HomeMy WebLinkAbout07-08-1981 CITY COUNCIL AGENDACITY OF SARATOGA
AGENDA BILL NO.
DATE: July 8, 1981
DEPARTMENT: City Manager
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SUBJI7CP: Renewal of Liability and Casuality Insurance
Issue Stuns
Initial:
Dept. Hd.
C. Mgr.
C-51 —c'
The City's Liability and Casuality Insurance agreements expired on June 30, 1981. Saratoga
Insurance Service, the City's insurance agent, solicited proposals from seven insuring,
agencies prior to the expiration date, following consultation with the City Manager on the
extent of coverage and limits to be sought. Four insurers responded. The Insurance Company
of North America (INA) has offered the lowest premiums for the type of insurance sought.
The policy period would cover fiscal year 1981 -1982 commencing July 1, 1981. The limits of
insurance coverage for general liability with the INA policy will be increased from $5,000,000
to $10,000,000. Casuality loss coverages will remain essentially unchanged except that the
deductible on loss of office equipment due to theft will be increased from $500 to $1000.
Recommendation
Approve the insurance agreement as presented by the City's insurance agent, Saratoga Insurance
Service, Inc., providing for liability coverage of up to $10,000,000 and general casuality
loss insurance.
Authorize City Manager to execute the insurance agreement on behalf of the City, and direct
payment of the premium due for the insured year.
Fiscal Impacts
Total premium cost of $48,549 - a reduction of approximately 34% from the cost of premium
for insurance for the preceeding policy year.
Exhibits /Attachments
1. Letter of June 30,,1981, from Saratoga Insurance Service, Inc. recommending approval of
the insurance policy.
2. Copies of the insurance policy are on file with the City Clerk.
Council Action
7/15: Jensen /Mallory moved to approve - Passed 5 -0.
SARATOGA INSUR�OE SERVICE
INCORPORATED
14363 Saratoga Ave.
Suite 204
JACK E. HARRISON Saratoga, CA 95070
Manaqer - Special Risks Phone:
(408) 867 -3532
SARATOGA INSURANCE AGENCY
14363 SARATOGA AVENUE, SUITE 204
P. O. BOX 306
SARATOGA, CALIFORNIA 95070
TEL: (408) 867 -3532
June 30, 1981
Mr. J. Wayne Dernetz, City Manager
City of Saratoga
13777 Fruitvale Avenue
Saratoga, California 95070
Subject: City Insurance Program
Dear Wayne:
We are extremely pleased to present for your approval the two con-
tracts that are the heart of the City's insurance program for the ensuing
fiscal year.
As we previously discussed, we are deliriously happy to be able to
secure much higher amounts of protection for the City and at a 34% reduc-
tion from last year's costs!
A brief comment on how this is possible seems to be in order at this
point. Insurance has always been a cyclical industry. The factors af-
fecting the cycles are various and complex, including the supply of capital
available in the marketplace at the time and the expectation of future
profits currently projected. Suffice it to say the present cycle is what
is referred to as a "soft market." That is to say that many companies
will "write a burning building" in order to obtain the premium dollars to
invest in the 16%+ money market funds. The result is extreme company
competition, i.e., rate cutting, and a more cavalier approach by some com-
panies in risk acceptance. The industry is also experiencing pressure
from newer entrants in the field such as expansion of foreign underwriters
in the U.S. marketplace, "captive" insurers owned by major companies and
trade groups, a trend toward "self- insurance" and the entry into the Pro-
perty- Casualty field by large Life Insurance companies such as Prudential
and Metropolitan.
The result of these factors is why Saratoga can have more insurance
for less money this year and should not be construed as a "permanent" situa-
tion nor as an indication that we were "overcharged" in the past.
As to some of our previous meetings on this matter may I review the
following. The bulk of the City's insurance program is comprised of the
two accompanying contracts which have an anniversary date of July 1st.
REPRESENTING
SAFECO INSURANCE COMPANIES
Mr. J. Wayne Dernetz - City of Saratoga
June 30, 1981
Page Two
As has been our practice each year since the City was incorporated,
this office has solicited proposals for the City's insurance coverage
from numerous sources and reviewed the options with the City Manager
each Spring. This year we solicited proposals from Firemen's Fund,
Safeco, Travelers, I.N.A., Continental, United Pacific, U.S.F. &G.
and four General Agencies (wholesalers). As you recall, some responded
favorably and some declined. I.N.A. presented the most favorable offer.
Per your suggestions and requests a significant $1,000. savings was
granted for a higher deductible on property coverage, a much more favor-
able $10,000,000. limit was negotiated on the Umbrella Liability policy
and we have clarified that crime coverage does apply to office equipment.
Regarding the Umbrella policy, it is double the coverage of last year
at a cost of $500. less.
Wayne, your past experience with these matters was immediately
apparent. It was most gratifying to witness your grasp of the situation
and obtain your comments and suggestions regarding this fine program we
have secured for the City.
Perhaps it is just nostalgia, but I am also pleased it was I.N.A.
that offered the best proposal this year. When Saratoga was first char-
tered as a City, it was the I.N.A. that wrote its first liability policy
and the fire insurance on the little "Doll House" that served as our
first City Hall. And, of course, it was my pleasure to service those
first I.N.A. policies!
If there are any questions or further suggestions, we stand as al-
ways at your service.
Very truly yours,
Stephen A. Abbey
Certified Insurance Counselor
SAA:ar