Memorandum

City of Lawrence

Administrative Service Department

TO:	David L. Corliss – City Manager
FROM:	Michael Bennett – Risk Manager
CC:	Cynthia Wagner – Assistant City Manager Diane Stoddard – Assistant City Manager Jonathan Douglass-Assistant to the City Manager
Date:	May 4, 2011
RE:	Police Official Liability, Public Official Liability and Employment Practices Liability Insurance Premiums

Introduction

On May 18, 2011 at 12:01 a.m., insurance policies for the Police Officer Liability, Public Official Liability and Employment Practices Liability (EPLI) coverage will expire. 

To assist with brokerage of these policies, the risk management division used multiple brokers this year to bid these policies.  Calvin, Eddy and Kappelman (CEK) of Lawrence, who has brokered this policy for several years, and the Hays Companies of Kansas City were the selected brokers. 

This memo contains staff’s recommended actions and requests your approval to bind coverage in advance of the expiration. 

Financial Comparison of Policies and Staff Recommendation

It is recommended that the City switch brokers and carriers from CEK and Scottsdale Insurance to the Hays Companies and Lexington Insurance.  Lexington Insurance offers the City $500,000 more coverage for police officer, civil rights claims, and has agreed to provide employment practices liability coverage for firefighters for $2,123.00 less than the renewal quote from Scottsdale.  The cost of the policy is $75,253.   This is a $2,103 increase from last year’s premium.  Scottsdale offered to renew last year’s year policy for $77,376.  This would be a $4,226 increase from last year with no additional coverage. 

Overview and Comparison of Police Officer, Public Official and EPLI

Police Officer and Public Official policies provide coverage for both tort and civil rights claims.  The higher limits are recommended because the protections found in the Kansas Torts Claim Act; K.S.A. 75-6101 et seq., including the $500,000 cap on damages, do not apply to civil rights violations.  In addition to tort/personal injury claims, these policies would provide coverage for claims of wrongful arrest, excessive use of force, racial profiling, wrongful taking  and other constitutional claims that are commonly filed against police officers and public officials.

The same rationale applies for Public Officials Liability.  This policy provides coverage for each public official for actions taken on behalf of the City.  This would include the City Commissioners and executive staff.

EPLI provides coverage for employee claims of discrimination, harassment, violation of the ADA, ADEA, Title VII, FMLA and state tort claims.

In addition to a lower premium with higher policy limits, Lexington offers the City:

• The right to select counsel. Gerry Cooley and Gilliland and Hayes have been pre-approved;
• $25,000 deductible for public official violations versus $75,000 for Scottsdale;
• Same $50,000 deductible for EPLI claims;
• Intentional torts such liable, slander and defamation are covered under the EPLI policy;
• Cost of defense expenses fall outside the policy limit for public official and EPLI coverage; i.e. the costs of defense are NOT deducted from the policy limits;
• Full coverage of prior, unknown and unreported claims regardless of the date of the incident are fully covered;
• Consent to settle clause included meaning the insurer cannot settle a case without the City’s permission;
• Hammer clause that requires the carrier will pay 50% of any judgment in excess of the settlement offer made should the City decide NOT to consent to settlement up to the policy limits.

While Lexington has agreed to raise the Public Official and EPLI coverage to $1,000,000 for an additional $3,849, staff does not make this recommendation at this time due to budget constraints.

Employment Practices Liability Insurance

This policy provides coverage for any claim brought in a civil proceeding in which monetary damages are sought as a result of wrongful act.  This would include alleged violations of Title VII of the Civil Rights Act of 1964, as amended by the Civil Rights Act of 1991; the American’s with Disabilities Act, Family Medical Leave Act and any other statutory right, except workers compensation, applying to the employer-employee relationship.

The deductible and cap will remain the same as last year; $50,000 and $500,000.

Recommended Action

Staff recommends changing carriers for Police Officer Liability, Public Official Liability and Employment Practices Liability for the insurance period of 5/18/11 to 5/18/2012 to Lexington Insurance for an estimated premium of $75,253.  Should you have further questions, please do not hesitate to contact my office at 832-3009.