TO: AC Transit Board of Directors
FROM: Shayna van Hoften, Interim General Counsel/Chief Legal Officer
SUBJECT: 2024-2025 Transit Operations Insurance Program Renewal
ACTION ITEM
AGENDA PLANNING REQUEST: ?
RECOMMENDED ACTION(S):
Title
Consider authorizing the General Manager to bind the District's 2024-2025 Transit Operations Insurance program.
Staff Contact:
Shayna van Hoften, General Counsel/Chief Legal Officer
Body
STRATEGIC IMPORTANCE:
Goal - Financial Stability and Resiliency
Initiative - Financial Efficiency and Revenue Maximization
Authorizing the General Manager to bind the proposed 2024-2025 Transit Operations Insurance program will allow the District to maintain its risk retention and risk transfer programs at the current optimum levels for the 2024-2025 policy period.
BUDGETARY/FISCAL IMPACT:
The total budgetary impact of binding the proposed insurance coverages as recommended by staff will not exceed $14,968,119.
BACKGROUND/RATIONALE:
The District's insurance program is renewed on an annual basis. The District's current insurance program, except for the commercial property and deadly weapons response lines of coverage, will expire at 12:01 a.m., April 26, 2024. Staff requests that the Board authorize the General Manager to bind the District's policies as recommended below.
Commercial Property and Casualty Market Update: Industry rating agency AM Best reports that the U.S. property/casualty industry's underwriting losses for 2023 reached a 10-year high of $38 billion, attributable to severe weather-related losses, inflation, supply chain challenges, labor shortages, and upward reinsurance pricing. Inflation-both economic and social-remains a disruptive influence on the insurance market. Liability costs have risen an average of 16% over the past five-year period, four times higher than the average economic inflation rate, driven in large part by the social inflation of jury verdicts and claim settlement values. California, with ...
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