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<br />L /1-/ <br /> <br />REPORT <br /> <br />To the Honorable Mayor and City Council <br />From the City Manager <br /> <br />April 11, 2005 <br /> <br />Subject <br />Selection of Workers' Compensation Excess Insurance Policy. <br /> <br />Recommendation <br />Approve, by motion, the authority to terminate membership with Bay Cities Joint Powers <br />Insurance Authority and return to Council with a contract to join the California Public <br />Entity Insurance Authority (CPEIA) for its excess insurance coverage effective July 1, <br />2005 and ending June 30, 2006. <br /> <br />Background <br />The City of Redwood City has been a self-insured employer for the Workers' <br />Compensation program since 1976. As a self-insured employer, whenever there is a <br />workers' compensation injury, the City covers the amount up- to the designated self- <br />insurance retention cap. <br /> <br />When the costs of an injury exceed the self-insurance retention (SIR) cap, the City is <br />insured through its excess workers' compensation insurance policy for expenses up to a <br />maximum of one hundred million ($100,000,000) per incident. <br /> <br />Historically, the City has purchased excess insurance with a self-insurance retention <br />limit at the first three hundred fifty thousand dollars ($350,000) of expenses relating to <br />the injury. In the wake of September 11, the insurance industry experienced' huge <br />losses with many insurance companies unwilling to underwrite agencies having Police <br />and Fire services. As a result, the market has produced higher premiums and increased <br />self-insurance retention levels. <br /> <br />Over the last several years the City has experienced increases in both self insurance <br />retention levels and premiums. In July 2003 and 2004, the City Council approved staffs <br />recommendation to purchase excess insurance coverage through Bay Cities Joint <br />Powers Insurance Authority (BCJPIA) thereby minimizing significant premium and SIR <br />increases. However, recent Worker's Compensation reform has opened the door for <br />improved premium savings and lower SIR's. Staff has explored various alternatives for <br />purchasing excess insurance. Attached is a summary of the vendor comparison. <br />(Attachment A). <br /> <br />While all other vendors require an extended membership period CPEIA requires only a <br />12 month contract. This could be advantageous to the city as we continue to see <br />improvements in worker's compensation insurance costs. A one year contract offers <br />the city the flexibility to continue to seek the best economic solution. <br /> <br />Aside from the economic benefits of joining CPEIA, this firm has a long standing <br />relationship with hundreds of agencies and brings plenty of experience working with <br />