Metro - File #: 2017-0306

• File #: 2017-0306
• Type: Program
• Status: Passed
• File created: 5/2/2017
• In control: Finance, Budget and Audit Committee
• On agenda: 6/14/2017
• Final action: 6/22/2017
• 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 $4.5 million for the 12-month period effective August 1, 2017 to August 1, 2018.
• Sponsors: Finance, Budget and Audit Committee
• Indexes: Agreements, Budgeting, Commuter Rail (Project), Expo Line Operating Project (Project), 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), Railroad commuter service, Safety, Station operations, Union Station Property Management (Project)

Date	Action By	Action	Result
6/14/2017	Finance, Budget and Audit Committee

Meeting_Body
FINANCE, BUDGET AND AUDIT COMMITTEE
JUNE 14, 2017

Subject
SUBJECT: EXCESS LIABILITY INSURANCE PROGRAM

Action
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 $4.5 million for the 12-month period effective August 1, 2017 to August 1, 2018.

Issue
ISSUE

The excess liability insurance policies expire August 1, 2017. 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.

The casualty insurance market for the transportation sector is undergoing change with insurers revisiting their underwriting methods after many years of declining real premium rates. In past years, Metro was able to add the Expo Line to Santa Monica and the Gold Line Extension to Azusa for no additional premium. Over the last several years; however, the insurance industry's assessment of transportation and transit risks has deteriorated for a variety of factors.

High profile rail accidents in the Northeast commuter rail corridor, a derailment at the CTA's...