HomeMy WebLinkAbout9 ACWA JPIA Insurance Broker 3 Year RenewalTRUCKEE DONNER
Public Utility District
TO: Board of Directors
AGENDA ITEM 9
FROM: Michael Salmon, Chief Financial Officer
Jillian Steward, Director of Human Resources & Risk
SUBJECT: Approval of ACWA JPIA as the District's Insurance Broker
for a Term of Three Years
APPROVED BY
RECOMMENDATION:
zel
Brian C. Wright, General Manager
Approve ACWA JPIA as insurance broker for fiscal years 2022/2023, 2023/2024, and
2024/2025, as applicable for Property, General Liability, Cyber Liability, Excess Crime
and Workers Compensation insurance.
BACKGROUND:
Since 2019, the District has leveraged membership in the Association of California Water
Agencies Joint Powers Insurance Authority (ACWA JPIA) to obtain insurance coverage
at competitive rates, which has equated to significant savings for the District. Having all
3 insurance lines with ACWA JPIA generates an additional discount for each insurance
line. The 2019 approval for utilizing ACWA JPIA was for three years.
ACWA JPIA is the insurance broker for over 330 program members, leveraging the size
and scope of membership to shop and provide the appropriate insurance coverage at the
most affordable rates for the membership. Staff has reviewed the information and
minutes of ACWA JPIA's insurance renewal board meetings; discussing the notable
market pressures from the various coverage proposals being reviewed by brokers for the
2022/2023 renewal cycle. While insurance costs have increased, staff is confident our
ACWA JPIA insurance brokerage relationship continues to produce a cost effective
outcome.
Insurance premiums for property & general liability cost on a calendar year basis, the
District's year end 12/31/YY, GL 1/2.3.924.628 are as follows (Actual unless otherwise
indicated):
2017 $327,757 2021 $259,426
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2018 $333,237 2022 $298, 807 Forecast over budget $23, 807 or 9%
2019 $294,776 2022 $275,000 Budget
2020 $248,680 2023 $364,533 Forecast over budget $81,283 or29%
2023 $283, 250 Budget
ACWA JPIA Policy Year
Insurance Renewals 2019/2020 2020/2021 2021/2022 2022/2023 Change % Chg.
Property, Mobile Equip,
Vehicles (FYE 6/30/YY) 72,857 88,554 106,180 144,441 38,261 36%
No change in coverage or $25k deductible. Property value covered total of $125.6m for 22/23 is up 12% to past
policy. Value of coverage change +12% and +20% rate increase on all values, combines for +36% overall.
General Liability
(FYE 9/30/YY) 174,354 161,411 155,823 192,298 36,475 23%
No change in coverage or deductible. Increase driven by payroll basis up 22%, plus 10% rate increase, partially
offset by Experience Modification improvement/discount factor improvement impact of 8% (no recent claims).
Premium / Payroll Estimate: FYE 6/22 1.73% FYE 6/23 1.76%
Cyber Liability
(FYE 6/30/YY) - - - 12,814 12,814 N/A
Cyber Liability was bundled 'value -add' in past years. Beginning with 22/23 renewal, policy cost is pass -through
to participating members.
Excess Crime
(FYE 6/30/YY) 1,832 1,995 2,095 2,200 105 N/A
Combined Total $ 249,043 $ 251,960 $ 264,098 $ 351,753 $ 87,655 33%
Workers Compensation insurance is based on payroll wages within five worker risk
classifications within the District. For FYE 6/30/2022, work comp insurance renewal cost
at contract rates based on estimated payroll was $200,454. The ACWA JPIA renewal
for FYE 6/30/2023 has a favorable reduction in rates per payroll dollar of 2%, however,
the District's overall experience modification factor increased from 0.94 to 1.21 (+29%)
due to actual claims in the 20/21 cycle year. The FYE 6/30/2023 renewal year cost is
$247,243, an increase of 23% based on estimated payroll. The effective workers
compensation rates as a percentage of payroll are 2.23% and 2.80%, for FYE 6/30/2022
and 2023 respectively. The FYE 6/30/2023 amount of $247,243 is based on ACWA
JPIA's experience rating and insurance rates applied to an estimated payroll amount.
The actual workers compensation insurance costs vary based on the actual payroll costs
incurred within the five risk classifications.
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FISCAL IMPACT:
Property & General Liability Insurance, FY22 Budget (GL 1/2.3.924.628) is $275,000, with
forecast of $298,807, over unfavorably to budget $23,807 or 9%. This overage for FY22
is forecasted to be more than offset by favorable savings in other operating costs,
excluding purchased power.
Property & General Liability Insurance, FY23 Budget (1/2.3.924.628) is $283,250, with
forecast of $364,533, over unfavorably to budget $81,283 or 29%. Note the General
Liability renewal effective 10/1/2023 impacts Q4 of 2023 and that renewal dollar cost is
not currently known, therefore the forecast utilizes +10% to 22/23 cost level for Q4. With
an operating reserve balance forecasted for 12/31/2022 of $12.3 million ($6.8 million
Electric and $5.5 million Water), the District has sufficient funds for the FY23 overage to
Budget.
Workers Compensation cost for FY22 Budget is $245,000 and forecast is $249,000 (Q4
estimated), for an overage to budget of $4,000 or 1.6%. This overage for FY22 is
forecasted to be more than offset by favorable savings in other operating costs, excluding
purchased power.
Workers Compensation cost for FY23 Budget is $260,000 and forecast is $295,000 (All
Qtrs.' payroll estimated, Q1/Q2 at known renewal rates, and Q3/Q4 at +10% for
conservatism). For FY23 the forecast overage to budget is $35,000 or 13.5%. With an
operating reserve balance forecasted for 12/31/2022 of $12.3 million ($6.8 million Electric
and $5.5 million Water), the District has sufficient funds for the FY23 overage to Budget.
ATTACHMENTS:
1 ACWA JPIA letters accompanying liability, property, and cyber renewal invoices
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