Metro - File #: 2016-0406

• File #: 2016-0406
• Type: Program
• Status: Passed
• File created: 5/3/2016
• In control: Finance, Budget and Audit Committee
• On agenda: 6/15/2016
• Final action: 6/23/2016
• Title: AUTHORIZE the Chief Executive Officer to negotiate and award excess liability insurance policies with up to $300 million in limits at a cost not to exceed $4.25 million for the 12-month period effective August 1, 2016 to August 1, 2017.
• Sponsors: Finance, Budget and Audit Committee
• Indexes: Agreements, Budgeting, Commuter Rail (Project), Expo Line Operating Project (Project), Fixing America’s Surface Transportation Act, Gold Line Operations (Project), Insurance, Light rail transit, Los Angeles Union Station, Metro Exposition Line, Metro Gold Line, Metro Green Line, Metro Orange Line, Metro Rail A Line, Metro Rail B Line, Metro Rail C Line, Metro Rail E Line, Metro Rail L Line, Metro Red Line, Operations Transportation (Project), Program, Project management, Rail Operations - Blue Line (Project), Rail Operations - Green Line (Project), Rail Operations - Red Line (Project), Rail transit, Railroad commuter service, Station operations, Trucking, Union Station Property Management (Project)

Date	Action By	Action	Result
6/23/2016	Board of Directors - Regular Board Meeting
6/15/2016	Finance, Budget and Audit Committee

Meeting_Body
FINANCE, BUDGET AND AUDIT COMMITTEE
JUNE 15, 2016

Subject/Action
SUBJECT: EXCESS LIABILITY INSURANCE PROGRAM

ACTION: PURCHASE EXCESS LIABILITY INSURANCE

Heading
RECOMMENDATION

Title
AUTHORIZE the Chief Executive Officer to negotiate and award excess liability insurance policies with up to $300 million in limits at a cost not to exceed $4.25 million for the 12-month period effective August 1, 2016 to August 1, 2017.

Issue
ISSUE

The excess liability insurance policies expire August 1, 2016. Staff typically brings this item to the Board for approval in July with final carriers and pricing, however because the Board is not meeting in July we are bringing this item in June. Insurance underwriters will not commit to final pricing until roughly six weeks before our current program expires on August 1. Consequently, we are requesting a not-to-exceed amount for this renewal pending final pricing and carrier identification. Metro is required by some shared use agreements with the freight railroads (Attachment A) to carry excess liability insurance. Without this insurance, Metro would be subject to unlimited liability for bodily injury and property damage claims resulting from, primarily, bus and rail operations.

Discussion
DISCUSSION

Our insurance broker, Wells Fargo Insurance Services ("Wells"), is responsible for marketing the excess liability insurance program to qualified insurance carriers. Quotes are in the process of being received by our broker from carriers with A.M. Best ratings indicative of acceptable financial soundness and ability to pay claims. We typically approach the Board in July with final firm pricing and carriers identified.

In December 2015, H.R. 22, the Fixing America's Surface Transportation (FAST) Act, was passed, raising the liability cap for commuter rail transit providers for passenger liability from $200 million to $295 million. As such, our broker requested options at renewal to increase Metro's current...