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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 May 16, 2018 Agenda Item Number: P.7 Agenda Item Summary #4176 BULK ITEM: Yes DEPARTMENT: Risk Management TIME APPROXIMATE: STAFF CONTACT: Maria Slavik (305) 295 -3178 N/A AGENDA ITEM WORDING: Approval of renewal of Primary Windstorm Insurance Policy with a premium of $809,775.00 from Citizens Property Insurance Corporation and for the Risk Administrator to sign all necessary forms. ITEM BACKGROUND: The County currently has a Primary Windstorm Insurance Policy providing coverage on 44 of its buildings and contents from Citizens Property Insurance Corp., that expires on May 29, 2018. This Windstorm Policy is purchased to supplement the windstorm coverage contained in the County's Master property insurance policy. The Master Policy provides Named Windstorm coverage with limits of $5 million and a deductible of $1,000,000.00 per occurrence /per location. This renewal Primary Windstorm Policy annual premium is $809,775.00. The building limits insured are $29,294.079 for a premium of $572,278.00, and the total Contents (business personal property) limits insured are $7,629,447.00 for a premium of $121,319.00. Fees and assessments total is $116,178.00. PREVIOUS RELEVANT BOCC ACTION: On 5/17/2017, the BOCC approved the current Windstorm insurance proposal. CONTRACT /AGREEMENT CHANGES: This is an increase of $294,615 (57.1 %) compared to the County's 2017 -2018 premium. The new renewal dates are 5 -29 -18 to 5- 29 -19. STAFF RECOMMENDATION: Staff request the Board to approve the renewal of the County's Primary Wind coverage as currently being proposed by Citizens. It is also recommended that the Board raise the deductibles for each location from 3% to 5 %. This will result in the 2018/19 premium being reduced to approximately $753,095. It is also recommended that the Board approve continuation of the critical review of the properties currently being insured by Citizens and eliminate the coverage for the less critical structures based on Staff's evaluation of each structure. If the structures can be deleted before May 29 the County should be able to reduce the amount paid to Citizens by the premium amount for the deleted structure. If a structure is deleted after May 29 the premium paid to Citizens will include the premium for that structure and Citizens will refund the pro -rata premium of the structure being deleted. The amount of the reduction cannot be provided at this time. DOCUMENTATION: Interisk Recommendation Wind Coverage Johnson Insurance Letter Analysis of Wind Premiums 2017 vs 2018 FINANCIAL IMPACT: Effective Date: May 29, 2018 Expiration Date: May 29, 2019 Total Dollar Value of Contract: $809,775.00 Total Cost to County: $809,775.00 Current Year Portion: $515,160.00 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: 05/16/18 503 -08502 - RISK MGMT INSURANCE $809,775.00 REVIEWED BY: Maria Slavik Completed 05/01/2018 2:53 PM Chris Ambrosio Completed 05/01/2018 3:22 PM Bob Shillinger Completed 05/01/2018 3:35 PM Budget and Finance Completed 05/01/2018 4:10 PM Kathy Peters Completed 05/01/2018 9:13 PM Board of County Commissioners Pending 05/16/2018 9:00 AM I NTERISK CORPORATION Consultants Risk Management Employee Benefits April 30, 2018 Ms. Maria Slavik, CPM Risk Administrator Monroe County 11 11 12 Street Suite 408 Key West, Florida 33040 Subject: Renewal of Citizens Wind Policy Dear Maria: 1111 North Westshore Boulevard Suite 208 Tampa, FL 33607 -4711 Phone (813) 287 -1040 Facsimile (813) 287 -1041 The County currently purchases Primary Wind Coverage on 44 of its buildings and contents from Citizens Property Insurance Corporation. This policy is purchased to supplement the wind coverage contained in the County's Nlaster Property Policy. This Master Policy provides Named Windstorm coverage with limits of $5 million and a deductible of $1 million per occurrence /per location. Citizens provide; up to $1 million of coverage for each building scheduled on the policy .ubject to a deductible that amounts to approximately 3' ` of the Insured Value of the building��) damaged. The County paid an annual premium of $515,160 for their 2017/18 policy that expires on May 29, 2018,. Citizens develops its premiums based on the Full Replacement Value of each building. For the 2017/18 policy term the cumulative Replacement Values of the buildings being insured by, Citizens totaled $49,449,000. Some of thes values were developed many years ago and have never been adjusted because Citizens requires independent appraisals (structured in their format) before they will adjust the Replacement Value of a building. During the past 12 months Citizens elected to have all of the County's independently- buildings appraised that resulted in the cumulative Replacement Values being increased by nearly= $40 million. For the 2018/19 policy term Citizens based their premiums on cumulative Values of $103,882,967. Unfortunately, the $103 million is more in line with independent appraisals that have been conducted by the County. Citizens have issued their renewal notice reflecting; a premium of $809,775. This represents an increase of $294,615 (57.1 compared to the County's 2017118 premium. There are 2 major factors that contributed to this increase- The higher Replacement Values of the buildings developed by Citizens 2. Citizens has increased their rates by approximately 10%. Regardless of the Replacement Value of the buildings, Citizens will only offer Insured Limits of $1 million for each building that includes the insurance coverage for the building and its contents. The following compares the cumulative limits ofthe buildings, the cumulative Emits oEthe contents and the fees and ^asossoznuts that were charged for the 3017/18 policy term to the cumulative limits of the buildings, the cumulative Emits of the buildings' contents And the fees and assessment that are being proposed for the 2O18/19 policy term. }nxsattempt to reduce the cost of insuring the and their contents for win related damage the County has taken the following steps. 1. Requested the (Lloyds of increase the Wind fin ($5 million) they provide and reduce the Wind deductible ($1 million per occurrence/per location). Ibli effort proved unsuccessful. 2. Locatemnuccepmble insurer that could replace Citizens. This also proved unsuccessful. 3. Explored increasing the 6c6ucti6leaoo the Citizens' policy from 3^0moY�6 Citizens' maximum deductible they will offer for commercial structures is 5qo. According to Ms. Sue Cheory6ou (the County's Wind Insurance Agent) this will result iuupremium reduction of approximately $56,678. The word '^xpprozioxteb�`is being used since Citizens will not issue u revised invoice until they are formally requested to reduce the deductible. B{s'([6oro3boo developed this reduction using Citizens" rating computer software. While this approach will result iou premium reduction, it should bc recognized that the County cumulative deductibles associated with the Citizens coverage will inrzcusc from $1,G59,3U8u,$3,088,661 4. Initiated x critical review o[die properties currently being insured )m Citizens with the intent of dele the Wind coverage oothe less crincxsooctuues.'necoviuwwill6c6nscdou8oc criticality of die structure to the County' operations and if the County has received FEDJA assistance ou the structure iu the past. The County im obligated to maintain Cidzcnm`YV6od coverage on any structure i[PENIA assistance has been received wn repair/rebuild the structure KoUmwiogn catastrophic event. It is recommended that Staff request t6c8OCC raising [J6xco's deductibles for all structures from Yo to 5`6. This will result in the 2078/19 premium b reduced to appro.ximately $753,095. It is also recommended that Staff request the B[>CCopnppomvcthe continuation ofthe critical review o[ the properties currently being insured 6r Citizens and eliminate the coverage for the less critical structures. If the structure o can 6o deleted before May 29' the County should 6c able to reduce the amount paid to Citizens 6V the premium amount for the deleted structure. Ifumtrncmunc is deleted after May 29`h, the premium paid to Citizens will include the premium for that structure and Citizens will refund the poo-zxm premium nf the structure being deleted. Tbe amount ofthe reduction cannot beprovi6cdot this time. Please do not hesitate om call if you have any questions orconcerns. LOMMIR � ���� ~ a division of Monroe County, Florida 1100 Simonton Street Key West, FL 33040 RE: Multiple Locations INSURANCE OFFICE OF AMERICA Citizens Property Insurance Corporation Policy No.: 00015845 Policy Term: 5/29/2018 to 5/29/2019 Dear Maria: The estimated annual savings would be $56,678 to increase the hurricane deductible from 3% to 5% effective the renewal date of May 29, 2018. Since Citizens only permits a deductible change at renewal time, the request would need to be received by Citizens prior to May 29, 2018. 1 would need signed authorization from you to submit to Citizens. I have also verified with Citizens, per telephone conversation with commercial underwriter, Jim Smith, that any locations which Monroe County removes will be deleted from the policy on a pro -rata return premium basis, even after June 1. Best regards, Sincerely, Susan Cherrybo , Agent Account Manager Email: scherry@johnsonsinsure.com Phone: 305- 872 -2888 30975 AVENUE A p x 37 41 FL 33050 13361 OVERSEAS HIGHWAY 13351 Ov BIG PINE KEY, FL 33043 � se MARATHON, FL 33050 (305) 289 -0213 Phone� Q o 7Q -j Fax • www.ioausa.com Par_ket Pa_ 7 Monroe County Analysis of in Premiums 2027 vs 2018 N Monroe County Analysis of Wind Premiums 2017 vs 2018 La am