Subject: CITYWIDE INSURANCE
COUNCIL DISTRICT: Citywide
SNI AREA: N/A
Approval of purchase of citywide insurance policies for the period July 1, 2001 to June 30, 2002 in an amount not to exceed $891,955.
BACKGROUND
The City transfers exposure for catastrophic events via insurance policies, when the frequency of events cannot be predicted, the severity of a potential loss could seriously hamper the City’s operation, and the cost of coverage is not exorbitant. The City purchases a number of insurance policies for which the premium is less than $100,000.
Currently the City purchases the following policies with an annual premium in excess of $100,000:
· Airport Owners and Operators General Liability – Provides coverage for bodily injury, property damage and personal injury for claims occurring at the airport.
Insurance carrier: Phoenix Aviation Managers.
· Law Enforcement Professional Liability – Provides coverage for an actual or alleged error or omission, negligent act, neglect or breach of duty by the City while conducting law enforcement activities, which result in bodily injury, property damage or personal injury. Insurance carrier: Zurich Specialties.
· Aircraft Hull and Liability – Provides coverage for bodily injury, including passengers, property damage and hull for Cessna 182 and American Eurocopter EC120B.
Insurance carrier: Phoenix Aviation Managers
· Excess Workers’ Compensation – Pays medical and wage benefits above $500,000 for each accident. The City is self-insured for the first $500,000 for each accident.
Insurance carrier: American International Group (AIG)
ANALYSIS
Annually the City’s insurance brokers approach all viable insurance carriers on our behalf to obtain the broadest insurance coverage at the best price. Marketing efforts have resulted in the following:
|
COVERAGE/DEDUCTIBLE |
CARRIER |
PREMIUM |
|
Airport Liability - $200,000,000 each occurrence combined single limit for bodily injury and property damage, with a $25,000,000 each occurrence limit for personal injury. Deductible: $100,000 each occurrence, excluding all loss adjusting and litigation defense costs |
Phoenix Aviation Managers · Have provided the coverage for the past three years and continue to offer the best premium |
$121,043 |
|
Law Enforcement Professional Liability - $3,000,000 each occurrence Deductible: $7,500 each claim, including claims expenses. |
Zurich Specialties · Have offered renewal premium at the same as expiring - $400 per officer |
$455,000 |
|
Aircraft Hull and Liability - $20,000,000 each occurrence for liability. Hull coverage: Cessna $ 257,000 Eurocopter $1,750,000 Deductible: Liability – NIL Hull/Cessna - $500 Hull/Eurocopter – 5% of the value |
Phoenix Aviation Managers · Have provided the coverage for the past three years and continue to offer the best premium |
$121,912 |
|
Excess Workers’ Compensation – Statutory coverage Deductible: $500,000 each claim |
American International Group · This is the third year of a three-year policy; therefore rate is guaranteed. Otherwise, increase would be 25-30%. |
$194,000 |
Not applicable.
This memo has been coordinated with the City Attorney’s Office and the Budget Office.
Fund: 523 Airport Maintenance and Operation Fund
Amount: $121,043.00
Budget Document: Proposed 01-02 Operating Budget, Page 6
Fund: 001 Field Services
Amount: $576,912.00
Budget Document: Proposed 01-02 Operating Budget, Page 444
Fund: 001 General Fund
Amount: $194,000.00
Budget Document: Proposed 01-02 Operating Budget, Page 609
SCOTT P. JOHNSON
Director, Finance Department