Item P7County of Monroe
<r
BOARD OF COUNTY COMMISSIONERS
�
Mayor David Rice, District 4
IleOI1da Keys
��x
t t 0.
Mayor Pro Tem Sylvia J. Murphy, District 5
Danny L. Kolhage, District I
P f,<
George Neugent, District 2
a
Heather Carruthers, District 3
County Commission Meeting
April 19, 2018
Agenda Item Number: P.7
Agenda Item Summary #4062
BULK ITEM: Yes DEPARTMENT: Risk Management
TIME APPROXIMATE: STAFF CONTACT: Maria Slavik (305) 295 -3178
N/A
AGENDA ITEM WORDING: Approval to accept Marsh USA proposal and renew Property
Insurance from Lloyds of London Ins. Co. (Lloyds) and Landmark American Ins. Co. (Landmark),
Hiscox Insurance Co., and Boiler and Machinery Insurance from Hartford Steam Boiler Ins. Co.
(HSB), and for the Risk Administrator to execute all necessary forms.
ITEM BACKGROUND:
Marsh USA has proposed to renew the County's Property Insurance with Lloyds and Landmark and
Hiscox for an annual premium of $676,395.00. Lloyds' premium will be $355,004.00 for a $2.5
Million part of $5 Million of coverage and Hiscox premium will be $250,004.00 for a $2.5 Million
part of $5 Million of coverage. Landmark's premium will be $71,387.00 for $228,846,327.00 in
excess of $5 Million of coverage. This represents an increase of $148,211.00 (28 %) in the County's
annual premium when compared to the premium the County paid for the 2017/18 premium. The
County's Property Insurance policy and excess policy will provide an increase of the sub - limits for
the policy's Building and Ordinance coverage from $5 million to $10 million and the sub -limit for
Builders Risk claims increased from $2.5 million to $5 million. The renewal provides replacement
cost property insurance coverage for County buildings, contents, communication towers and
contractors equipment with a current value of $235,316,591.00. Coverage for wind and flood losses
is limited to $5 million in excess of the limits provided by the State administered wind program
(Citizens) and the National Flood Insurance Program (NFIP). (The maximum limits under the
Citizens program are $1 million per building and maximum limits under the NFIP are $500,000 per
building.)
HSB has agreed to renew the County's Boiler and Machinery coverage for an annual premium of
$9,892.00. This represents a decrease of $87.00 (1 %). This decrease is due to the County's Total
Insurable Values decreasing. The terms, conditions and coverages of HSB's renewal policy will be
the same as the expiring policy.
Combining Marsh's proposed premium of $355,004.00 for the Lloyds' ($2.5 Million part of $5
Million) policy plus Marsh's proposed premium of $250,004.00 for Hiscox Insurance Company
($2.5 Million part of $5 Million) and $71,387 for Landmark's Excess Property policy ($228,846,327
excess of $5 Million) plus Marsh's proposed premium of $9,892 for HSB's Boiler and Machinery
policy, the County's total Property /Boiler and Machinery premium for the 5/1/18 to 5/1/19 policy
term will be $686,287.00.
PREVIOUS RELEVANT BOCC ACTION:
1/21/15 - BOCC approved the Marsh USA bid proposal and insurance purchases. 4/12/17 — BOCC
approved renewal of the current policies.
CONTRACT /AGREEMENT CHANGES:
Marsh USA proposed Property, Boiler and Machinery Insurance with Lloyds and Landmark. Hiscox
and Hartford Steam Boiler Ins. Co. for annual premium of $676,395. This represents an increase of
$148,211 (28 %). HSB proposed Boiler and Machinery Ins. for an annual premium of $9,892. This
represents a decrease of $87 (1 %).
STAFF RECOMMENDATION: Approval to accept Marsh USA proposal and renew Property
Insurance from Lloyds and Landmark, and Hiscox and Boiler and Machinery Insurance from HSB,
and for Risk Administrator to execute all necessary forms.
DOCUMENTATION:
Interisk Recommendation Property/ Boiler and Machinery Insurance
FINANCIAL IMPACT:
Effective Date: 5/1/2018
Expiration Date: 5/1/2019
Total Dollar Value of Contract: $686,287.00
Total Cost to County: $686,287.00
Current Year Portion: $528,184.00 Budgeted: Yes
Source of Funds: Internal Service Fund /Primarily Ad Valorem
CPI: N/A
Indirect Costs: N/A
Estimated Ongoing Costs Not Included in above dollar amounts: N/A
Revenue Producing: No
Grant: N/A
County Match: N/A
Insurance Required: N/A
Additional Details:
If yes, amount:
05/01/17 503 -08502 - RISK MGMT INSURANCE
Insurance
$686,287.00
REVIEWED BY:
Maria Slavik
Chris Ambrosio
Bob Shillinger
Budget and Finance
Kathy Peters
Board of County Commissioners
Completed
04/02/2018 3:19 PM
Completed
04/02/2018 4:32 PM
Completed
04/03/2018 9:43 AM
Completed
04/03/2018 10:16 AM
Completed
04/03/2018 1:39 PM
Pending
04/19/2018 9:00 AM
Y NTERISK CORPORATION
Consultants
Risk Management
Employee Benefits
March 30, 2018
Ms. Maria Slavik, CPM
Risk Administrator
Monroe County
1111 12` Street
Suite 408
Key West, Florida 33040
Subject: Renewal of Monroe County's Property Insurance
Dear Maria:
1111 North Westshore Boulevard
Suite 208
Tampa, FL 33807 -4711
Phone (813) 287 -1040
Facsimile (813) 287 -1041
Monroe County's Property/Boiler & Machinery Insurance expires on May 1, 2018. The expiring Property
policy is provided by Lloyds of London and Landmark American Insurance Company. Both Lloyds 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 $528,184 for this coverage.
In addition to the County's Property insurance, the County purchases a stand -alone Boiler & Machinery
policy from Hartford Steam Boiler Insurance Company (HSB) that provides coverage for damage to
mechanical and electrical equipment. The primary purpose of this coverage is to provide inspections of
boiler equipment that is required by the State. HSB also enjoys a favorable rating from the A.M. Best
Company. The premium for the expiring policy is $9,979.
Marsh USA (the County's insurance agent) has extensively marketed the County's program and has
submitted the County's account to over 26 different insurers. It is believed that the insurers Marsh
approached represent the majority of insurers that have the ability and desire to write the insurance
coverages the County is seeking. Unfortunately, the results have not been as favorable as in years past.
Most of the insurance companies approached by Marsh either declined to submit a proposal or their pricing
was not competitive.
During the past 12 months, the insurance industry has been hit with several hurricanes, an earthquake in
Mexico and wild fires in California. The losses associated with these events have been estimated at $10
billion to $30 billion. The County itself experienced insurable losses in excess of $2 million as a result of
Hurricane Irma. Normally, when the insurance industry experiences significant losses premiums tend to
rise. This is particularly true for Property losses.
When Marsh first approached Lloyds of London who is currently providing the first $5 million of the
County's Property coverage, they indicated that they wanted to raise the County's rates by 1009'x. Based on
Lloyd's initial indications, Marsh initiated negotiations with Hiscox Insurance Company who agreed to
provide $2.5 million of the County's first $5 million of coverage for a price significantly lower than what
Lloyds had initially indicated. Hiscox was unwilling or unable to provide all of the primary $5 million of
coverage. Marsh leveraged Hiscox's pricing that has driven Lloyds of London's price downward
significantly.
The following table compares the major features of the proposed Property renewal program to those of the
program that is about to expire.
Total Insurable Limit
Overall Policv Limits
I`- s M
10 RIM M &VIA IT
ling and Ordinance
Builders Risk
Extra Expense
11�11'l�i i11
Named Windstorm
Flood losses at properties not
located in Flood Zones A & V
and Flood losses not related to a
Named Windstorm
Flood losses at properties located
in Flood Zones A & V
Flood losses resulting from a
Named Windstorm
Contractors Equipment
Communication Towers
Emergency Materials Arresting
System (EAS)
f IIM
$50,000 per Occurrence
$1 Million pr Location /Per
Occurrence
After considerable negotiations with the insurers (particularly with Lloyds of London) Marsh has been able
to structure the following Property Insurance program for the County.
This represents an increase in the County's premium of $148,211 (28 %) when compared to the premium
the County paid for their 2017118 program. While any increase in premium is never viewed as being
favorable, we are aware of some insureds experiencing Property premiums have increasing by 409o' and
other organizations' premium doubling. It should also be recognized that that the proposed premium is
still less than what the County paid for its Property insurance for the 2012113 policy term. During that term
the County paid total Property premiums of $718,457 based on a Total Insurable Values of $209,118,812.
Limits Provided
Annua
Lloyds of London --0
2�
11.
Hiscox Insurance r
'F R.M. S a
1 1 1
Landmark American Insurance
$22
Company
+
I
�
$,
This represents an increase in the County's premium of $148,211 (28 %) when compared to the premium
the County paid for their 2017118 program. While any increase in premium is never viewed as being
favorable, we are aware of some insureds experiencing Property premiums have increasing by 409o' and
other organizations' premium doubling. It should also be recognized that that the proposed premium is
still less than what the County paid for its Property insurance for the 2012113 policy term. During that term
the County paid total Property premiums of $718,457 based on a Total Insurable Values of $209,118,812.
HSB has agreed to renew the County's Boiler and Machinery coverage for an annual premium of $9,892.
This represents a decrease of $87 (less than 17 , o), This decrease is due to the County's Total Insurable
Values decreasing. The terms, conditions and coverages of HSB's renewal policy will be the same as the
expiring policy.
Following displays what the County's Property and Boiler and Machinery premium for the 2018119 policy
term.
While the County will experience a significant increase in the cost of its Property /Boiler and Machinery
insurance it is believed that the cost is reasonable based on the current insurance market conditions and it is
recommended that the County renew its Property coverages with Lloyds, Hiscox and Landmark and their
Boiler and Machinery coverage with Hartford Steam Boiler as being proposed by Marsh for the 5 1I 118 to
511/19 policy term..
Please give me a call if you have any questions or wish to discuss this issue in more detail.
Cordially,
INTERISK CORPORATION
% Ij
Sidney G. Webber
CPCU, ARM