DATE:October 4, 2006
TO:Board of Retirement
FROM:Becky Van Wyk
Assistant Retirement Administrator
SUBJECT:Liability Insurance for the FCERAAdministrationBuilding
Attached is the quote received on September 25, 2006 for the renewal of the Special Liability Insurance Program (SLIP) for the period September 29, 2006 through September 29, 2007 for the Fresno County Employees' Retirement Association (FCERA) AdministrationBuilding. SLIP provides loss coverage resulting from claims for bodily injury, personal injury and property damage to visitors to our facility.
FCERA works with Alliant Insurance Services, Inc., formerly Driver Alliant, an insurance broker, to research and obtain information on desired insurance coverage. In addition, Gregory S. Borboa, Manager of the Risk Management Division of the County of Fresno Personnel Department has reviewed the quote and confirmed that the coverage is both adequate and appropriate. I have attached his e-mailed response for your review.
The recommended carrier, Evanston Insurance Company is our existing carrier. Evanston Insurance is a non-admitted carrier with a Best Rating of A, Excellent and Financial Size Category XII. Non-admitted carriers although strong, reputable insurance companies are not licensed to sell insurance in California and are therefore not subject to the Financial Solvency Regulation and Enforcement that applies to California licensed insurers. Such insurers do not participate in any of the insurance guarantee funds created by California law. Therefore, state funds will not pay any claims or protect FCERA's assets if the insurer becomes insolvent and is unable to make payments as promised. However, both the insurance broker and County Risk Management believe that Evanston Insurance will be able to cover any losses incurred by FCERA.
The annual premium for the SLIP is $6,603.19 for a maximum per occurrence coverage of $5,000,000 and a deductible of $5,000. The prior premium was $6,600.90 for the same per occurrence coverage. This is a $2.29 increase over the prior premium.
Under the federal Terrorism Risk Insurance Act of 2002 (the "Act"), insurance coverage can be purchased for losses arising out of an Act of Terrorism, which is defined in the Act as an act certified by the Secretary of the Treasury (i) to be an act of terrorism, (ii) to be a violent act or an act that is dangerous to (A) human life; (B) property or (c) infrastructure, (iii) to have resulted in damage within the United States, or outside of the United States in case of an air carrier or vessel or the premises of a U.S. mission and (iv) to have been committed by an individual or individuals acting on behalf of any foreign person or foreign interest as part of an effort to coerce the civilian population of the United States or to influence the policy or affect the conduct of the Untied States Government by coercion.
Please note that the premium noted for primary fiduciary insurance does not include coverage for Terrorism Risk Insurance. The premium for the excess fiduciary insurance policy does include coverage for Terrorism Risk Insurance. Terrorism Risk Insurance coverage is available for an approximate additional premium of $1,651 (25% of the base premium plus applicable surplus lines taxes and fees). Your Board has not previously purchased Terrorism Risk Insurance.
I recommend that your Board bind SLIP insurance coverage with Evanston Insurance Company and decline Terrorism Risk Insurance for theFCERAAdministrationBuilding for the policy year September 29, 2006 to September 29, 2007.
I am available to answer any question. Thank you.
1111 H Street, Fresno, CA93721, Tel 559.457.0681 Fax 559.457.0318