1. BCJPIA July 1, 2015 Renewals Board of Directors June 4, 2015 Presented By: Conor Boughey & Michael Beatty License #0C36861

2. Outline I.P&C Ins. Market Update II.Renewals to be Discussed: A.Excess Property B.Employment Practices Liability C.Marina Operators Legal Liability D.Crime

3. P & C Market Update The market continues to be “unsettled,” with different lines of coverage responding as follows;  Property markets are competing on low loss ratio accounts, driving premiums down. Accounts with losses and poor risk modeling continue to increase. Wildfire and coastal exposure concerns continue to rise in California.  Liability Starr Indemnity Liability Company (SILC) withdrew from the Public Entity market, leading to re-pricing of many CA PE accounts. Other markets continue to try to hold rates flat or offer slight rate reductions.  Workers’ Compensation PE markets continue to harden. The few major insurance carriers in the market are pushing retentions up to $2M for cities with safety officers.  Employment Practices underwriters are seeking increases in rate. Increases in employment numbers or losses will compound these increases.  Crime carriers have seen an increase in claims frequency and severity in the last three years. Several California municipalities have had large losses, leading underwriters to increase pricing.  Marine markets are relatively flat, however underwriters continue to be risk adverse.

4. Average Commercial Rate Change All Lines Sources: Insurance Information Institute. Overall, slightly lower rate this year

5. Change in Commercial Rates by Line Employment Practices rate increases are highest Percentage Change (%) Source: Council of Insurance Agents and Brokers; Insurance Information Institute.

6. Commercial Lines Combined Ratio *2007-2012 figures exclude mortgage and financial guaranty segments. Source: A.M. Best (1990-2014F); Conning (2015F) Insurance Information Institute. Favorable Combined Ratio leading to slight rate reductions.

7. Book Yield on Property/Casualty Insurance Invested Assets (Percent) Book yield in 2014 is down 114 BP from pre-crisis levels Lower Investment Earnings Place a Greater Burden on Underwriting and Pricing Discipline

8. Crime Market Update: Recent California Public Entity Losses EntityAmountDescription City of Pasadena$6 millionPublic Works official used false invoices to direct $6.4M of funds to personal accounts, funds were supposed to be used for placing utilities underground Los Angeles Unified School District$9 millionProcurement official conspired with plumbing supplier to divert materials over several years City of Santa Barbara$500,000Police Department clerk diverted cash payments for tickets San Jose State University$900,000IT employee removed equipment and sold on eBay Association of Bay Area Governments $1.3 millionCFO falsified payments to a contractor and diverted them to personal use Port of Seattle$300,000Airport badging clerk continued to accept cash payments for several years after the Port and discontinued and diverted proceeds

9. BCJPIA’S INSURANCE RENEWALS

10. Excess Property Renewal Historical Premiums and Loss Data

11. Excess Property Renewal Renewal Terms offered by APIP. Lexington (A, XV) is the primary capacity carrier, with many other participating carriers all maintaining a minimum rating of A-, VIII  7.5 % Rate Increase  Total Insurable Values (TIV) increase 3.37%  Overall premium increase is 11.12%, based on the two factors above  Total Premium for 2015-16: $920,836  Expiring Premium was: $828,678

12. Excess Property Renewal Material Coverage Changes Pollution Coverage Enhancements:

13. Excess Property Renewal Material Coverage Changes Enhancements: $10,000 Per Vehicle or Item for Licensed Vehicles, Unlicensed Vehicles and Contractors Equipment subject to $100,000 Maximum Per Occurrence, Per Named Insured for the peril of Earthquake for Named Insured(s) who do not purchase dedicated Earthquake limits $10,000Per Vehicle or Item for Licensed Vehicles, Unlicensed Vehicles and Contractor's Equipment subject to $100,000 Maximum Per Occurrence, Per Named Insured for the peril of Flood for Named Insured(s) who do not purchase dedicated Flood limits Restrictions: Carrier-mandated increase of 500-year Flood deductible from $100,000 per occurrence to $250,000 pre occurrence (same as all risk deductible)

14. Cyber Enhancement Option (CEO) Webinar on enhanced coverage presented June 3 rd Current Members purchasing CEO: –Menlo Park$2,597 –Los Altos$2,597 –Mill Valley$2,597 –Pleasanton$6,325 –Novato$3,895 City of Berkeley is still considering.

15. Excess Property Renewal Cyber Enhancement Option

16. Excess Employment Practices Renewal Terms offered by Beasley London (A, VIII)  Coverage is for excess employment practices (excess of ERMA), follow form endorsement issued (but claims made)  Policy Terms are:  $2,000,000 Each Insured Event Limit, excess of $1,000,000 ERMA  $3,000,000 Total Aggregate Policy Period Limit per Member City, subject to  $10,000,000 Overall Total Aggregate Policy Period Limit for All BCJPIA participating members.  Renewal Premium: $116,555  Expiring Premium: $111,004  3% increase in payroll; 4% increase in employees  1-2% rate increase

17. Marine Coverage Renewal Terms offered by Zurich (A, XV)  Coverage is for Marina Operators Legal Liability, Hull & Machinery and Protection and Indemnity (P&I)  Participating Members are: Berkeley, Brisbane, Redwood City (no MOLL coverage) & Docktown LimitDeductible Marina Operators Legal Liability:$1,000,000 $5,000 Protection and Indemnity: $1,000,000 $1,000 Hull& Machinery: Agreed Value $1,000 2015-16 Total Premium:$48,517 (flat renewal)

18. Excess Marine Coverage Renewal Terms offered by Navigators (A, XI)  New structure for the $19M xs $1M is $5M xs $1M and $14M xs $6M  Covered Entities: Berkeley, Brisbane & Docktown  Renewal Premium is $17,776 (flat renewal)

19. Crime Coverage Current Terms with Zurich (A, XV)  Three Year term: July 1, 2014 to 2017  Employee Theft Limit: $1,000,000  Forgery or Alterations: $1,000,000  Faithful Performance: $1,000,000  Deductible: $5,000  3 Year Premium (Paid 2014):$49,869  $16,623 annually

20. Excess Crime Coverage Renewal Terms offered by Great American (A+, XIII)  Optional Limits are available to all BCJPIA members  Policy is written as an “Excess Follow Form”  City of Novato, Sausalito & San Anselmo currently purchase $2,000,000 excess of the primary $1,000,000 limit. Fairfax purchases $1,000,000 excess of the primary $1,000,000.  Increased Limits: City of Larkspur will increase to $2,000,000 excess of the primary.  New Participants: Redwood City will purchase $2,000,000 excess of the primary $1,000,000 limit.  Policy premiums are underwritten per agency and follow pricing trends of the underlying coverage, renewal premium is $16,283

21. RENEWAL SUMMARY

22. QUESTIONS? Conor Boughey 415-403-1411 cboughey@alliant.comcboughey@alliant.com Michael Beatty 415-403-1457 michael.beatty@alliant.commichael.beatty@alliant.com Mike Simmons 415-403-1425 msimmons@alliant.commsimmons@alliant.com