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HomeMy WebLinkAbout8.1 County Contracted Insurance &ty of DUBLYP . 17p-3D AGENDA STATEMENT Meeting Date: October 25, 1982 SUBJECT : County Contract Services - Insurance EXHIBITS ATTACHED : Letter from Judy Adams, Alameda County Risk Manager dated October 19, 1982; Letters from Ben Fernandez dated September 27, August 24, August 13 and August 6, 1982. RECOMMENDATION : Authorize the addition of the County of Alameda to the City's insurance policy. FINANCIAL STATEMENT: Reduction in County overhead charges for contract services. DESCRIPTION : As you may recall , at the time that the City negotiated the contracts for service with Alameda County, the County proposed that the City assume all liability exposures for services provided. As part of the final contract agreement the County agreed to accept a reciprocal hold harmless clause, in which the City would be responsible for the acts of its employees and the County would be responsible for the acts of County employees providing service to the City of Dublin. During the last several months, the County has been unsuccessful in securing a separate liability insurance policy to cover those services it provides to the City of Dublin. In order to adequately insure those services the County identified two alternatives. The first would be to add the County as an additional insured to the City's insurance policy. If the City agreed to add the County of its insurance policy the County would agree to pay any additional premium costs and also pay any premium increases which were directly attributable to contract services for not only the term of the contract, but also 2 years beyond the termination date of the contract. In addition, the overhead rates which the City presently pays the County would be reduced. 1 The second alternative would be for the County to cover the contract services to the City of Dublin under the County's Risk Management Program. The County has estimated that the annual cost for this type of coverage would be $98,217. This cost would be passed onto the City as part of the contract service, if this alternative was selected. It's important to note that the City is already paying a portion of this insurance cost in the overhead rates which it pays the County on all services except Sheriff services. The City's insurance broker has contacted the City's present insurance carrier, Continental Insurance Company. The insurance company underwriter has indicated that the only addi- tional cost of adding the County as an additional insured to the City's insurance policy would be a charge of $2,736 for liability coverage of those police vehicles which are COPIES TO: Judy Adams Ben Fernandez TTFM N(1 8. 1 AGENDA STATEMENT: County Contract Services-Insurance Page 2 specifically assigned to Dublin. This charge would be paid by the County. Recommendation It is Staff's recommendation that the City Council authorize the addition of the County of Alameda to the City's insurance policy and direct Staff to amend the contract agreements with the County with the following conditions included: 1 . The County will assume 100% of the cost of all additional premium increases which are the result of adding the County to the City's insurance policy for the term of the contracts and a period of 2 years after the termination date of the contracts. This also includes any increase in rates due to adverse claim experience resulting from the provision of contract services. 2. There should be an annual review of the various exposure charges and any impact caused by beneficial or adverse exposure. 3. Annual review and termination or revision clauses should be included. In summary the advantages to adding the County to the City's insurance policy are: 1 . The cost of insurance coverage to the City would be reduced in the form of reduced overhead charges. 2. Claims would be handled in a more expeditious manner with one insurance company handling all claims. There would be no subrogation conflicts between the County's insurance and the City's insurance. 3. All increased premium charges would be assumed by the County for a period of 2 years after the termination of contract services. In almost all cases the statute of limitations is 100 days or 1 year, therefore, additional exposure to the City would be minimal . ^ t o4< b .', o `,P 1FOilN/ , COUNTY ADM I N ISTRATOZ,RE C p. OAT2 9 82 F D rk Op Oi 4 of STEPHEN A. HAMILL MEL RING ASSISTANT COUNTY ADMINISTRATOR COUNTY ADMINISTRATOR October 19, 1982 Richard C. Ambrose City of Dublin P.O. Box 2340 Dublin, Ca. 94568 Dear Mr. Ambrose: Thank you for your letter of October 5th regarding the insurance coverage for contracts with the County of Alameda. Our estimates for cost allocation charges to the City of Dublin covering insurance risks to the County's Risk Management Program total $57,293. Most of this is for the Road Maintenance risk. This figure is for the seven month period beginning July 1, 1982 and ending January 31, 1983. The annual cost would be $98,217. Considering the expense involved, it would definitely be cost effective for the City to cover the County's liability under the City's policy since there will be no charge for that coverage. According to your request, the County will agree to a written agreement or addendum to the existing contract providing that the County is willing to pay any premium increases which were directly attributable to contract services. This obligation would not only be valid for the term of the contract, but also for a period of at least 2 years beyond the date in which the contract is terminated. Rich, let's see if we can get this matter tied up soon because the longer we wait, the less chance that the City's insurance will be willing to cover retroactive to July 1, 1982. We should keep in mind that it is important that the coverage go back to July 1 otherwise the County's risk management charges will need to be implemented. I recommend the Council consider authorizing you to add the County as additional named insured immediately and that the terms of the addendum be worked out as soon as possible thereafter. If you have any reservations about this approach, let me know. Thank you for your help. S'ncerely /4 UDY ADAMS, CSP RISK MANAGER JA:ph cc: Ben Fernandez George Barbera George Hewitt Jeff Campen Steven H ami l l 1221 OAK STREET SUITE 555 OAKLAND. CALIFORNIA 94612 14151 974-6252 I 7l[lfR j 1'LLB g, 11411,1ance ft q t4, / COOPER MCKENZIE MURPHY i*'• ,ti POST OFFICE BOX 1030 % t . . r PLEASANTON.CA.94588 0" ' a- PHONE:415-848.4423 xi • IF September 27 , 1982 City of Dublin 6500 Dublin Blvd, Suite 218 Dublin, Ca. 94568 Attn: Rich Ambrose Dear Rich: We have discussed the matter of segergating experience with Continental Insurance Company . John Bubrick, the senior commercial lines underwriter, states that this cannot be done. However, he does point out that the risk, even with the new exposure, is probably too small for experience rating anyway. Thus , if there were severe losses caused by assumption of liability under these contracts , there should be no effect on the premium caused by the adverse experience . We have received word from the county administrator' s office that the risk should be. assumed under your present contract or the county will be back charging you for the cost of the exposures . Judy Adams has indicated that a decision on this matter should be made as soon as possible so that we can put the entire matter behind us . Bests ega 4s , COO" ' MCKENZIE MU t j / Ben Fernandez RECEIVED 3EF/pb cc: Mike Nave Judy Adams SEP 2 $ 1982 George Barbera CITY OF DUBLIN vov ependent fim:mg /AGENT u..wv "tn i 0 7 . • AettelC1/11Ce ' COOPER McKENZIE MURPHY • f2 POST OFFICE BOX 1030 i 1 V' PLEASANTON.CA.94566 i PHONE*415•846.4423 September 16, 1982 R E C E 'I E p SEP171982 Continental City OF DUBLIN Attn: John Bubrick_ Subj : City of Dublin Dear John: Per our discussion, we would like to work out a solution to the possible problem that can result if the operations of the County of Alameda are insured under policy #CBP911523. • You will recall in recent correspondence that City of Dublin has undertaken contracts for Police Services, Animal Control Services, Street Maintenance and Building Construction. . The County of Alameda would like to be insured under our contract for provision of these services. The City of Dublin'is .agreeable'.to doing .t.his up to a point. The City of Dublin would not want any .adverse experience occurring from these contracts to effect their experience rating inthe future. Since the contracts only have a 1 year duration, it is possible that bad effects of poor experience could continue beyond the li£e.of the contract. . It would be difficult to request reimbursement from the County of Alameda under such circumstances. If you can work out a reasonable solution, such as issuing a separate contract or segregating experience internally, we would appreciate an early response. • • Best re gar , • ' 7 • '. COOPS• v c NZIE MURPHY IP ;en Fernandez BEF/j f , • voui 9he,eId9BI ,I7SU,ancr i AGENT w.n 0 o • i-atetali,ce Car COOPER McKENZIE MURPHY POST OFFICE BOX 1030 PLEASANTON.CA.94566 PHONE:415-846-4423 August 24, 1982 RECEIVES 'AUG 2 4198 • City of Dublin CITY OF. DUBLIN 6500 Dublin, Blvd. Ste . 218 Dublin, Ca. 94568 Attn: Richard Ambrose Dear Rich: Enclosed please find a copy of the confirmation from Continental Insurance Company regarding assumptions made regarding additional costs of coverages to be assumed in the various contracts entered into with the County of Alameda. We will keep the original of this letter on file to be certain that Continental Insurance Company does not change { its mind or its approach without prior knowledge . In regard to a written agreement between the City of Dublin and the County of Alameda, we do not profess to .be ' in a position to properly write such a document . We think that County Counsel' s Office should draft the final document. However, we think that such a document should include the following: a 1 . It should be agreed that the County of Alameda will assume 100% of the cost of all additional closures created by the written agreement between County of Alameda and the City of Dublin. 2 . County of Alameda should assume any incremental in- creases in rates due to adverse experience created by assumption of risk for the County of Alameda due i. t to the various agreements . 3 . There should be an annual review of the various ex posure charges and any impact caused by beneficial or adverse experience . 4. Any agreement entered into should be reviewed annually and a termination revision, on either parties part , • should be included. YOURI1Mdd/I NKWWICl�.4GENT a.mia rou nwn 0 As a practical matter, it will be difficult to assess the impact of experience on any of the charges . However, we are privy to the companys experience information . We do not anticipate any great problems , however we must have the cooperation of both parties in determining the proper way to handle any increase costs . As we discussed, we think that adding County of Alameda on to policy #CBP911523 will be to the benefit of both parties . As was pointed out, it would be difficult to separate the liability of the two parties in the event of a loss within the city limits i of Dublin. As long as the costs of the coverage are separated, we do not anticipate any great problems . Because this is relatively new ground, we would appreciate any comments on the foregoing and, should you wish additional infor- mation, please call upon us for additional input . Best regards , COOPER:'1"LC:KENZIE MURPHY 161/. .,/) Ben Fernandez BEF/jf encl . a 1 0 0 • Xtilanc,e Cl/Mr COOPER McKENZIE MURPHY POST OFFICE BOX 1030 PLEASANTON,CA.94566 eirjr PHONE:415•846.4423 August 13 , 1982 • RECEW ?fl TO:: Continental 'AUG 1 6 1982 • Attn: John Bubrick COMMERML Subj : City of Dublin #CBP911523 Dear John: Many thanks for the manual wording for the treatment of Govermental Agencies for Liability protection. Because the wording is a bit hazy, we must have absolute assurance that the recent'.contracts entered into with the County of Alameda will not have an audit charge at the end of the year . We have assured the City of Dublin official that this would not be the case . We would like ailetter indicating that Continental Insurance Company will not be charging .for .this contract. If you prefer, you can indicate at the bottom of this letter that the foregoing is agreed upon and your signature will suffice . Your prompt attention to this matter would be greatly appreciated. Best Reg, us COOP / - ( NZIE MURPHY Ben Fernandez BEF/pb A/- �- ...�ti Liz- ,,—y��. c-// vouFrNepertCent / insurance c 0 CO C , COOPER McKENZIE MURPHY POST OFFICE BOX 1030 PLEASANTON.CA.94588 PHONE:415-846.4423 August 6 , 1982 ECEIVED , AUG 101992 City of Dublin �,,_„ "011%;IN 6500 Dublin Blvd. , Suite 218 Dublin, Ca. 94568 Attn: Richard Ambrose Dear Rich: We have submitted copies of all of the agreements to Continental Insurance Company. They have affirmed that, due to the hold harmless agreements reciprocally agreed to between the two agencies , there will be no additional premium charged for the contracts . In fact, if County of Alameda were added as an additional insured, there would be no additional premium charged. We are somewhat puzzled at their decision, but are also pleased. We have asked the underwriter to send a memo to this office with a copy to the company' s audit department . We do not want a difference of opinion when the final audit is made . We think that George Barbera will understand why we say this . The only charge that would be made would be for the 6 police vehicles assigned to the city . If it is agreed that the City of Dublin will pick up these premium charges , the liability charge per vehicle would by $456 . The contract indicates 6 vehicles , thus there would be an additional premium of $2 ,736 . No changes on our contract will be made until this has been thoroughly discussed with all parties . It would be well to arrange a meeting between your office, the county office and any of the insured parties that are interested. We will await your instructions . Best regards , COOPE' ►'cKENZIE MURPHY Ben Fernandez BEF/jf TOUFi � �UIONT /AGENT aevis you rwn f�®