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Home My WebLink About13 Liability and Workers Compensation Insurance Agenda Item # 13 TRUCKEE DONNER Utility District lu Ic CTION To: Board of Directors From: Robert Mescher Date: May 04, 2011 Subject: Consideration of the Award of a Contract for Property, ' ' � Liability and Workers' Compensation Insurance 1. WHY THIS MATTER IS BEFORE THE BOARD The District's annual property, liability and workers' compensation insurance ends June 1, 2011 and must be renewed. p ce coverage 2. HISTORY Marsh Risk & Insurance Services has been the District's insurance broker ' Keith Grand is the Client Executive that oversees since 2001. this process for the District. Mr. Grand will present this year's insurance renewal proposal. 3. NEW INFORMATION Staff requested Marsh to obtain quotes for policies with higher deductibles ctibles in order to lower the premiums and to take advant age of the improved financial condition of the District; specifically, the larger reserves developed over the past few p years. Marsh requested quotes from various insurance companies. The u summarized below: p quotes received are Coverage Company 2010/11 2011/12 Renewal Comments General Liability One Beacon 171,002 148,603 Higher deductibles Excess Liability AWAC 20,000 20,000 Workers'Comp US Fire 2349346 224,571 Lower ExMod; no commission; Earthquake Landmark/Essex 64,406 72 151 higher surcharge Increased replacement Crime Chubb values 41537 4,537 Pollution Steadfast 7,349 18,144 3-year policy Broker Fee Marsh 509000 65,000 Worke s'com P Total 5519640 553,006 Attachment 1 is a more detailed summary of the insurance renewal program by Marsh as compared to the premiums of the P gram proposed p expiring coverage. Overall, the proposed premiums, totaling $553,000 are about the same as the year. ear. P Attachment 2 is a proposed draft of Marsh's Client Services Agreement - 2012 policy year. The broker's fee has g ent for the 2011 s been increased by $15,000, from $50,000, to compensate Marsh for brokering the workers compensation insurance. Last $20,516 broker's commission was integrated in the workers' co year, premium and was paid by the insurance com compensation ins year, company. This year it will be paid directly by the District, resulting in a lower premium. 4. FISCAL IMPACT The proposed property, general liability, and workers' compensation premiums and fees total $553 006 �s about the same insurance e as the prior year's premiums and is about $20,000 lower than the budgeted insurance remainder of FY11 Budget. g expense for the g The last five months of the renewed insurance policies will forthcoming FY12 Budget. p be funded by the 5. RECOMMENDATION 1) Award contracts for the property, liability insurance and workers' the period beginningJune 1 2011 � kers compensation for and ending June 1, 2012. 2) Approve Marsh's Client Services Agreement for the 2011 - 2 to District Counsel's review. 012 policy year subject ---------------- P-7 Robert Mescher Acting Administrative Services Manager Michael D. Holley General Manager Al MARSH Truckee Donner Public Utility District Renewal Proposal June 1, 2011 to 2012 yam;>;. Js� �♦ 3''!4 r T a4 6 h 4 N Y S q s+ i Nay; ��%:, ♦�.'� .. Y x Marsh Risk & Insurance Services 345 California Street Suite 1300 San Francisco, CA 94104 s- CA Insurance License ' ��'VV VV.nlarsh.corn TRUCKEE DONNER PUBLIC UTILITY DISTRICT PREMIUM SUMMARY AND OPTIONS JUNE 1,2011 TO 2012 BLUE=change from prior year COVERAGE Expiring Program Renewal Program Renewal Pro gram ram 2010-2011 Options Received [RECOMMENDED] 2011-2012 2011-2012 Package(GL/ALIPROP/ OneBeacon 171,002.00 ne Beacon/$1K Ded 184E&O/CRIME) 950.00 One Beacon /$25K Ded 148,603.00 ne Beacon/$25K Ded 148,603.00 Pess Liabili AWAC 20,000.00 AWAC 20,000.00 AWAC 20,000.00 rkers'Comp U.S. Fire 234,346.00 U.S. Fire ** ** � 224,571.00 U.S. Fire 224,571.00 (Annualized) SCIF Pending Midlands Pendin Earthquake -Primary Landmark 40,916.94 Landmark -Excess!I!its I 11:1113MINNUNN Essex 46,688.62 Landmark 46,688.62 23,489.38 Essex 25,462.48 Essex 25,462.48 Crime Chubb$2Mil/$5K 4,537.00 Chubb$2Mil/$5K Ded Ded 4,537.00 Chubb$2Mil/$5K Ded 4,537.00 Chubb$2Mil/$25K Ded 3,973.00 Chubb$3Mil/$25K Ded 4,966.00 Travelers$2Mil/$25K Ded 4,000.00 Hartford$2Mil/$10K Ded 8,555.00 Hartford$1 Mil/$5K Ded 6,880.00 Hartford$2Mil/$25K Ded 7,954.00 Pollution Steadfast$1 Mil $ 7,349.34 Steadfast$1 Mil/$50K Ded 7,744.00 Steadfast 1 /$50K Ded Mil/ 18,143.61 Steadfast$1 Mil/$25K Ded 8,085.40 $25K Ded(3 Yr Term) Steadfast$1 Mil/$50K Ded 17,346.31 (3 Yr Term) Steadfast$1 Mil/$25K Ded 18,143.61 3 Yr Term Marsh Compensation Broker Fee 50,000.00 Broker Fee 65,000.00 Broker Fee 65,000.00 TOTALS 2090-201 1 551,640.65 2091-2092 553,005.71 %Change from prior year 0.2% NOTE: WC Commission included in premium 20 516.00 WC Commission ' included in broker fee 15,000.00 -Premiums include any applicable SL Taxes and Fees -Optional TRIA is not included these premiums **Currently being reviewed Page 2 of 10 Truckee Donner Public Utility District Package Policy(General Liability,Auto, Property and Excess Liability) June 1,2011 to 2012 BLUE=change from prior year Expiring Renewal Option 1 Renewal Option 2 61112010-2011 61112011-2012 611/2011-2012 Carrier&A.M.Best Rating IOneBeacon Ins.Co. OneBeacon Ins.Co. OneBeacon Ins.Co. AXII* AXII* AXII Property Coverage: Building Limit $47,829,666 $61,797,245 $61,797,245 Personal Property Limit $3,291,848 $2,798,054 $2,798,054 Business Income&Extra Expense $2,500,000 Same as Expiring Same as Expiring Blanket Flood Limit $10,000,000 „ Special Theft Limits $10,000 If If Equipment Breakdown $100,000 if „ Miscellaneous Tools $495,223 $505,751 $505,751 Computer Fraud $25,000 $25,000 $25,000 Contractors Equipment-Scheduled $791,466 $235,480 $235,480 Newly Acquired Locations-Buildings $2,000,000/180 Days Same as Expiring Same as Expiring Newly Acquired Locations-Personal Property $1,000,000/180 Days If ^ Key Sublimits: Pollutant Cleanup Removal $100,000 ^ Debris Removal $250,000 „ Claims Expense $50,000 ^ Reward $50,000 ^ Contractual Penalties $50,000 ^ ., Automatic Seasonal Increase $100,000 ^ „ Brands and Labels $50,000 ., Leasehold Interest $25,000 ^ to Business Income or Extra Expense Utility $25,000 ^ It Dependent Properties $100,000 ^ to Lessor's Lease Cancellation $25,000 ^ , Lessors Tenant Relocation Expense $25,000 ^ „ Limited Coverage for Fungus,Rot and Bacteria- $15,000 ^ Aggregate Electric Data Damage or Destruction $50,000 ^ „ Soft Costs $25,000 If Temporary Reloaction of Property During $100,000/90 Days ^ „ Renovation or Remodeling Bucket Limits: $500,000 ^ „ -Personal Effects -Valuable Information Property -Accounts Receivable -Outdoor Property -Hardware and Media -Tenants Improvements and Betterments -Electric Data Damage Fine Arts-Per Item $10,000 ^ „ Property in Transit $50,000 If International Air Shipments $25,000 ^ „ Property at Other Locations $50,000 ^ If Crime Limits: $25,000 ^ „ -Money&Securities -Employee Theft -Money Orders and Counterfeit Paper -Forgery and Alteration -Inside Premises-Robberty or Safe Burglary or Other -ERISA Employee Theft Deductibles -Property and All Other $1,000 $1,000 -Flood $25,000 $25,000 $25,000 $25,000 General Liability Coverages: Each Occurrence Limit-Bodily Inujury and Property $1,000,000 Same As Expiring Same As Expiring Damage Liability(Coverage A) Personal&Advertising Injury Limit(Coverage B) $1,000,000 General Aggregate Limit $5,000,000 Products/Completed Operations Aggregate Limit $5,000,000 „ Damage To Premises Rented To You Limit $1,000,000 ^ Failure to Supply $1,000,000 ^ Medical Expense Limit Excluded Deductible $1,000 for A&B $25.000 for A&B Automobile Coverages: Page 3 of 10 Truckee Donner Public Utility District Package Policy(General Liability,Auto, Property and Excess Liability) June 1,2011 to 2012 BLUE=change from prior year Expiring Renewal Option 1 Renewal Option 2 PACKAGE COVERAGES 61112010-2011 61112011-2012 6/1/2011-2012 Canner&A.M.Best Rating OneBeacon Ins.Co. OneBeacon Ins.Co. OneBeacon Ins.Co. AXII* AXII* AXII Auto Liability $1,000,000 Same As Expiring Same As Expiring -Limit Hired Auto Liability n -Comprehensive $100,000 go -Collision $100,000 is -Deductible $1,000/$1,000 go $25,000/$25,000 Uninsured Motorist BI If Same As Expiring -Limit $1,000,000 n Rental Reimbursement $450 Max/30 Days Professional Liability Coverages: Errors&Omissions $1,000,000 Same As Expiring Same As Expiring -Each Wrongful Act -Aggregate $5,000,000 n -Deductible $10,000 If $25,000 Employment Practices $1,000,000 If Same As Expiring -Each Offense -Aggregate $5,000,000 91 -Deductible $10,000 $25,000 Employee Benefits $1,000,000 Same As Expiring -Each Offense -Aggregate $5,000,000 -Deductible $1,000 n ,• [Annual xcess Liability Coverage: ggregate Limit $10,000,000 Same As Expiring Same As Expiring ch Claim $10,000,000 n Premium $171,002.00 $184,950.00 $148,603.00 ptional TRIA PremiumRejected $2,183.00 $1,711.00 han a in Premium from Eir irin . 7.54% -1&07% FGa sh Commission N/A N/A NIA - , .Beacon Insurance Company Quotedfelters Declined Midlands Declined Travelers Declined Philadelphia Declined ACE Declined Amwins Declined Safety National Declined Chartis Declined Genesis Declined Ironshore Declined CV Starr Declined Page 4 of 10 Truckee Donner Public Utility District Excess Liability June 1, 2011 to 2012 Expiring Renewal 6/1/2010-2011 6/1/2011-2012 Carrier&A.M. Best Rating Ailed World Allied World - Excess Excess Liability Limits: AXV AXV* Each Occurrence and Aggregate Limit $10,000,000 Same As Ex irin Excess of Underlying Limits p g Annual Premium $20,000.00 $20 000.00 Optional TRIA Premium Rejected $800.00 Change in Premium from Expirin : 0.00% Marsh Commission NIA N/A Page 5 of 10 Truckee Donner Public Utility District Workers'Compensation and Employers' Liability June 1,2011 to 2012 Expiring Renewal Option 1 Renewal Option 2 Renewal Option 3 71112010-611/2011 611/2011-2012 6/112011-2012 611/2011-2012 11 Month Term • - 1 Carrier&A.M.Best Rating U.S.Fire Ins.Co. U.S.Fire Ins.Co. SCIF Midlands AXIII* AXIII* (No Rating) AVIII Policy Limits Workers'Compensation Statutory Same as Expirig Pending Pendin Employers Liability: 9 -Each Accident $1,000,000 $1,000,000 -Policy Limit $1,000,000 $1,000,000 -Each Employee $1,000,000 $1,000,000 Exposure and Rate: Estimated Payroll $ 5,845,053.33 $ 5,649,923.00 Composite Rate Incl.Premium and Surcharges) 0.0368 0.0397 Premium: 11 Month Premium $214,817 ** Annualized Premium $234,346.00 $224,571.00 TRIA Premium Included,not rejectable Included,not rejectable Change in Premium from Expiring: -4.35% Change in Exposures from Expiring: -3.45% Change in Rate from Expiring: 7.54% Marsh Commission Included in Premium ° o 10.00/0 10.00/o U.S.Fire Ins.Co. **Quoted-Still being reviewed State Compensation Pending Midlands Management Pending Zenith Declined-Could not compete with renewal pricing Chartis Declined-Does not meet minimum premium Page 6 of 10 Truckee Donner Public Utility District Difference In Conditions - Primary and Excess June 1, 2011 to 2012 Expiring Renewal COVERAGE 61112010-2011 6/1/2011-2012 Carrier&A.M. Best Rating Landmark AXII and Landmark AXII and Essex AXIII* Essex AXIII Total Insurable Values $53,698,313 $61,272,101 DIC Primary Limits DIC Excess Limits $5,000,000 $5,000,000 $5,000,000 $5,000,000 Deductible 5% subject to a 5%subject to a minimum of$25,000 minimum of$25,000 Premium: ---- Primary Premium $39,629.00 45 Excess Premium $ 2 19.00 $22,750.00 $24,661.00 Surplus Lines Taxes and Fee $1,287.94 $2 271.10 Total Premium Including Taxes and Fees ' $63,666.94 $120151.10 Minimum Earned Premium 25% 25% Optional TRIA Premium . . Rejected $49 229.60 Change in Premium from Expiring: ' 12.36 Change in Exposures from Expiring: % Change in Rate from amiring: 00%.000% Marsh Commission NIA NIA Page 7 of 10 Truckee Donner Public Utility District Crime BLUE=change from prior year June 1,2011 to 2012 Expiring Renewal Option 1 Renewal Option 2 Renewal Option 3 Renewal Option 4 Renewal Option 5 Renewal Option 6 Renewal Option 7 6/1/2010-2011 61112011-2012 61112011-2012 6/112011-2012 6/112011-2012 61112011-2012 611/2011-2012 6/112011-2012 w Carrier& Federal Ins.Co. Federal Ins.Co. Federal Ins.Co. Federal Ins.Co. Travelers Hartford Hartford Hartford A.M.Best Rat! A++XV* A++XV* A++XV* A++XV* �q+X AXV* AXV AXV Crime Coverage Section Employee Theft $2,000,000 $2,000,000 $2,000,000 $3,000,000 $2,000,000 $2,000,000 $1,000,000 $2,000,000 Premises $2,000,000 $2,000,000 $2,000,000 $3,000,000 $2,000,000 $2,000,000 $1,000,000 $2,000,000 Transit $2,000,000 $2,000,000 Forgery $2,000,000 $2,000,000 $3,000,000 $2,000,000 $2,000,000 $1,0 00,000 $2,000,000 $2,000,000 $2,000,000 $3,000,000 $2,000,000 $2,000,000 $1,000,000 $2,000,000 Computer Fraud $2,000,000 $2,000,000 $2,000,000 $3,000,000 $2,000,000 $2,000,000 $1,000,000 $2,000,000 Funds Transfer Fraud $2,000,000 $2,000,000 $2,000,000 $3,000,000 $2,000,000 $2,000,000 $1,000,000 2 000 000 Money Orders&Counterfeit $2,000,000 $ , $2,000,000 $2,000,000 $3,000,000 $2,000,000 $2,000,000 $1,000,000 $2,000,000 Fraud Credit Card Fraud $2,000,000 $2,000,000 $2,000,000 $3,000,000 $2,000,000 $2,000,000 $1,000,000 $2,000,000 Client $2,000,000 $2,000,000 $2,000,000 $3,000,000 Expense $25,000 $25,000 $25,000 $25,000 $25,000!$0 Ded $25,000 I$0 Ded $25,000 I$0 Ded Deductible Options $5 000 $5 000 $25 000 $25 000 $25 000 $10 000 $5 000 $25 000 Notes Flat Renewal Rate Guarantee Avail Rate Guarantee Avail Rate Guarantee Avail Premium $4,537 $4,537 $3,973 $4,966 $4,000 $8,555 $6,880 Change in Premium from o $7,954 Ex irfn : 0•00% -14.20% &64% -13.43% 46.97% 34.06% 42.96% Marsh Commission N/A N/A N/A N/A N/A N/A N/A N/A Page 8 of 10 Truckee Donner Public Utility District Pollution Liability BLUE=change from prior year June 1,2011 to 2012 Expiring L6/l/2011-2012 al Option 1 Renewal Option 2 Renewal Option 3 Renewal Option 4 6/112010-2011 611/2011-2012 6/1/2011-2014 6/1/2011-2014 COVERAGE 3 Year Polic Term 3 Year Polic Term Carrier&A.M.Best Rating Steadfast Ins.Co. Steadfast Ins.Co. Steadfast Ins.Co. Steadfast Ins.Co. Steadfast Ins.Co. A+XV* A+"* A+XV* A+XV* A+XV* Limits of Liability: Each Pollution Event $1,000,000 $1,000,000 $1,000,000 $1,000,000 Aggregate Policy Limit $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 Deductible Each Pollution Event $50,000 $50,000 $25,000 $50,000 $25,000 Insuring Agreements A-Cleanup Costs- Yes Yes Yes Yes Yes Existing Pollution Event B-Bodily Injury or Property Damage- Yes Yes Yes Yes Yes Existing Pollution Event C-Cleanup Costs- Yes Yes Yes Yes Yes New Pollution Event D-Bodily Injury or Property Damage- Yes Yes Yes Yes Yes New Pollution Event Premium $7,118.00 $7,500.24 $7,830.90 $16,800.30 $17,572.50 Surplus Lines Taxes and Fees $ 231.34 $ 243.76 $ 254.50 $ 546.01 $ 571.11 Total Premium including $7,349.34 $ 7,744.00 $ 8,085.40 $ 17,346.31 $ 18,143.61 Taxes and Fees Optional TRIA Premium Rejected $ 75.76 $ 79.10 $ 169.70 $ 177.50 Change in Premium from Expiring: 5.10% 9.10% 57.63% 59.49% Marsh Commission NIA NIA N/A NIA NIA Page 9 of 10 Truckee Donner Public Utility District Insurance Proposal June 1, 2011 to 2012 Please Note: *A.M. Best ratings of these insurers are provided for information purposes only and are based upon information with respect to such ratings available to Marsh as of the date of this Proposal. Marsh will not, and will have no responsibilityor obligation inform you or any other person(s)relying upon this information of any changes in such Best ratings g to, g occurring after such date. Marsh will have no liability with respect to the solvency or future ability to pay claims of any of the insurance companies which have issued the insurance policies referenced herein. This document and any recommendations, analysis, or advice provided b Marsh collective) " Analysis") are intended solely for the entity identified as the recipient Y (collectively, the Marsh p herein ("you").This document contains proprietary, confidential information of Marsh and may not be shared with any third party, including other insurance producers,without Marsh's prior written consent.Any statements concerning actuarial, tax, accounting, or legal matters are based solely on our experience as insurance brokers and risk consultants and are not to be relied upon as actuarial, accounting,tax, or legal advice,for which you should consult your own professional advisors. "An modeling, analytics, or projections are subject to inherent uncertainty, and the Marsh Analysis could be material) affected if any underlying assumptions, conditions, information, or factors are inaccurate or incomplete or should change.The information contained herein is based on sources we believe reliable, but we make no representation or warranty as to its accuracy. Except as may be set forth in an agreement between you and Marsh Marsh shall have no obligation to update the Marsh Analysis and shall have no liability to you or any other part with regard to the Marsh Analysis or to any services provided by a third party to you or Marsh. Marsh makes no representation or warranty concerning the application of policy wordings or the financial condition or solvency of insurers reinsurers. Marsh makes no assurances regarding the availability, cost, or terms of insurance e. g covera or Page 10 of 10 MARSH CGUYCARP N ERMARSH EROLN RLLL ATTACHMENT 2 Client Service Agreement By and Between Marsh Risk& Insurance Services and Truckee Donner Public Utility District AGREEMENT, effective June 1, 2011 (the "Effective Date"), between Marsh Risk & Insurance Services ("Marsh"), and Truckee Donner Public Utility District("Client"). It is agreed as follows: 1. Servoces. Marsh is hereby engaged to act as the Client's risk management advisor and consultant and insurance broker, as applicable, and shall provide the Client with the services set forth on Appendix A (the "Services") in accordance with the terms set forth herein. Appendix A may be amended from time to time by written agreement of the parties. The additional services set forth in Section 3 of Appendix A are available for additional compensation and subject to the negotiation of separate agreements. 2. Comnensation. (a) Marsh shall be compensated for providing the Services to the Client as set forth on Appendix B. Appendix B may be amended from time to time by written agreement of the parties. (b) If there is a significant change in the Client's operations or exposures that affects the nature and scope of its insurance program and/or service needs, Marsh and the Client both agree to renegotiate Marsh's compensation in good faith as appropriate. 3. Term and Terming inn (a) The term of this Agreement shall commence on the Effective Date and shall terminate one (1) year thereafter(the "Contract Year). The Contract Year may be extended by mutual written agreement of the parties. (b) Notwithstanding the term, either party may terminate this Agreement upon 90 days' prior written notice to the other party. If this Agreement is terminated, Marsh will assist the Client in arranging a smooth transition process, subject to receipt by Marsh of all amounts due Marsh from the Client. However, Marsh's obligation and the obligation of its affiliates (including, if applicable, Marsh's U.K. affiliates)to provide Services to the Client will cease upon the effective date of termination, unless otherwise agreed in writing. (c) In the event of termination by the Client prior to expiration, Marsh's commission compensation set forth on Appendix B for the current 1 MARSH EMARSH MERCER KROLL MAC GUY CARPENTER OLNER WYMAN Contract Year will be deemed fully earned at inception and Marsh's fee compensation set forth on Appendix B for the current Contract Year will be deemed earned in accordance with the following schedule, for Services performed through the termination date: 60% at commencement of the current Contract Year; 75% after four months; and 100% after seven months. In the event that Marsh must return unearned portion of its fee pursuant to the preceding sentence, it will do so in a timely manner. (d) In the event of a termination by Marsh prior to expiration, Marsh's annual compensation will be deemed earned on a pro-rata basis. In the event that Marsh must return unearned portion of its fee pursuant to the preceding sentence, it will do so in a timely manner. 4. Authorization. Marsh shall be authorized to represent and assist the Client in all discussions and transactions with insurers relating to the lines of insurance listed on Appendix A when acting as the Client's insurance broker, provided that Marsh shall not place any insurance on behalf of the Client unless so authorized by the Client in writing. Notwithstanding the foregoing, at all times during the performance of this Agreement Marsh shall be an independent contractor and shall not be an employee of Client. 5. Other Terms and Conditions_ The Standard Terms and Conditions set forth in Appendix C shall apply to the Services performed by Marsh under this Agreement. 6. Governing Law, This Agreement shall be governed by and construed in accordance with the laws of the State of California, without regard to its conflicts of law provisions. 7. Mediation. In the event that a dispute arises that cannot be settled by the parties within ten (10) days, the parties agree to submit the dispute to a mediator within thirty(30) days thereafter to resolve a dispute. The mediation shall be conducted in Truckee, California. Mediation fees, if any, shall be divided equally among the parties. If any party commences a court action based on a dispute or claim to which this paragraph applies without first attempting to resolve the matter through mediation, then that party shall not be entitled to recover attorney's fees, even if they would otherwise be available to that party in any such court action. 8. Severability. It is the intent of the parties that the provisions of this Agreement shall be 2 MARSH MARSH MERCER KROLL MAIL GUY CARPENTER OLIVER WYMAN enforced to the fullest extent permitted by applicable law. To the extent that the terms set forth in this Agreement or any word, phrase, clause or sentence is found to be illegal or unenforceable for any reason, such word, phrase, clause or sentence shall be modified or deleted in such manner so as to afford the party for whose benefit it was intended the fullest benefit commensurate with making this Agreement, as modified, enforceable, and the balance of this Agreement shall not be affected thereby, the balance being construed as severable and independent. 9. Miscellaneous. This Agreement, together with all appendices attached hereto, contains the entire understanding of the parties with respect to the subject matter hereof and supersedes all written or oral prior agreements, understandings and negotiations with respect to such matters. This Agreement may be modified or otherwise amended and the observance of any term of this Agreement may be waived, only if such modification, amendment or waiver is in writing and signed by the parties hereto. This Agreement shall be binding upon and inure to the benefit of the parties' respective successors. Neither party shall have any liability for any failure or delay in performance of its obligations under this Agreement because of circumstances beyond its reasonable control, including, without limitation, acts of God, fires, floods, earthquakes, acts of war or terrorism, civil disturbances, sabotage, accidents, unusually severe weather, governmental actions, power failures, computer/network viruses that are not preventable through generally available retail products, catastrophic hardware failures or attacks on its server. Marsh Risk& Insurance Services By: Date: Keith Grand Vice President Accepted and agreed: Truckee Donner Public Utility District By: Date: Jeff Bender President, Board of Directors 3 MARSH MARSH MERCER KROLL _MMC GUY CARPENTER OLIVER WYMAN Appendix A Scope of Services 1. Marsh will act as the Client's risk management advisor and consultant and insurance broker, as applicable, with respect to the following lines of insurance (effective dates noted in parenthesis): (a) Workers' Compensation (06/01/2011) (b) Pollution Legal Liability(06/01/2011) (c) Directors & Officers Liability (06/01/2011) (d) Casualty (06/01/2011) (e) Property (06/01/2011) (f) Difference in Conditions (06/01/2011) (g) Flood (01/22/2012) (h) Surety(06/01/2011) 2. As respects the lines of insurance in Section 1, above, Marsh shall provide the following services: (a) Work with the Client to assess the Client's risk exposures (b) Work with the Client to design and develop the Client's insurance program (c) Assist with documentation and other steps to obtain commitments for and implement the Client's insurance program upon the Client's instructions (d) Keep the Client informed of significant changes and or trends in the insurance marketplace and provide the Client with annual information on market trends (e) Assist the Client in identifying insurers. Solicit quotes from insurers selected by the Client for the placement of Client's insurance program in accordance with the Client's instructions (f) Conduct a Renewal Strategy Meeting in advance of each placement (g) Negotiate on the Client's behalf with insurers and keep the Client informed of significant developments in the negotiations (h) Assist the Client with the evaluation of options received from the insurance market (i) Use best efforts to place insurance on behalf of the Client as directed by the Client and secure the Client's approval prior to requesting insurers to bind coverage {j} Follow up with insurance carriers for timely issuance of policies and endorsements. Marsh may deliver the Client's insurance policies and endorsements to the Client electronically (k) Promptly respond to Client's questions related to coverage placed by Marsh or the placement process (1) Deliver binders on or before the effective date of coverage being placed, subject to placement (m)Process or facilitate the processing and delivery of certificates or memoranda of insurance and auto identification cards with respect to insurance policies placed by Marsh, as requested by the Client A-1 MARSH EMN MARSH MERCER KROLL C GUY CARPENTER OLIVER WYMAN (n) Review policies and endorsements for conformity to agreed terms and coverages (o) Provide coverage summaries for all new placements and updates on changes to existing policies (p) Review premium and exposure audits, rating adjustments, dividend calculations and loss data (q) Monitor published financial information of the Client's current insurers and alert the Client when the status of one or more of such insurers falls below Marsh's minimum financial guidelines. Insurers with whom the Client's risks have been placed will be deemed acceptable to the Client, in the absence of contrary instructions from the Client (r) Provide the Client with detailed invoices, except in the case of direct billing by insurers. Remit premiums to insurers and taxes and fees to the relevant authorities on a timely basis, following receipt thereof from the Client (s) Provide the following claims-related services: • Evaluate coverage applicability on all Marsh placed business • Assist the Client in the development of settlement strategies • Assist the Client with insurer negotiations • Assist the Client with litigation management issues that impact claim settlements • Recognizing that it is the Client's responsibility to report Workers Compensation, Primary Auto Liability/ Physical Damage and non- complex Primary General Liability claims, Marsh will assist the Client to prepare loss notices to insurers and notify insurers of these and all other claims, excluding Workers' Compensation, provided that the Client's Marsh claims advocate is informed in writing by the Client of the claim, with details of the claim, and Marsh has placed the applicable policies or the Marsh claims advocate has been provided written notice by the Client of the applicable carrier and policies. The total number of hours of property and casualty claims services described in this paragraph provided by Marsh Risk Consulting division in a calendar year shall not exceed 25, unless otherwise agreed in writing. Marsh will not serve as the Client's insurance broker, but only as its risk consultant, with respect to placements with ineligible insurers (none proposed for 2011/12 renewal). In those circumstances, Marsh's non-U.S. affiliates shall provide the brokerage Services. 3. Additional Services are available for separate compensation and shall be agreed upon in advance and addressed by amendment to this agreement or by separate agreement (in certain cases with affiliates of Marsh). Such additional services include, but are not limited to: • Actuarial analysis of Workers' Compensation, General Liability, and Automobile Liability claims, or other lines of insurance • Consulting relating to workers' compensation cost containment, including behavioral risk management, absence management, cumulative injury A-2 MARSH MARSH MERCER KROLL MW GUY CARPENTER OLIVER WOMAN management, lean ergonomics, financial diagnostics, claims inventory workout, vendor selection, return-to-work, PastPerformer diagnostics, managed care, claim audits and custom cost containment solutions • Business interruption and other claim valuation services offered by Marsh's Forensic Accounting practice • Environmental risk consulting services • Specialty consulting, including business continuity management, supply chain risk management, strategic risk assessments, and other MRC specialty practices • Specialized/customized property risk consulting solutions, including business interruption and natural hazards modeling/consulting, boiler and machinery specialized consulting, loss estimate studies, emergency response management solutions, fire protection engineering services, and property risk site evaluation and assessment services • Claims services other than those specified under Section 2, if any, including claims management services, claims reporting as to lines of coverage or claims not included under Section 2, and property and casualty catastrophic claim response • Mass tort claims consulting and insurance archaeology research • Services in connection with loss portfolio transfers and alternative risk financing, including placements made in connection with such services • Captive insurance company feasibility studies • Establishment and administration of captive insurers • Placement of non-recurring insurance,_including, but not limited to: • "one-time" placements for construction projects • "one-time" placements for marine/cargo risks • "one-time" placements for surety • Placements for specific financial risks, such as trade credit • Placements involving significant quantitative or actuarial analysis or modeling • Placement of risks with financial institutions other than insurance carriers • Placements of risks not customarily accepted by insurers • Employee benefits services • Pension plan consulting • Compensation consulting • Executive deferred compensation services • Risk management claims information systems, including STARS and TrendTracker software programs, and related services • Enterprise Risk Management consulting • Strategic Risk Assessment • Provision of Marsh personnel on an out-sourced basis • Intellectual Property Consulting • Security Consulting • Insurance-related mergers and acquisition due diligence services and transactional solutions • Placement and servicing of owner controlled insurance programs • Interactive on-line client services A-3 MARSH MARSH MERCER KROLL MAlC GUY CARPENTER OLIVER WYMAN Appendix B Compensation For all lines of insurance coverage listed on Appendix A, Section 1 except those listed below (the "Fee Coverages"), Marsh will deliver the Services to the Client for an annual fee of$65,000.00. The annual fee for Services shall be paid by the Client on June 1, 2011. Prior to each placement by Marsh or its affiliates for the Client, Marsh or the applicable affiliate shall disclose to the Client and obtain the client's approval of any commissions to be collected by Marsh or its affiliates with respect to such placement, except when such affiliates are acting as an underwriting manager on behalf of insurers. Marsh shall credit amounts equal to any retail commissions collected by Marsh or its affiliates with respect to the Fee Coverages against remaining installments of the annual fee (except as provided below) and, to the extent in excess of the remaining installments, refund previously paid installments of the annual fee. In the event such retail commissions for a Contract Year exceed the annual fee for that year, then such excess retail commissions shall be returned to the Client if permitted by law. Otherwise, an amount equal to such excess retail commissions shall be carried forward and applied against Marsh's annual compensation for subsequent years if permitted by law. Any wholesale commissions collected by Marsh or its affiliates will not be credited against the annual fee. In addition, any enhanced commissions collected by Marsh or its affiliates on placements incepting on or after January 1, 2009 will not be credited against the annual fee. Marsh shall be compensated for providing its Services with respect to Flood placed through the National Flood Insurance Program through commissions received from insurers, which shall be in addition to and not be credited against the annual fee. Marsh shall disclose to the Client these commissions prior to placement. Marsh will deliver Flood Zone Determinations to the Client for an additional fee of$8.75 per Determination, subject to the Client's approval of the ordering of such Flood Zone Determinations. Surety services hereunder include the handling of day to day bond needs, renewal bonds, invoicing and tracking outstanding bond liability for existing entities. This includes routine new bond requests provided the scope is similar to bonds required in the past. Marsh reserves the right to negotiate commissions or additional fee for any unforeseen large non-routine obligation. Should this instance arise, Marsh and the Client both agree to renegotiate Marsh's surety compensation in good faith as appropriate. In addition to the compensation set forth above: (a) Marsh's foreign offices and affiliates shall be entitled to receive commissions on foreign local placements made on behalf of the Client or its foreign subsidiaries, which shall be in addition to and not be B-1 MARSH AL: MARSH MERCER KROLL VC GUY CARPENTER OLIVER WYMAN credited against the annual fee. Prior to each placement Marsh shall disclose to the Client and obtain the Client's approval of such commissions , except when such affiliates are acting as an underwriting manager on behalf of insurers. Marsh may make such disclosure to and obtain such approval from the Client's local operating management. (b) Marsh United Kingdom (including Bowring Marsh)will be entitled to receive commissions from insurers on placements made by them for the Client, which will be in addition to and not be credited against the annual fee. In the event(i)the Client elects to obtain insurance for a particular line of coverage from a foreign insurer and that insurer is domiciled in a country not part of the Client's insurance program with respect to such line of coverage as of the commencement date of this Agreement and (ii)the resources and services of a foreign Marsh affiliate are necessary or appropriate for such placement, Marsh and the Client shall negotiate additional compensation for such services and/or modification to Marsh's compensation in good faith. Any commissions collected by Marsh or its affiliates shall be considered fully earned at the time of placement, including if an insurance policy placed by Marsh or its affiliates for the Client or its foreign subsidiaries is terminated by the Client or its foreign subsidiaries prior to expiration unless such policy is replaced by another policy placed by Marsh or its affiliates for the Client or its foreign subsidiaries during the term of this Agreement. B-2 MARSH MARSH MERCER KROLL MAIL GUY CARPENTER OLIVER WYMAN Appendix C Standard Terms and Conditions These Standard Terms and Conditions are part of the attached Client Service Agreement between Truckee Donner Public Utility District(the "Client) and Marsh Risk& Insurance Services ("Marsh"). 1. Taxes and Fees. In certain cases, insurance placements that Marsh makes on the Client's behalf may require the payment of insurance premium taxes (including U.S. federal excise taxes), sales taxes, use taxes, surplus or excess lines and similar taxes and/or fees to federal, state or foreign regulators, boards or associations. The Client agrees to pay such taxes and fees, whenever assessed. To the extent practical, such taxes and fees will be identified by Marsh on invoices covering such placements. Any such taxes and fees collected by Marsh will be promptly remitted by Marsh to the appropriate authorities. 2. Client Responsibilities. The Client shall be solely responsible for the accuracy and completeness of information and other documents furnished to Marsh and/or insurers by the Client and the Client shall sign any required application for insurance. The Client recognizes and agrees that all insurance coverages placed in connection with this Agreement and all Services, evaluations, reports and recommendations provided by Marsh hereunder are based on data and information furnished by the Client. Marsh will be under no obligation to investigate or verify the completeness or accuracy of any such data or information, nor will Marsh have any liability for any errors, deficiencies or omissions in any Services, evaluations, reports or recommendations provided to, or any insurance coverages placed on behalf of, the Client that are based on such inaccurate or incomplete data or information. The Client understands that the failure to provide all necessary information to an insurer, whether intentional or by error, could result in the impairment or voiding of coverage. The Client will review all policies, endorsements and program agreements delivered to it by Marsh and will advise Marsh of anything which the Client believes is not in accordance with the negotiated coverage and terms within thirty days following receipt. 3. Intermediaries. (a) When in Marsh's professional judgment it is necessary or appropriate and subject to the Client's prior approval, Marsh may utilize the services of other intermediaries, including wholesale brokers, to assist in the marketing of the Client's insurance. Such intermediaries may be affiliates of Marsh. C-1 MARSH FMARSH MERCER KROLL MAK GUY CARPENTER OLIVER WYMAN (b) Wholesale brokers may represent insurers or act as managing general agents. Prior to utilizing a wholesale broker in connection with a placement for the Client, Marsh shall disclose to the Client the compensation received or to be received by Marsh and its affiliates in connection with the wholesale placement, any interests of Marsh and its affiliates in the wholesale broker, any contractual agreements between Marsh and its affiliates, on the one hand, and the wholesale broker, on the other, and alternatives to using the wholesale broker. (c) Marsh shall disclose to the Client the compensation of any Marsh affiliated intermediaries utilized in connection with the Client's placements, and obtain the Client's consent to such compensation prior to the binding of coverage. Marsh shall disclose to the Client the compensation of any non- Marsh affiliated intermediaries utilized in connection with the Client's placements to the extent known by Marsh. 4. Other Revenue. (a) If the Client requests assistance with obtaining premium financing in connection with the Client's placements and Marsh provides such assistance, Marsh may receive compensation from the finance company that provides premium financing to the Client. Marsh shall provide to the Client information relating to Marsh's and its affiliates' arrangements with and interests in the premium finance companies to be considered by the Client and the compensation that Marsh and its affiliates would receive from finance companies with respect to the Client's placements. (b) Marsh earns and retains interest income on premium payments held by Marsh on behalf of insurers during the period between receipt of such payments from clients and the time such payments are remitted to the applicable insurer, where permitted by applicable law. 5. Confidentiality. (a) Confidential Information. The Client may provide Marsh with certain proprietary and confidential information ("Confidential Information") in connection with the Services provided by Marsh under this Agreement. Neither Marsh nor any of its employees or agents directly or indirectly shall disclose to any third party or use any Confidential Information furnished by or on behalf of Client for any purpose except in furtherance of the Services and in furtherance of other insurance brokerage, risk consulting, risk financing, risk transfer, employees benefits or other insurance-related services rendered by Marsh to Client, which may include in the normal course of business the release to insurers and other financial institutions of Confidential Information relevant to the underwriting and/or evaluation of Client's risks and the processing of its claims, provided that such insurers and financial institutions are informed of the confidential nature of such information. Marsh shall take all steps reasonably required to maintain the C-2 MARSH FMARSH MERCER KROLL MAK GUY CARPENTER OUVER WYMAN confidentiality of Confidential Information in Marsh's possession. The transmission of Confidential Information via electronic data transmission networks which provide for the security of users' data shall be deemed consistent with Marsh's obligations hereunder unless such use is contrary to Client's express instructions. (b) Exceptions. The restrictions and agreements set forth above shall not apply to any Confidential Information: (i)which at the time disclosed to or obtained by Marsh is in the public domain; (ii)which becomes part of the public domain through no act, omission or fault of Marsh; (iii) which Marsh's records demonstrate was developed independently by Marsh or was received by Marsh from a third party which Marsh had no reason to believe had any confidentiality or fiduciary obligation to the Client with respect to such information; (iv)which is required to be disclosed by law, including, without limitation, pursuant to the terms of a subpoena or other similar document; provided, however, Marsh shall, to the extent practical, give prior timely notice of such disclosure to the Client to permit the Client to seek a protective order, and, absent the entry of such protective order, Marsh shall disclose only such Confidential Information that Marsh is advised by its counsel must be disclosed by law; or(v)following the lapse of two years after disclosure of such information to Marsh. (c) Return of Confidential Information. As between the Client and Marsh, Confidential Information shall be the sole and exclusive property of the Client. Upon the Client's request, all documents and records in Marsh's possession containing Confidential Information shall be returned to the Client; provided, however, that Marsh may retain copies of documents that may contain Confidential Information which are necessary for the conduct and proper record keeping of Marsh's business in accordance with standard operating procedures or applicable law. (d) Remedy. It is understood and agreed that money damages would not be a sufficient remedy for any breach of these confidentiality provisions and the Client shall be entitled to injunctive relief as a remedy for such breach, without prejudice to any other rights or remedies available to the Client under applicable law. 6. Disclaimers: Limitation of LlabllltX. (a) Marsh does not speak for any insurer, is not bound to utilize any particular insurer and does not have the authority to make binding commitments on behalf of any insurer, except under special circumstance which Marsh shall always endeavor to make known to the Client. Marsh shall not be responsible for the solvency of any insurer or its ability or willingness to C-3 MARSH MARSH MERCER KROLL A/MC GUY CARPENTER OLNER WYMAN pay claims, return premiums or other financial obligations. Marsh does not guarantee or make any representation or warranty that insurance can be placed on terms acceptable to the Client. The Client acknowledges that, in performing Services, Marsh and its affiliates are not acting as a fiduciary for the Client, except to the extent required by applicable law. Any reports or advice provided by Marsh should not be relied upon as accounting, legal, regulatory or tax advice. In all instances, Marsh recommends that the Client seek its own advice on such matters from professional accounting, legal, regulatory and tax advisors (b) If Marsh has taken over any existing program or policies implemented by another broker, Marsh will not assume any responsibility for the adequacy or effectiveness of those programs or policies or any acts or omissions occurring prior to Marsh's engagement. Within 45 days, Marsh will have completed a review of such programs and policies and will make recommendations it believes are necessary. (c) Any loss control services and/or surveys performed by Marsh under this Agreement are advisory in nature. Such services are limited in scope and do not constitute a safety inspection as provided by a safety engineering service. Marsh does not claim to find or include every loss potential, hazard, statutory or code violation or violation of good practice. All surveys and reports are based upon conditions observed and information supplied by the Client. Marsh does not expressly or impliedly guarantee or warrant in any way the safety of any site or operation or that the Client or any of its sites or operations is in compliance with federal, state or local laws, codes, statutes, ordinances or recommendations. (d) In no event shall either party to this Agreement be liable for any indirect, special, incidental, consequential or punitive damages or for any lost profits arising out of or relating to any services provided by Marsh or its affiliates. The aggregate liability of Marsh, its affiliates and its and their employees to the Client or its affiliates arising out of or relating to the provision of services by Marsh or its affiliates shall not exceed $10,000,000. This provision applies to the fullest extent permitted by applicable law. (e) Marsh may provide to the Client information and services related to insurance regulatory and insurance tax issues relating to the Client's insurance program. Any reports or advice provided by Marsh will be based on publicly available information and Marsh's experience as an insurance broker and risk consultant in dealing with such matters for other clients and should not be relied upon as accounting, regulatory or tax advice. In all instances, Marsh recommends that the Client seek its own advice on accounting, regulatory and tax matters from professional legal and tax advisers. (f) Marsh may provide the Client with modeling and/or business analytics services, including hazard loss and catastrophe modeling, loss forecasting C-4 MARSH MARSH MERCER KROLL MAC GUY CARPENTER OUVER WYMAN and triangles, adverse event simulation, scenario and portfolio risk analysis, decision mapping, risk bearing and risk retention tolerance analysis and insurance program evaluation analysis ("Modeling and Analytics"). Modeling and Analytics services will be based upon a number of assumptions, conditions and factors. If any of them or any information provided to Marsh are inaccurate or incomplete or should change, the Modeling and Analytics provided by Marsh could be materially affected. These services are subject to inherent uncertainty, and actual results may differ materially from that projected by Marsh. They are provided solely for the Client's benefit, and do not constitute, and are not intended to be a substitute for, actuarial, accounting or legal advice. Marsh shall have no liability to any third party in connection with these services or to the Client with regard to any services performed or provided by a third party. Except to the Client's insurers in connection with the placement of coverage by Marsh, the Client shall not share any of Marsh's Modeling and Analytics work product with a third party without Marsh's prior written consent. C-5