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Item C32BOARD OF COUNTY COMMISSIONERS AGENDA ITEM SUMMARY Meeting Date: April 16, 2014 Division: Employee Services Bulk Item: Yes X No _ Department: Risk Management Staff Contact Person: Maria L. Slavik x3178 AGENDA ITEM WORDING: Approval to accept proposal from Marsh USA for Property Insurance package through Lloyds of London Insurance Company and Landmark American Insurance Company at an annual premium of $695,465. The terms and conditions of the policy will remain the same. ITEM BACKGROUND: Provides replacement cost property insurance coverage for county buildings, contents, communication towers and contractors equipment with a current value of $225,195,099. PREVIOUS REVELANT BOCC ACTION: This policy was last bid in January, 2011, and approved by the BOCC on April 20, 2011. CONTRACT/AGREEMENT CHANGES: Marsh proposed an annual premium of $695,465 which is a decrease of $98,389 . STAFF RECOMMENDATIONS Approval to renew the policy as submitted by Marsh for the period of 5/l/14—511115. TOTAL COST: $695,465 BUDGETED: Yes X No COST TO COUNTY: $695,465 SOURCE OF FUNDS: Internal Service Fund Primarily Ad Valorem REVENUE PRODUCING: Yes No X AMOUNT PER MONTH Year APPROVED BY: County Atty_ OMB/Purchasing Risk Management DOCUMENTATION: Included X Not Required DISPOSITION: AGENDA ITEM # Revised 2/27/01 Monroe County Board of County Commissioners Quote Comparison Policy Term: May 1, 2014 to May 1, 2015 Expiring Program Renewal Quotes 05/01/2014-2015 $679,825 Renewal Quotes 05/01/2014-2015 $775,650 Dollar ($96,138) Percentage -12.39% Property $775,963 Estimated Surcharges $17,891 $15,640 $17,848 ($2,251) -12.58% Total Property Premium & Surcharges $793,854 $695,465 $793,498 ($98,389) -12.39% Schedule of Values $215,076,378 $225,195,099 $225,195,099 $10,118,721 4.70% Rate per $100 Values $0.361 $0.302 $0.344 ($0.059) -16.33% Environmental is i ity Renewal 05/1/2014-2017 (Note 1) $71,394 $75,455 $75,455 $4,061 5.69% Surcharges $928 $981 $981 $53 5.71% Total $72,322.00 $76,436.00 $76,436.00 $4,114 5.69% Total Premiums and Surcharges $866,176 $771,901 $869,934 -$94,275 0.43% Note 1. Environmental - 3 Year Program The exhibits within this presentation and any recommendations, analysis, or advice provided by Marsh (collectively, the "Marsh Analysis") are intended solely for the entity identified as the recipient herein ("you"). This document contains proprietary, confidential information of Marsh and may not be shared with any third party, including other insurance producers, without Marsh's prior written consent. Any statements concerning actuarial, tax, accounting, or legal matters are based solely on our experience as insurance brokers and risk consultants and are not to be relied upon as actuarial, accounting, tax, or legal advice, for which you should consult your own professional advisors. Any modeling, analytics, or projections are subject to inherent uncertainty, and the Marsh Analysis could be materially affected if any underlying assumptions, conditions, information, or factors are inaccurate or incomplete or should change. The information contained herein is based on sources we believe reliable, but we make no representation or warranty as to its accuracy. Except as may be set forth in an agreement between you and Marsh, Marsh shall have no liability to you or any other party with regard to the Marsh Analysis or to any services provided by a third party to you or Marsh. Marsh makes no representation or warranty concerning the application of policy wordings or the financial condition or solvency of insurers or reinsurers. Marsh makes no assurances regarding the availability, cost, or terms of the insurance coverage. Marsh April 15, 2014 � Y Property Insurance Program: May 1, 2014-2015 Monroe County Board of County Commissioners 2013 TIV: $215,076,387 2013 Premium: $775,963 2013 Rate/$100: $0.3608 2014 TIV: $225,195,099 2014 Premium: $679,825 2014 Rate/$100: $0.3019 $ Delta: $10,118,712 $ Delta: ($96,138) % Delta: 4.49% % Delta: (12.39%) % Delta: (16.339/6) LIMITS $225,195,099 $5,000,000 Named Windstorm: $1,000,000 per location per occurrence Earthquake: $100,000 Flood A/V or subset: $5% of TIV at each location involved in loss or damage, subject to a minimum of $1,000,000 any one occurrence. $1,000,000 at each location involved in loss or damage, any one occurrence. $5% of the TIV at each location involved in loss or damage, subject to a minimum of $25,000 any one occurrence and a maximum of $100,000 any one occurrence $5,000 except $50,000 for Named Windstorm $5,000 except $50,000 for Named Windstorm $5,000 except $50,000 for Named Windstorm Named W/S: All Other: Contractors Equip: EDP: Towers: PREMIUM -xpiring tctual expiring actual expiring $ 15,640 estimated Surcharges $695,465 Total I NTERISK CORPORATION Consultants Risk Management Employee Benefits April 15, 2014 Ms. Maria Slavik, CPM Risk Administrator Monroe County 1100 Simonton St. Suite 268 Key West, Florida 33040 Subject: Renewal of Monroe County's Property Insurance Dear Maria: 1111 North Westshore Boulevard Suite 208 Tampa, FL 33607-4711 Phone (813) 287-1040 Facsimile (813) 287-1041 On March 25, 2014 I sent you a letter recommending that the County renew its Property Insurance with Lexington Insurance Company and RSUI (Landmark Insurance Company) for the policy term of 5/1/14 to 511115. This recommendation was based on the following facts: 1. The terms and conditions of the proposed coverages were consistent with those the County is currently purchasing. 2. Lexington would provide the first $5 million of limits and RSUI would provide the balance of the limits ($220,195,099). 3. Lexington's proposed premium for the first $5 million of coverage (including all fees and taxes) amounted to $706,718. 4. RSUI's proposed premium for the balance of the County's coverage amounted to $86,780. 5. The combined premiums for both Lexington's and RSUI's coverages amounted to $793,498. Marsh has now advised that Lloyds of London has agreed to provide the coverages that Lexington had agreed to provide with terms and conditions that are consistent with those being proposed by Lexington and consistent with those currently purchased by the County. Lloyds has agreed to provide the coverages for an annual premium of $608,685, including all fees and taxes. This amounts to $98,023 less than what Lexington proposed for the same level of protection. When you combine Lloyd's premium with RSUI's premium the annual cost of the County's 2014/15 Property Insurance will amount to $695,465. It should be noted that it is common for agents to negotiate with insurers until the last possible moment. Based on the fact that Lloyds of London has agreed to provide the same coverage as Lexington Insurance Company for an annual premium that is nearly $100,000 less than what Lexington is proposing, it is recommended that Monroe County renew its Property Insurance for the policy term of 5/1/14 to 511115 with Lloyds of London and RSUI as being proposed by Marsh USA. 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 ERS AGENDA ITEM BOARD OF COUNTY COMMISSIONERS Meeting Date: ices -AM216,2914 Division: EM&M Services Bulk Item: as X No "f I it1 E'. ' •ri :''7Serv] r:% 11rs `N -•1 :I 1 WAYC '< 1 1 i r' ♦ ! ; YY i f ! f`>y ♦ `R 1! I ♦:.. ♦ f I ,`.1 a1 ' r : 1 go 4 r ' R 1 1 1 : / ♦ 11 ' :If ;if f aWIN :� If :7 ''>(II jai IjZj1tt.i 1 Yf;,♦ II 1 r 61 .111 Bill11 1 I ' I t 1 ITEM BACKGROUND: ftovides replacement cost property msumce coveragecounty buildings, coritents, communication. towersand icontractors: 1 I' i 41 =1 r r.. 1a current $225,195,009. Pi'-U'"OUS REVELANT BOCC ACMON: Tins policy was last bid in January, 2011, and approved by i BOCCApril 20,2011. CONTRAMAGREIlff CHANGES: Marsh proposed an annual premium of $793,496 which is a decrease of $356. ! 1 177 1 1 R « * 1' r R i fI y ■ a y 1 rY Company for the period R TOTALI :rr ► e X No COST TO COUNTY: ,.,498 SOURCEOF FUNDS:, -M, VENUE PRODUCING: Yes — No X AMOUNT PER MONTH Year � r APPROVED BY: Ifty li t 11: '1 f " Risk 7,f sWIF::ii F 1 O 1 <O Included DISPOSITION: CONTRACT SUMMARY Contract with: Marsh USA, Inc. Contract # Effective Date: 5/1/14 Expiration Date: 5/1115 Contract Purpose/Description: Property Insurance Renewal Contract Manager: Maria Slavik 3178 Employee Services #1 (Name) (Ext.) (Department/Stop #) for BOCC meeting on 4-16-14 Agenda Deadline: 4/1/14 CONTRACT COSTS Total Dollar Value of Contract: $ $793,854 Current Year Portion: $ 793,853.96 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 innitnrial ea Date In Division Director , j.2(- • q Risk Management 'A O.M.B./Purch ing -.21 y County Attorney 3 q Comments: n1k CONTRACT REVIEW Changes Date Out Needed Reviewer Yes❑ No IQ, 3, Z Yes❑ NoE ,;, -4 ! -� r Yes❑ No© Yes[] Not/zi2eL 3'a} -01014 Risk Management Employee Benefits March 25, 2014 Ms. Maria Slavik, CPM Risk Administrator Monroe County 1100 Simonton St. Suite 268 Key West, Florida 33040 Subject: Renewal of Monroe County's Property Insurance Dear Maria: 1111 North Westshore Boulevard Suite 208 Tampa, FL 33607-4711 Phone (813) 287-1040 Facsimile (813) 287-1041 Monroe County's Property Insurance expires on May 1, 2014. The expiring program is provided by Lexington Insurance Company and Landmark American Insurance Company. Both Lexington and Landmark enjoy a favorable rating from the A.M Best Company, the leading evaluator of insurance company operations. The County is currently paying an annual premium of $793,854 for this coverage. Marsh USA (the County's insurance agent) has proposed to renew the County's Property Insurance with Lexington and Landmark for an annual premium of $793,498. This represents a slight decrease ($356) in the County's annual premium. The following table compares the major features of the proposed renewal program to those of the program that is about to expire. Expiring Program Renewal Program Total Insurable Limit $215,076,378 $225,195,099 Overall Policy Limits $215,076,378 $225,195,099 Major Sub -Limits Named Windstorm $5,000,000 $5,000,000 Flood $5,000,000 $5,000,000 Boiler and Machine !y $5,000,000 $5,000,000 Building and Ordinance $10,000,000 $10,000,000 Builders Risk $2,500,000 $2,500,000 Extra Ex ense $5,000,000 $5,000,000 Deductibles Basic $50,000pq Occurrence $50,000 per Occurrence Named Windstorm $1 Million pr Location/Per $1 Million pr Location/Per Occurrence Occurrence Flood losses at properties not located in Flood Zones A & V and Flood losses not related to a $100,000 $100,000 Named Windstorm Flood losses at properties located 5% of the property damaged, 5% of the property damaged, in Flood Zones A & V subject to a minimum of $1 subject to a minimum of $1 Million Million Flood losses resulting from a 5% of the property damaged, subject to a minimum of $1 $1 Million per location per Named Windstorm Million occurrence Boiler and Machinery Losses — $5,000 each Loss $5,000 each Loss Contractors Equipment $5,000 except $50,000 for Named $5,000 except $50,000 for Named Windstorm Windstorm Communication Towers $5,000 except $50,000 for Named $5,000 except $50,000 for Named Windstorm Windstorm Emergency Materials Arresting $50,000 except 25% of loss $50,000 except 25% of loss System (EMAS) subject to a $500,000 minimum subject to a $500,000 minimum for damage caused by aircraft for damage caused bL aircraft Essentially Lexington and Landmark have offered to renew the County's program with the same terms and conditions of the expiring program with a small enhancement to the deductible for Flood losses resulting from a Named Windstorm. All such losses will be subject to a flat $1,000,000 per location/per occurrence deductible compared to the current 5% of the property damaged, subject to a minimum of $ 1,000,000. While this change is viewed as an enhancement, the only facility that this change may impact, because of the value of the County's structures is the detention center located on Stock Island. It is therefore believed that this enhancement offers limited value to the County. Through out the entire renewal process you and I have met with Marsh several times to ensure the most comprehensive and cost effective renewal proposal can be obtained. From the beginning Marsh has indicated that the County should anticipate a premium increase of approximately 10%. You and I -advised Marsh that any premium increase would be viewed as being less than favorable. Marsh was instructed to submit the County's program to as many different insurers as possible to ensure the best options can be achieved. Marsh submitted the County's account to 39 different insurers, all of which enjoy a favorable rating from the A.M. Best Company. Most of the insurers declined to provide a proposal citing the location of Monroe County and the favorable pricing being offered by Lexington and Landmark as a reason for not submitting a proposal. The few insurers that did indicate an interest in proposing on the County's program were not willing to offer some of the important coverages, such as Wind and Flood, for accounts located in southern Florida. It is therefore believed that Marsh did a good market search of the insurance market place during the renewal process. Since Lexington and Marsh have agreed to renew the County's Property insurance with terms and conditions comparable to the expiring program (with the slight enhancement for Flood losses resulting from a Named Windstorm) and that the proposed annual premium ($793,498) is effectively the same as the expiring premium despite the fact that the County's total property values have increased by over $10 million, it is believed that Marsh has done a credible job in structuring the renewal of the County's Property program. It is therefore recommended that Monroe County renew its Property insurance with Lexington Insurance Company and Landmark American Insurance Company for the policy period of 5/1/14 to 511115 as being proposed by Marsh USA. 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