AgdaPkt 2003-06-30 - Laserfiche WebLink

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REPORT To the Honorable Mayor and City Council From the City Manager June 30, 2003 Subject Establishment of Workers' Compensation Excess Insurance Policy. Recommendation Approve, by motion, the purchase of the City's excess workers' compensation insurance policy with the Local Agency Workers' Compensation Excess pool (LAWCX) under the group purchasing program from Bay Cites Joint Powers Insurance Authority effective July 1, 2003. Background The City of Redwood City has been a self- insured employer for the Workers' Compensation program since 1976. As a self- insured employer, whenever there is a workers' compensation injury, the City covers the amount up to the designated self- insurance retention cap. When the costs of an injury exceed the self- insurance retention cap, the City is insured through its excess workers' compensation insurance policy for expenses up to a maximum of twenty-five million ($25,000,000) per incident. Historically, the City has purchased excess insurance with a self - insurance retention limit at the first three hundred fifty thousand dollars ($350,000) of expenses relating to the injury. In the wake of September 11, the insurance industry experienced huge losses with many insurance companies unwilling to underwrite agencies having Police and Fire services. As a result, the market has produced higher premiums and increased self - insurance retention levels. Over the past three years the City has experienced the following increases in both self insurance retention levels and premiums. Fiscal Year Self Insurance Retention Premium % Increase from previous year 00 -01 $350,000 $32,280 18.73% I 01 -02 $350,000 $50,848 57.5% 02 -03 $500,000 $122,734 141.3% I Making matters more difficult, a few months ago the City's excess insurance carrier for the past 10 years informed us that they will no longer be in the excess insurance business and the City needed to find another carrier. The City's current insurance