FROM: James D. Herberg, General Manager
Originator: Lorenzo Tyner, Assistant General Manager
SUBJECT:
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2022-23 PROPERTY-LIABILITY INSURANCE RENEWALS
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GENERAL MANAGER'S RECOMMENDATION
recommendation
RECOMMENDATION:
Approve the Orange County Sanitation District FY 2022-23 Property-Liability Insurance Renewals included in the FY 2022-23 and FY 2023-24 Budget for the not-to-exceed amounts specified below:
Property and Boiler & Machinery - Not to Exceed
$ 1,812,868
Excess General Liability Insurance - Not to Exceed
$ 1,064,822
Excess Workers' Compensation Insurance - Not to Exceed
$ 343,000
Earthquake Insurance - Not to Exceed
$ 131,927
TOTAL
$ 3,352,617
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BACKGROUND
Financial Management staff and the Orange County Sanitation District's (OC San) operational insurance broker, Alliant, began the renewal process in January and receives final quotes in June. After negotiating with the insurance carriers, Alliant was able to secure competitive rates for OC San without compromising the quality of coverage provided. The insurance market has been in a state of flux due to COVID-19, weather extremes, sea level rise, wildfires, catastrophic losses, social inflation, and cybersecurity threats around the world and in the state of California. There is a considerable amount of uncertainty in the market as insurers have taken outsized losses for previous years, and the concern is that rates are insufficient to keep pace with the expectation of future losses. As a result, insurance costs need to increase to absorb these expectations.
The extreme uncertainty in the market due to COVID-19 and the above-mentioned factors will impact the insurance rates. As such, OC San will need to pay higher rates to obtain the same coverage limits. The current extreme degree of uncertainty in the insurance industry means severe rate increases, at least in the short term, until the numbers play out for the insurance industry over the next few years.
The pro...
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