Metro - File #: 2024-0243

• File #: 2024-0243
• Type: Program
• Status: Agenda Ready
• File created: 4/9/2024
• In control: Finance, Budget and Audit Committee
• On agenda: 6/20/2024
• Title: AUTHORIZE the Chief Executive Officer to negotiate and purchase Public Entity excess liability policies with up to $300 million in limits at a not-to-exceed premium of $29.9 million for the 12-month period effective August 1, 2024, to August 1, 2025.
• Sponsors: Finance, Budget and Audit Committee
• Indexes: Budget, Budgeting, Expo Line Operating Project (Project), Insurance, Los Angeles Union Station, Metro Rail A Line, Metro Rail B Line, Metro Rail C Line, Metro Rail E Line, Operations Transportation (Project), Program, Public policy, Rail Operations - Blue Line (Project), Rail Operations - Green Line (Project), Rail Operations - Red Line (Project), Rail Operations Control Center, Rail Operations-Crenshaw Line (Project), Ridership, Safety, Union Station Property Management (Project)
• Related files: 2023-0265

Date	Action By	Action	Result
6/27/2024	Board of Directors - Regular Board Meeting

Meeting_Body
FINANCE, BUDGET, AND AUDIT COMMITTEE
JUNE 20, 2024

Subject
SUBJECT: EXCESS LIABILITY INSURANCE PROGRAM

Action
ACTION: APPROVE RECOMMENDATION

Heading
RECOMMENDATION

Title
AUTHORIZE the Chief Executive Officer to negotiate and purchase Public Entity excess liability policies with up to $300 million in limits at a not-to-exceed premium of $29.9 million for the 12-month period effective August 1, 2024, to August 1, 2025.

Issue
ISSUE

Metro's Public Entity excess liability insurance policies (which include transit rail and bus operations) expire on August 1, 2024. Insurance underwriters will not commit to final pricing until two to three weeks before the current program expires on August 1st. Consequently, staff is requesting a not-to-exceed amount for this renewal, pending final pricing and carrier selection. Without this insurance, Metro would be subject to unlimited liability for bodily injury and property damage claims resulting primarily from bus and rail operations.

Background
BACKGROUND

Metro's insurance broker, USI Insurance Services ("USI"), is responsible for marketing the excess liability insurance program to qualified insurance carriers. Quotes are currently being received from carriers with A.M. Best ratings indicative of acceptable financial soundness and ability to pay claims. The premium indication below is based on current market expectations. Final pricing, however, is not available until approximately 14 days prior to binding coverage.

Metro established a program of excess liability insurance to protect against insured losses. Each year, Risk Management meets with USI to prepare for the upcoming marketing process.

Initial discussions begin in the third quarter of the fiscal year through an evaluation of market conditions to determine the availability of coverages and at what levels of premium. The annual stewardship meeting is conducted in January to identify the required data, including loss development, riders...