Meeting_Body
FINANCE, BUDGET AND AUDIT COMMITTEE
JULY 15, 2015
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 $250 million in limits at a cost not to exceed $3.65 million for the 12-month period effective August 1, 2015 to August 1, 2016.
Issue
ISSUE
The excess liability insurance policies expire August 1, 2015. Metro is required by some agreements (e.g., shared use agreements with the freight railroads) 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 were received from carriers with A.M. Best ratings indicative of acceptable financial soundness and ability to pay claims.
High profile transportation related fatality accidents including the February 2015 Metrolink truck/train collision, January 2015 Washington Metropolitan Area Transit Authority subway fire, December 2013 Metro North high speed derailment in New York, April 2014 FedEx truck/bus collision in Northern California and, most recent, May 2015 Amtrak high speed derailment in Philadelphia, are proving problematic for the transportation sector. After years of positive acceptance, the casualty insurance market for the transportation sector is undergoing change with insurers revisiting their underwriting methods. Negative nationwide transportation risk perception is increasing the difficulty in placing primary insurance coverage with the domestic markets.
To complicate the marketing of Metro's excess liability program this ye...
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