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Human Resources Department, Risk Management Division, recommending the Board approve insurance coverage and programs for an estimated total amount of $10,624,922 and authorize the Human Resources Department, Risk Management Division, to sign and approve all documents required to secure insurance coverage and programs for Fiscal Year 2025-26 in order to avoid lapse of coverage, including, but not limited to the following:
1) PRISM - insurance and program participation in the following: Primary Workers' Compensation; Excess Workers' Compensation; General Liability 2; General Liability 2 Assessment; Property; Medical Malpractice; Optional Excess Liability; Catastrophic Inmate Medical Insurance; Cyber Liability; Master Crime; Pollution; Underground Storage Tank; Airport Operations Liability; Aircraft Insurance (Helicopter); Watercraft;
2) Alliant - Special Liability Insurance Program; and
3) WellFleet - Volunteer Blanket Insurance.
FUNDING: Risk Management Internal Service Fund.
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DISCUSSION/BACKGROUND
The County faces a complex array of risks that can result in severe or catastrophic loss. Purchasing insurance helps protect the County from catastrophic general liability claims, automobile accidents, and workers' compensation injuries. Additionally, purchasing insurance protects the County from loss due to damage or destruction of County assets, pollution, crime, cyber liability, and airport operation exposures. The County procures a variety of insurance policies and programs to mitigate and transfer exposures to catastrophic loss. By securing these risk mitigating and transfer mechanisms, the County is better positioned to protect assets and personnel for the fulfillment of its services, objectives, and goals related to the Strategic Plan.
This request is an annual process for the Board to authorize the Risk Management Division to renew insurance coverage and programs provided by PRISM, Alliant, and WellFleet. The County utilizes its participation in PRISM in conjunction with professional insurance brokerage services to place a variety of commercial insurance policies to protect the County.
The total estimated premium for FY 2025-26 is $10,624,922. This reflects an overall decrease of $1,094,439 or 9% from the previous fiscal year. The Risk Management Division has evaluated each of the insurance programs in terms of potential loss, coverage, self-insured retentions, deductibles, and policy limits, and recommends the purchase of insurance as described below with allowance for estimation variation with approval from Human Resources and CAO/Fiscal departments.
PRISM Programs
PRISM is a Joint Powers Authority (JPA) comprised of California counties, cities, and public agencies organized to jointly develop and fund insurance and related programs with the most favorable terms and costs. The County has been a PRISM Program participant for more than 30 years. Current program participation includes:
Primary Workers’ Compensation - Provides “First Dollar” bodily injury and employer liability coverage for industrial-related injury and illness. Coverage also includes compensation for loss of earnings at statutory rates. The estimated premium for FY 2025-26 is $4,162,341. This reflects a decrease of 22% ($1,153,701) from the previous fiscal year.
Excess Workers' Compensation - Provides bodily injury and employer liability coverage for industrial-related injury and illness. Coverage also includes compensation for loss of earnings at statutory rates. The County has a $300,000 self-insured retention in this program for claims prior to our start in the PWC program in September 2018. The estimated premium for FY 2025-26 is $2,242,045. This reflects a decrease of 15% ($409,930) from the previous fiscal year.
General Liability 2 - Provides coverage for claims from third parties alleging damages on the part of the member arising out of bodily injury, personal injury, property damage, public officials' errors and omissions, automobile liability, and employment practices liability. The County has a $1,000,000 self-insured retention in this program. The estimated premium for FY 2025-26 is $2,510,900. This reflects an increase of 31% ($600,782) from the previous fiscal year.
General Liability 2 Assessment - The GL2 program has had negative implications stemming from litigation with an insurance carrier, AmTrust. This insurance carrier stopped paying/reimbursing claims and an arbitration process occurred, followed by a final settlement. However, the settlement does not cover all claims outstanding. PRISM did an assessment based on GL2 members that were in AmTrust years, who will need to pay their portion to be able to pay all outstanding claims at present. According to a $25M commutation, our share was $337,480 last fiscal year. There may need to be future assessments depending on new claims and the program funding available to pay those claims.
As of December 31, 2024, additional claim development occurred, necessitating an additional $7.1M assessment to fund the expected ultimate claims costs. Our allocated proportion of the second assessment for FY 2025-26 is $95,844. It is important to note that subsequent assessments may be necessary.
Property - Provides coverage for physical damage to the County's property as a result of a variety of perils including flood and earthquake sub-limits. The deductible for the "all risk" perils is $25,000. Vehicles are insured at replacement cost value. The deductible for values under $250,000 is $15,000 and $100,000 for values greater than or equal to $250,000. Contractor's equipment is covered with a $15,000 deductible. Boiler and machinery and electronic data processing equipment, data, and media are also covered with a $1,000 deductible. The estimated premium for FY 2025-26 is $712,764. This reflects an increase of 12% ($77,421) from the previous fiscal year.
Medical Malpractice - Provides coverage for alleged negligence arising from health care operations including clinics, hospitals, mental health, public health, jail clinics, and coroner operations. The County has a $25,000 deductible in this program. The estimated premium for FY 2025-26 is $373,211. This reflects an increase of 3% ($10,060) from the previous fiscal year.
Optional Excess Liability - Provides excess insurance of $10,000,000 above the general liability program of $25,000,000 with identical coverage terms. The estimated premium for FY 2025-26 is $186,381. This reflects an increase of 13% ($22,035) from the previous fiscal year.
Catastrophic Inmate Medical Insurance - Provides medical expense coverage for inmates requiring off-site inpatient hospital services, outpatient surgical, and associated physician services. There is no aggregate limit of liability cap and the program can be excess of coverage provided under an existing contract or placed as primary. There is a $75,000 deductible for this program. The estimated premium for FY 2025-26 is $117,151.48. This reflects a decrease of 1.5% ($1,761) from the previous fiscal year.
Cyber Liability - Provides information security and privacy liability insurance with electronic media liability coverage. The self-insured retention is $100,000. The estimated premium for FY 2025-26 is $61,092. This reflects an increase of 3% ($1,720) from the previous fiscal year.
Master Crime - Provides coverage for illegal acts committed by employees while on the job. Coverage includes, but is not limited to, employee theft including failure of faithful performance of duty, forgery or alteration, computer fraud and funds transfer fraud, and money order and counterfeit paper currency acts. The deductible is $2,500. The estimated premium for FY 2025-26 is $31,148. This reflects an increase of 0.2% ($53) from the previous fiscal year.
Pollution - Provides coverage for bodily injury, property damage or remediation expense. The County has a $250,000 deductible in this program. This reflects a Claims Made policy in which claims must be made during the policy period to be paid. The estimated premium for FY 2025-26 is $6,151. This reflects a decrease of 42% ($4,513) from the previous fiscal year.
Underground Storage Tank - Fulfills the State of California Financial Assurance Requirements for underground storage tanks for bodily injury, property damage or corrective action or loss that the insured entity becomes legally obligated to pay as a result of a claim for bodily injury, property damage or corrective action resulting from contamination that originates from an underground storage tank scheduled on this policy. This reflects a Claims Made policy in which claims must be made during the policy period to be paid. The estimated premium for FY 2025-26 is $2,239. This reflects an increase of 5% ($115) from the previous fiscal year. This program is billed together with Pollution program on one invoice.
Airport Operations Liability - Provides liability and property coverage for Placerville and Georgetown Airport operations. There is no deductible for this program. The premium for FY 2025-26 is $7,944. This reflects no change in premium from the prior fiscal year.
Aircraft (Helicopter) - Provides coverage for Helicopter for the Sheriff’s Office. There is no deductible for this program. The premium for FY 2025-26 is $60,317. This reflects no change in premium from the previous fiscal year.
Watercraft - Provides coverage for bodily injury and property damage liability for all owned watercraft operations including watercraft trailers. There is a $1,000 deductible for this program. The premium for FY 2025-26 is $7,540. This reflects a decrease of 13% ($1,099) from the previous fiscal year.
Other Insurance Programs
Special Liability Insurance Program - The County purchases insurance for County Service Area 2 and 9 Road Maintenance Zone of Benefit in a SLIP placed with Alliant. The SLIP program is a unique liability program developed specifically for small public entities and not-for-profit organizations. The estimated premium for FY 2025-26 is $46,300. This reflects an increase of 15% ($6,191) from the previous fiscal year. This program renews in September and is based on Alliant’s estimated 15% increase.
Volunteer Blanket Insurance - The County provides all volunteers with Accident Medical Expense Benefits of $50,000 maximum on an excess basis, and additional Accidental Death and Dismemberment Benefit up to $10,000. There is a $100 per accident deductible that is the responsibility of the volunteer. This policy is placed with WellFleet. The premium for FY 2025-26 is $1,554. This reflects a decrease of 10% ($177) from the previous fiscal year.
ALTERNATIVES
No viable alternative recommendations are available.
PRIOR BOARD ACTION
07/16/2024 Legistar file 24-1233
OTHER DEPARTMENT/AGENCY INVOLVEMENT
N/A
CAO RECOMMENDATION
Approve as recommended.
FINANCIAL IMPACT
Funding for these insurance programs is included in the Risk Management Internal Service Fund budget for FY 2025-26, and costs are recouped from County departments through internal charges. Funding is included in the FY 2025-26 Recommended Budget.
CLERK OF THE BOARD FOLLOW UP ACTIONS
Provide one certified minute order of the agenda item to Joseph Carruesco in the Human Resources Department, Risk Management Division; and one certified minute order of the agenda item to the Chief Administrative Office.
STRATEGIC PLAN COMPONENT
N/A
CONTACT
Joseph Carruesco, Director of Human Resources