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City of Arts &Innovation
<br />Finance Committee
<br />Memorandum
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<br />TO: FINANCE COMMITTEE
<br />FROM: FINANCE DEPARTMENT
<br />DATE: OCTOBER 10, 2018
<br />WARDS: ALL
<br />SUBJECT: ANNUAL FINANCIAL REVIEW OF THE CITY'S LIABILITY INSURANCE TRUST
<br />FUNDS - FISCAL YEAR 2017-2018 - DIRECT SUBMITTAL
<br />ISSUE:
<br />Receive an annual financial review of the City's Liability Insurance Trust Funds for Fiscal Year
<br />2017-18.
<br />RECOMMENDATION:
<br />That the Finance Committee receive, provide input on, and forward to the City Council for approval
<br />an annual financial review of the City's Liability Insurance Trust Funds ("LITF") for Fiscal Year
<br />2017-18.
<br />BACKGROUND:
<br />Effective fiscal year 2015-16, City staff began presenting to the City Council, through the Finance
<br />Committee, a financial and operational review of the City's liability funds, including claim activity.
<br />This review includes the Workers' Compensation and General Liability Funds.
<br />The Human Resources Department administers the City's Workers' Compensation program. The
<br />Risk Management Division of the City Attorney's Office, through a third party administrator, has
<br />responsibility for the General Liability program on behalf of the City.
<br />The City carries insurance coverage to mitigate the most significant losses it may incur. For
<br />General Liability losses, the City carries commercial liability insurance in the amount of
<br />$20,000,000 for general and auto liability claims, with a self-insured retention of $3,000,000 per
<br />occurrence. This means the City covers out of funds on hand, the costs of any claim up to the
<br />first $3,000,000 incurred. After that, the insurance policy covers the next $20,000,000. If a claim
<br />exceeds the combined total of $23,000,000, then the City would be responsible for the additional
<br />costs out of its own funds.
<br />The situation is identical for the Worker's Compensation program, except that the insurance
<br />coverage has a policy limit of $25,000,000. The self-insured retention for the Workers'
<br />Compensation is also $3,000,000 per occurrence. There have been no claims settled in the last
<br />ten years that exceed insurance coverage under either program. Each year, as the insurance
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