FROM: James D. Herberg, General Manager
Originator: Lorenzo Tyner, Assistant General Manager
SUBJECT:
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2020-21 PROPERTY - LIABILITY INSURANCE RENEWALS
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GENERAL MANAGER'S RECOMMENDATION
recommendation
RECOMMENDATION: Recommend to the Board of Directors to:
Approve the Orange County Sanitation District FY 2020-21 Property-Liability Insurance Renewals for the not-to-exceed amounts specified below:
Property and Boiler & Machinery - Not to Exceed
$ 1,167,866
Excess General Liability Insurance - Not to Exceed
$ 584,718
Excess Workers' Compensation Insurance - Not to Exceed
$ 207,000
Earthquake Insurance - Not to Exceed
$ 93,079
TOTAL
$ 2,052,663
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BACKGROUND
Financial Management staff and the Orange County Sanitation District's (Sanitation District) operational insurance broker, Alliant, began the renewal process in January and received final quotes in June. After negotiating with the insurance carriers, Alliant was able to secure competitive rates for the Sanitation District without compromising the quality of coverage provided. The insurance market has been in a state of flux due to COVID-19 and events around the world and in the state of California. There is a lot of uncertainty in the market and insurers have taken losses for previous years and, as a result, insurance costs will increase to absorb the losses.
There are key differences over expiring coverages - the historic $1 billion All Risk Limit and extensive flood limits previously provided are not sustainable. Such flood limits are worth millions of dollars in the market currently, as flood is viewed as a catastrophic exposure, in the same vein that the earthquake peril is viewed. The coverage can be bought, but the costs are extremely high, as available capacity in the market is going to the highest bidder, especially with what is expected to be an above average hurricane season for 2020.
The extreme uncertainty in the market is due mainly to COVID-19 and its ...
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