That the City Council authorize the City Manager to place the City’s primary earthquake policy with Landmark American Insurance Company at a policy limit of $5 million and assign excess coverage of $73.06 million to Everest Indemnity, QBE Specialty Insurance, and General Security Insurance for a one-year term from April 19, 2022, through April 19, 2023.

The City’s current earthquake insurance policy, which expires on April 19, 2022, provides building, structure, and contents coverage for City owned buildings.  Last year, the City’s total insurable value amount was $75.69 million.  This year that valuation has increased to $78.06 million.  In an effort to secure the lowest cost insurance renewal options, staff instructed the City’s insurance broker, Schrimmer Insurance, to solicit bids for coverage.  Schrimmer Insurance contacted 22 carriers and secured pricing proposals from eight firms, including the City’s current providers.  Three carriers declined to submit quotes due to the age of the City buildings.  Seven other carriers declined to quote due to “no compete clauses” with the City’s current carriers. 

Staff reviewed the viable proposals that were submitted and rejected three that had a high primary coverage premium.  The City’s required insurance coverage level is $78.06 million based on the building replacement and content values.  Coverage limits of less than that amount would not provide sufficient coverage in the event of a widespread catastrophic earthquake.

The most cost-effective proposal for the City's consideration is a combination bid from three of the City’s current carriers and two new carriers for the excess layer.  This bid (Quote 1) from Landmark American Insurance (primary insurer), Everest Indemnity, General Security Insurance, Palomar Excess and Surplus Insurance, and Trisura Specialty Insurance Company has an aggregate policy limit of $78.06 million and a 10 percent deductible at the annual premium of $302,968.  This represents a premium increase of $8,830 from last year.
 
A summary of the City’s current coverage and all feasible quotes are listed as follows:

Staff evaluated the costs and elements of all proposals and recommends renewing the City’s earthquake insurance policy with Landmark American (Quote #1) for a policy limit of $5 million and with Everest Indemnity, General Security Insurance, Palomar Excess and Surplus Insurance, and Trisura Specialty Insurance Company for excess coverage of $78.06 million policy limit at a 10 percent deductible with a total premium cost of $302.968, which is $8,830 more than the prior year premium amount.
 
Landmark American Insurance, Everest Indemnity, General Security Insurance, Palomar Excess and Surplus Insurance, and Trisura Specialty Insurance Company all have insurance ratings by A.M. Best of A+,A, or A- which indicates an excellent financial strength rating, and all demonstrate a high level of financial capitalization.