FROM: James D. Herberg, General Manager
Originator: Lorenzo Tyner, Assistant General Manager
SUBJECT:
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2021-22 PROPERTY - LIABILITY INSURANCE RENEWALS
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GENERAL MANAGER'S RECOMMENDATION
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RECOMMENDATION: Recommend to the Board of Directors to:
Approve the Orange County Sanitation District FY 2021-22 Property-Liability Insurance Renewals included in the FY 2021-22 Budget Update for the not-to-exceed amounts specified below:
Property and Boiler & Machinery - Not to Exceed
$ 1,484,593
Excess General Liability Insurance - Not to Exceed
$ 906,635
Excess Workers' Compensation Insurance - Not to Exceed
$ 271,860
Earthquake Insurance - Not to Exceed
$ 118,166
TOTAL
$ 2,781,254
Includes Option #2 of the OC San 2021 Year Over Year Premiums Worksheet which is a reduction to the Flood Limit from $100M to $25M and an increase in the deductible from $500,000 to $1M.
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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 received 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 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.
The extreme uncertainty in the market due to COVID-19 and the abovementioned 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 ter...
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