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Item C36 or BOARD OF COUNTY COMMISSIONERS AGENDA ITEM SUMMARY Meeting Date: September 17,2013 Division: Employee Services Bulk Item: Yes X No — Department: Risk Management Staff Contact Person: Maria L. Slavik X3178 AGENDA ITEM WORDING: Approval to accept renewal with VFIS to provide Portable Equipment and Emergency Apparatus Insurance and authorize the Risk Management Administrator to sign the Florida Consent-To-Rate/Excess Rate Application. ITEM BACKGROUND: The policies provide insurance coverage for Emergency Vehicle and Portable Equipment damages and/or losses. PREVIOUS REVELANT BOCC ACTION: American Alternative Insurance Company through the VFIS Insurance Agency is specialized especially for portable equipment used in firefighting, ambulance and rescue operations. The BOCC approved the last renewal with VFIS on September 21, 2012. CONTRACT/AGREEMENT CHANGES: American Alternative has proposed the policies with the same terms and conditions for annual premium of$47,675 for Emergency Vehicle Physical Damage and $5,785 for the Portable Equipment which represents a $2,2/3 (4.4%) increase . The premium is to be paid in four quarterly payments. STAFF RECOMMENDATIONS: Approval to accept proposal from VFIS Insurance Agency for the period of October 1, 2013 to September 30, 2014. TOTAL COST: 54 264.89 INDIRECT COST: BUDGETED: Yes X No COST TO COUNTY: $54,264.89 SOURCE OF FUNDS: Internal Service Fund Primarily Ad Valorem REVENUE PRODUCING: Yes_ No X AMOUNT PER MONTH Year APPROVED BY: County Atty 6/Purchasing ! Risk Managemen DOCUMENTATION: Included X To Follow Not Required DISPOSITION: AGENDA ITEM# Revised 2/27/01 MONROE COUNTY BOARD OF COUNTY COMMISSIONERS CONTRACT SUMMARY FContractith: VFIS Contract# Effective Date: 10/1/2013 Expiration Date: 9/30/14 Contract Purpose/Description: Portable Equipment and Emergency Vehicle Physical Damage Contract Manager: Maria L. Slavik 3178 Employee Services #1 (Name) (Ext.) (Department/Stop#) for BOCC meeting on 09-17/2013 Agenda Deadline: 09/03/2013 CONTRACT COSTS Total Dollar Value of Contract: $ $54.264.89 Current Year Portion: $ $51,991.47 Budgeted? Yes® No ❑ Account Codes: 503-08502-530-450- Grant: $ County Match: $ ADDITIONAL COSTS Estimated Ongoing Costs: $ /yr For: (Not included in dollar value above) (eg.maintenance,utilities,janitorial,salaries, etc.) CONTRACT REVIEW Changes Date Out ate In Needed viewer Division Director 21 Yes[:]No Risk Mana ement , g Yes❑No O.M.B./Purc ing Yes[:]No❑ ,. .; I County Attorney -W r3 Yes[:]No TC oriunerits: OMB Form Revised 2/27/01 MCP#2 I NTERISK CORPORATION Consultants 1111 North Westshore Boulevard Risk Management Suite 208 Tampa, FL 33607-4711 Employee Benefits Phone (813)287-1040 Facsimile (813)287-1041 August 28,2013 Ms.Maria Slavik,CPM Risk Administrator Monroe County 1100 Simonton St. Suite 268 Key West,Florida 33040 Subject: Emergency Vehicle Physical Damage and Portable Equipment Damage Insurance Dear Maria: The County's Emergency Vehicle Physical Damage and Portable Equipment Damage policies are scheduled to expire on October 1,2013. Currently the coverages are provided by the American Alternative Insurance Company through the VFIS Insurance Agency. Both of these policies provide broad coverages and have served the County well in years past. The current premium for the Emergency Vehicle Physical Damage policy is$47,252.40 and the current premium for the Portable Equipment Damage policy is $4,739.07. It should be noted that American Alternative's Emergency Vehicle Physical Damage and Portable Equipment policies contain features that are not normally available from traditional insurers. Some of these more notable features are discussed below. Emereency Vehicle Physical Damage American Alternative provides Physical Damage(Compressive and Collision)coverage for the County's fire fighting equipment(fire trucks). While coverage is provided on an industry standard Business Automobile Liability policy,most standard Business Automobile Liability policies provide coverage on an "Actual Cash Value"(ACV)basis. ACV is defined as"Replacement Cost"less Depreciation. This means that all claim payments will be reduced by the amount of the vehicles depreciation. For example assume a vehicle has a"Replacement Cost"of$100,000 and has a useful life of 10 years. Further assume this vehicle is destroyed in the 5 h year of its useful life. A traditional Business Automobile Liability insurer will only honor a claim amount of$50,000($100,000 x 50%). American Alternative's policy provides Physical Damage coverage on an"Agreed Amount"basis. This means that American Alternative will reimburse the County for what ever value is reflected in policy for that vehicle. -11 Another unique feature of American Alternative's policy is that it only contains a$500 per claim deductible. Most Business Automobile Liability policies contain a minimum deductible of$1,000. Many of them have an even higher deductible,especially for high valued equipment such as fire trucks. Portable Equipment Policv American Alternative provides its Portable Equipment policy on an"Inland Marine"form. The policy defines Portable Equipment as: "Portable firefighting, ambulance or rescue related equipment and portable communication equipment commonly used in fire and rescue operations away from your premises" Most insurers that offer"Inland Marine"coverage requires that all equipment being insured be scheduled on the policy and the claim amount will be limited to the value reflected in the policy for the damaged or destroyed equipment. Not only does this make the administration of the policy difficult,requiring the notification to the insurer every time a piece of equipment is acquired or disposed,the amount recoverable from the insurer will be limited to the amount reflected on the schedule. American Alternative does not require that Portable Equipment be scheduled and the policy does not contain any limits. American Alternative will honor claims in any amount required to replace the damaged or destroyed equipment. I am not aware of any insurer that offers this feature. American Alternative's policy also provides coverage for damage to"personal effects"belonging to volunteers,employees,directors,officers or trustees while in route,during and returning from any official duty authorized by the County. Most"Inland Marine"insurers are not willing to offer this feature. Another attractive feature of American Alternative's policy,compared to similar policies offered by other "Inland Marine"insurers is that claims will be subject to a$250 deductible while traditional"Inland Marine"policies typically contain a much higher deductible. It is therefore believed that the County will experience difficulty in receiving competitive bids if it's Emergency Vehicle Physical Damage and Portable Equipment policies are competitively bid through an RFP process. I have reviewed VFIS'proposal for the renewal of the County'Emergency Vehicle Physical Damage and Portable Equipment policies. American Alternative has proposed to renew these policies with comparable terms and conditions for an annual premium of$47,675.00 for the Emergency Vehicle Physical Damage policy and$5,785.00 for the Portable Equipment policy. In addition to these premiums,the County will be obligated to pay a total of$804.89 of State imposed taxes,surcharges and fees. VFIS did not allocate these taxes,surcharges and fees between the Emergency Vehicle Physical Damage and the Portable Equipment Damage policies. The following table compares the proposed renewal premiums for these policies as compared to the expiring policies. Policy 2012/13 Premium 2013/14 Proposed Increase/(Decrease) Premium Emergency Vehicle Physical $47,252.40 $47,675.00 $422.60 Damage Portable Equipment Policy $4,739.07 $5,785.00 1,045.93 State Imposed Included in above Taxes, Surcharges $804.89 $804.89 and Fees premiums Total $51,991.47 $54 264.8.9 73.42.x It is believed that the proposed premium increase of$2,273.42(4.4%)is reasonable and it is recommended that Monroe County renew its Emergency Vehicle Physical Damage and Portable Equipment policies with American Alternative Insurance Company as being proposed by VFIS for the 2013/14 policy term. VFIS has also requested that the County sign a"Florida Consent-to-Rate/Excess Rate Application. This authorizes American Alternative to charge rates that are higher than those on file with the State. For the County to continue the Emergency Vehicle Physical Damage policy,you will have to sign the requested application. It does not impact the coverages being provided by the policy. Please give me a call if you have any questions or wish to discuss this issue in more detail. Cordially, INTERISK CORPORATION Sidney G.Webber CPCU,ARM CC: Teresa Aguiar BOARD OF COUNTY COMMISSIONERS County of Monroe Mayor George Neugent,District 2 Mayor Pro Tern,Heather Carruthers,District 3 The Florida Keys Danny L.Kolhage,District 1 " . David Rice,District 4 Sylvia J.Murphy,District 5 MEMORANDUM TO: Board of County Commissioners Monroe County THRU: Teresa E.Aguiar Employee Services lijon Director FROM: Maria L. Slavik Risk Administrator DATE: August 30, 2013 SUBJECT: Insurance Renewal—with VFIS (Volunteer Fire Insurance Service) Portable Equipment and Emergency Damage This item request approval to accept renewal with VFIS to provide Portable Equipment and Emergency Apparatus Insurance at a premium of$54,264.89 to be paid in four quarterly payments. The Consultant has advised us that both of these policies are unique and offer protection not normally available from other insurers. Also, staff researched telephonically with the following two different entities: GSA stated that they are self-insured and they do not purchase private insurance. The State of Florida stated they do not have a policy specifically for any fire rescue equipment, etc. It is understood that VFIS has indicated that the premiums for the 2013/2014 policy year be as follows: Portable Equipment: $5,785 (Deductible$1000) Emergency Vehicle Physical Damage: $47,675 (Deductible$500) StatC1Mpow. . S C - -804... . The premiums have increased approximately 4.4% and it is believed that VFIS is the only organization that offers this specialty coverage. This insurance provides coverage for physical damage to scheduled Emergency Vehicles and blanket coverage for loss of damaged Portable Equipment.It is therefore recommended that the County renew this policy as proposed for the renewal period October 1, 2013 to September 30, 2014.