492 $144,943 $138,355 $151,531 10.3% 20.8% SAM $19,501 $20,964 $20,476 $21,451 5.0% 10.0%
San Mateo-Foster
City Public
Financing
Authority
(Liability)
$21,454 $23,599 $22,526 $24,672 5.0% 15.0%
Total: $2,313,741 $3,137,026 $3,064,310 $3,209,740 32.0% 38.2% In March 2024, the City Attorney’s Office received the fiscal year 2024-25 Insurance Budget Estimates and PRISM Premium Estimates, and then received updated estimates in June 2024, as follows: the estimated premium for Property, Boiler & Machinery, Environmental & Cyber coverage is $1,147,186, which matches the budget estimate. The estimated premium for Property (Bridges) coverage at $144,943 represents an average of the low and high budget estimates, as does the premium for Sexual Abuse and Molestation (SAMS) coverage at $20,964. The renewal premium estimates currently total $3,137,026, which is below the budget high estimated total of $3,209,740. Note that the final estimate for Excess Liability coverage has not yet been received but is expected to be no more than the budget high estimate of $1,755,000 listed in the table above. Regardless, the staff committee is given broad authority to obtain insurance coverage even if the estimate is somewhat more than the budget high estimate.
The staff committee is recommending that Council authorize the committee to select the most cost-effective solution continuing into fiscal year 2024-25 as circumstances remain challenging and unusual. The City Attorney would then execute all of the documents necessary to obtain that insurance. Included in this evaluation would be liability insurance and property insurance (including insuring the City’s critical bridges), and excess cyber liability, if deemed necessary.
In addition, the Main Library's Difference in Conditions (DIC) including Flood and Earth Movement/Building Ordinance/ICC/Demo coverage is renewed annually in March. This year's premium for the Library's DIC insurance coverage was renewed for $82,554.28. The budget high estimate for this coverage is $99,684, which will be renewed in March 2025.
BUDGET IMPACT:
The City paid approximately $2.28 million for general liability and property insurance (including bridges, cyber, and crime) for fiscal year 2023-24. The renewal premium for 2024-25, including Library DIC is estimated to be $3,137,026. The proposed fiscal year 2024-25 budget assumed $3.2 million for insurance premiums, therefore no modifications to appropriations are required.
ENVIRONMENTAL DETERMINATION:
This item is not a project subject to CEQA, because it can be seen with certainty that it will not cause a physical change in the environment. (Public Resources Code Section 21065.)
NOTICE PROVIDED
All meeting noticing requirements were met.
ATTACHMENTS
None
STAFF CONTACT
Prasanna W. Rasiah, City Attorney
[email protected]
(650) 522-7020