FROM: Stacey Barnier, Chief Human Resources Officer
SUBJECT: Renewal of property and casualty insurance coverages
RECOMMENDATION:
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Approve renewal of property and casualty insurance with Alliant Insurance Services and the Marsh & McLennan Insurance Agency LLC for fiscal year 2026-2027 in an amount not to exceed $502,566 with a contingency of $5,000 to account for any extreme dislocations in the insurance market that might change some of the quotes prior to binding coverage.
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BACKGROUND:
SBCERA conducted a Request for Qualifications followed by a Request for Proposals in Spring 2020 with the help of G2 Risk Consulting to test the market and put in place appropriate coverage in various areas of our property and casualty risk management program. Alliant Insurance Services was awarded the contract for our Fiduciary Liability and Employment Practices insurance coverage whereas Marsh & McLennan Insurance Agency LLC was awarded the contract for the remainder of our casualty insurance coverages including cyber, property, general liability, excess/umbrella, crime, and Workers’ Compensation coverages.
As we have done in prior years, both carriers shopped SBCERA’s risk portfolio to various carriers based on the lines of coverage they currently handle for SBCERA. Different in this years’ property and casualty coverages is that we have removed the Directors and Officers coverage which was offered to SBCERA for a one year period to cover any potential claims arising out of the dissolution of Hospitality Office, Inc. which the Board approved at the June 5, 2025 Board Meeting.
SBCERA is part of the Alliant Fiduciary Liability Insurance Program which is a pooled plan that bundles fiduciary liability, fiduciary dishonesty and employment practices liability insurances and leverages the buying power of multiple public pension plans. Our fiduciary liability insurance increased 2.82% as a result of the increase in SBCERA’s overall fund balance. As the fund continues to grow, we should expect to see our fiduciary liability insurance premiums increase. Our fiduciary dishonesty and employment practices liability insurance renewals increased (9.12% and 2.94% respectively) due to headcount and increase in fund size.
Significant enhancements were added to the standard policy we purchase for Deadly Weapons incidents to now include crisis response to non-deadly weapons incidents. Although our hope is that we never have to use coverage from a policy like this, these new enhancements will help with crisis response to issues such as ICE Raids, fire at a records retention facility or even HVAC equipment falling from the ceiling.
Overall building coverage increases were minimal 4.5% for property and 2.3% for general liability respectively. Workers compensation coverage premium is currently quoted at 12% based on a percentage of our payroll given the regular merit increases and salaries with anticipated COLA increases applied as well modifiers based on claims data. Given the number of data breaches and cyber incidents we have seen across the country over the last year including the most recent Canvas breach impacting our local schools, we anticipate a Cyber premium renewal increase of 8% this year while our renewals for auto, crime, and business travel insurance were flat this year.
Our brokers are still negotiating with various carriers to obtain the best possible rates for SBCERA. Exhibit A outlines the recommended coverages and associated price quotes which are subject to change as a result of market conditions at the time we actually bind insurance coverage. As a result, staff recommends approval of contingency funding in the amount of $5,000 to account for extreme dislocations in the insurance market that might change some of the quotes prior to binding coverage.
BUDGET IMPACT:
Costs for this item are included in the current year administrative budget.
STRATEGIC PLANNING GOAL/OBJECTIVE:
Operational Excellence & Efficiency
Prudent Fiscal Management
STAFF CONTACT:
Stacey Barnier
ATTACHMENTS:
Exhibit A: Proposed Property and Casualty Insurance Coverage Costs