|Manatee County Government Administrative Center Commission Chambers, First Floor 9:00 a.m. - September 24, 2013|
Agenda Item #17
Purchase of Excess Workers Compensation and Liability Insurance
Contact and/or Presenter Information
Raymond Carter, Risk Manager County Attorney's Office
Motion to approve the purchase of excess workers compensation and liability insurance in an amount not to exceed $461,421.50 (inclusive of all State/Federal mandated fees) which is Option 1 of the attached proposal from First Florida Insurance Brokers, and to approve the County Attorney or his designee to execute all required documents.
The Board of County Commissioners of Manatee County purchases excess workers' compensation and liability insurance to protect the County from catastrophic financial loss. Pursuant to Florida Statute 768.28 and Chapter 440 Florida Statutes, the Risk Management Division administers the risk management fund 505 to finance its Property, Casualty and Workers’ Compensation programs. The Property insurance program is renewed each year on June 1st and is not included in this agenda item.
To ensure sufficient coverage limits, the County purchases excess coverage, necessary to protect against large losses; to provide higher limits required by contract; or to cover a claims bill pursuant to Florida Statute 768.28. The current program expires on October 1, 2013, and contains the following provisions: The liability total loss limit per expiring program is $5 million per occurrence and $10 million aggregate, with a $500,000 deductible. The workers compensation portion of the expiring program has a $600,000 deductible. The county self administers the auto and general liability claims, and Commercial Risk Management administers workers compensation claims.
The current carrier, Star Insurance Company, notified the County on July 5, 2013, that they would not renew the expiring policy. Research through the AM Best website and other sources indicates that Star’s financial outlook has been downgraded to negative. Additionally, Star Insurance, who has been underwriting many public entities’ excess policies, decided to not write new polices effective immediately. This places tremendous upward pressure on pricing because of their very competitive rates in the market place, and creates a very short window of opportunity for many October 1, 2013 renewals. The workers compensation portion of the program is driving premium increases because of “presumption” claims. Presumption laws assume that first responders like Sheriff’s deputies and firefighters claims related to heart and lung are “presumed” to be caused by employment.
The Risk Management Division has performed an extensive programmatic review of the risk financing program to ensure that it would be comprehensive, competitive, and underwritten by financially sound carriers. Staff has examined loss runs for workers' compensation claims, and determined that the County has not had a workers' compensation claim breach its $600,000 deductible within the last five years. Staff recommends increasing the workers compensation deductible to $750,000 to save valuable premium dollars and apply these savings to fund reserves. Staff is also aware that the County is currently bare (does not maintain) public officials, or employment practices, excess coverage, this recommendation will provide this coverage, and thereby provide a more well balanced and comprehensive excess liability insurance program.
Key enhancements of this recommendation are outlined below:
Option 1 will have excess liability limits of $2 million per occurrence and $4 million aggregate for General Liability and Auto Liability claims, and provide the public officials/employment practices coverage, along with the clash coverage, and increase our retention on workers' compensation claims to $750,000.
Staff recommends a Motion to approve the purchase of excess workers' compensation and liability insurance in an amount not to exceed $461,421.50 (inclusive of all State/Federal mandated fees) which is Option 1 of the attached proposal from First Florida Insurance Brokers and to approve the County Attorney or his designee execute all required documents. All coverages are subject to the terms, conditions, endorsements, and exclusions of the policy. Limits and Self Insured Retentions as proposed are in line with those in place for like sized counties in the State of Florida.
County Attorney Review
Other (Requires explanation in field below)
Explanation of Other
The Risk Management Division has discussed this item with the County Attorney Mr. Palmer.
Instructions to Board Records
Please return a stamped copy of this Agenda Memorandum certifying its approval by the Board of County Commissioners to Raymond Carter (firstname.lastname@example.org) – County Attorney’s Office.
Cost and Funds Source Account Number and Name
$461,421.50 From 5050001300(50%), 5050001400(25%), 5050001500(25%) Risk Management Fund
Amount and Frequency of Recurring Costs
$461,421.50 One time payment
Attachment: MCBOCC- XS Liability Proposal Revised 09 16 2013.pdf