Item C12
'.
BOARD OF COUNTY COMMISSIONERS
AGENDA ITEM SUMMARY
Meeting Date: June 14 & 15.2000
Bulk Item: Yes .x.. No
Division: Management Services
Department: Human Resources/Risk Management
AGENDA ITEM WORDING: Accept Proposal from Arthur J. Gallagher to provide Airport Liability
Insurance at an annual premium of $44,370. '
ITEM BACKGROUND: County purchases Airport Liability Insruance to cover the liability exposures
of the County as owner and operator of both key West International and Marathon Airports This policy
was renewed in 1998 and Gallagher's with a premium of $55,300. This is a premium reduction of
$10,930.
PREVIOUS RELEVANT BOCC ACTION: Awarded bid to Arthur 1. Gallagher & Co. July 16, 1997.
STAFF RECOMMENDATION: Approval to accept proposal and pay premium,
TOTAL COST: $44.370
COST TO COUNTY: $44.370
REVENUE PRODUCING: Yes
BUDGETED: Yes-X No
No X AMOUNT PER MONTH
YEAR
APPROVED BY: County Atty _ OMBlPurchasing _ Risk Management ~
~ ~.
DIVISION DIRECTOR APPROV ".' A . .' ., ,~r, I;;:RATOR
James L. Roberts 0~96o
DOCUMENTATION: Included:.x..
To Follow: _ Not Required: _
DISPOSITION:
Agrodaltem# H'~
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INTERISK CORPORATION
Consultants
Rio. Manasement
Employee Benefits
May 2~, 2000
Mr, Wayne Robertson
Risk Manaaer
Moaroc County
S 100 College Road, Room 205
Key West, Florida 33040
1111 North Weetahore Boulevard
Suite 208
Tampa. FL 33Ci07 -4711
Phone (813) 287-1040
Faceimile (813) 287-104:1
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Re: AiIport LitJ6UJty RmftWIl
Dear Wayne:
Plea8e find auacbecl the draft of our report ~prding the cwluatioD of the CGumy's AIrport LiIbilily
renewal. ()oQe you have bad an opportunily to review it. pkase give me a c:aIlliO it am be fiDAIi~ before
yuar Boenl's ageuda .......,,-,
Cordially.
INTERISK CORPORATION
J~
SidneyO. Webber
CPCU, ARM
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MONROE CoUNT\' AIRPoRT LlABIU'IY
2:000 INSURANCE PROGRAM
PIOpOHI EwluadOG
The County'S Ai.tport Liability program has been successfully te-muketed th2t will peanit the
County to either tMuce its cost by neatly twenty pe~ent (20%) or double its limits ofliability for
essenli2lly the S~ amount they paid for Ihe 1999/2000 policy. FoDowing is an analysis of the
process and the propos21s that were received. To supplement the nasntive discussion of !he
proposal., the attaChed s~ have been prepaled comparing the ma;or features of each
propo.al to one another and. the current propn.
&~.nd
Detailed bid specifications were prepared and made available to all intetested pmposen on April 11,
2000. Monroe County's intention of receiving c<npeti.tive pl'OpOSils was published. in ~ (3) local
newspapen over a twO-week period in aa:otd2nce wirh me County's purchasing policy.
In an effort to control the process and ensure all proposen had. an equitable opportunity to develop
a competitive proposal, agents were r:equiald to submit a list of insuren (anked in older of
prefaence) they wanted to approacl1 on behalf of the County. A total of five (5) agmu submi=
requests fix tbiaeen (13) diffelent insuten. It is believed that tbe ~n .requested reptesent all
major mum:! that are able or wUling to provide aviation insurance. Based on the agenr"s requests
aua:horization letters we~ distributed to the five agents assigning them specific .inaudnce companies.
The proposal process specified thai all ~ta for xlditional infOtmation must be submitted in
writing and addendums answefiag the agent's questiom were diatributal to all propoaers.
Sealed proposals were tec:eived by the County and wae opened. on May 16, 2000. Four: (4) of the
five (5) participating agenu subni~ plOpOIals. One agent submitted proposals &om two (2)
diffetent insW'e[S. All agmts submi~ multiple options for limirs of:
> $100 million
> $75 million
> $50 million
> $25 million
In addition, altemate proposals foJ: a $10,000 deductible (the current progtam has no deductible)
~l'e proposed for ~ option. Based on the County's pte9ious 10s& esperience, the potential
exposUfe to loss and the pricing suucture of d1e vuious options, it is being re<:ommeoded not to
r:ed.uce die Countfs limits or increase its dMuctible at this time. Two ageDrs (I.ance Toland aod
Associates and Atthu!: J. Gt11agber) submitted proposals for limits of $200 million. While dUs would
essentiaJly double rhe .level of pmtection the County cwrendy has without incmasing ill COlt, it wu
St2ffs opinion 1h2t the higher limits ~ not oeeded at this time. The size of plInes that utilize the
Key Welt and Matatbon a.iIpol1S and the 2V2il2bality of Sovereign Immunity support this opinion.
Therefore this report will. focus on each proposas $100 million option with no deductible which is
the level of protection cw:rendy be1ng pun:hased.
A decUled review of the policy foans that wete submiued with each proposal indicates that the
coverages that would be provided ~ basically the lame. r:egamless ofwhich proposet'WU selectl:d.
The major differences in the coverages wiD be discussed ~ each proposer's caption.
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Marsh Inc submitted proposals &om Associated Aviation UnderwriterS. Not only was the pricing
($68,,367) higher than other available proposals, Marsh wu not able to include continpt liquor
liability as part of their program. This is viewed as an impomnt fea.Iw:e since the Liquor license at
both the Key West and M2rarhon Airports ue in the mme of the County. Because of the reduced
coverages and ~ COSt, it is recommended that Marsh's proposal be eliminated. from
consideration.
Jolul&OllI.unac:e Aceac:y
Johnson submi<<m proposals from a syndicate comprised of Greenwich Insurance Company and XL
InsW2nCe Company. The Johnson Agency W3S also W1ab1e to provide contingent liquor liability and.
while their pricing was ItlOltl fzvorable than Marsh's, mote favorable pricing wu submiltled by o1her
proposers d1a.t did include contingent liquor liability. It is IhetefoR! r:eco1'Dl'Dl!l\ded th2t the Johnson
Insurance .Agency's propo$al be e1imina~ from COI1$i.daation.
Laacc: ToLuuI '" Aeaociaeca
Lance Toland subminM twO proposals. The fiat urilizied National Umon Insurance Cocnpmy as the
insurer, however me pricing WlU sigrUticandy higher and the wverages wee considenble less. For
these seasons the National Union proposal was not included on the spreadsheet analysis and it is
reconunended. that it be eliminated from coosidetation.
I.:ance Toland's second proposal utilized ACE Insurance Company and in some instances contained
provisions th2t were better man me cuaent program. Some of the enhanced provision$ include
higbel'limits for Penonallnjwy and Adveftising Liability ($30 million n. $25 million). Neither of
these exposw:es a<< viewed. as being significant, the~ little wlue was assigned to these
enhancements. While Lance Toland's proposals contained cettain enhaocernems. the also offemt
less coverages in some cases. 'The major: reduction in co~ was a !:educed limit of liability for:
liquor liability ($50 miJlioo VI. 1100 million). In ~tion, limits of only $50 minion were offered foe
Excess Vehicle Liability ptol'CCtion. These twO limitabons ate viewed 2S more significant th2t the
enhanced coverages that axe being offered.
Lance Toland's proposed premium for: its 1100 million option was $44.410. While this would
represent a $10,890 reduction over the waent premium, odler more favoable priced ptoposils were
received. It is therefore r:ec:ommmded dw Lance Toland's proposals be eliminated from
considetation.
ArdIur J. G.JJacIIer
GaU3gbet (the incumbent agent) submitted layeen pmpot2ls ualizing Old Republic ~
Company and lloyds of London. The retms and conditions of their program are consistent with the
ezpiringprogram and the proposed premium ofS44,370 t:q)l'elentll a $10.930 (19.80/0) r:cductian in
the annual premium. In addition, if the County remains with Gallagbet's program for three (3) ~,
a dividend. hued on the County's losses may be available. While the :amount of dividend CUJIJOt be
de=mined at this rime. it could be as much as $2,SOO iflosses ate COI1U'OUed.
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The fact that Gallagh<<S proposal is viewed u having sligbdy better coverages and alawer pmnium.
it is r:ecornmended that Monroe County select the Old Republic/lloyds insurance ptognm as
submitted by AmlU1" J. G1IIIagher for its 2000/2001 .Ailpmt liability U1~. It abouId.o be
noted that G2lbghet: is me incumbent agent for the County's Airport Li2bi1ity insunnc:e and it 15 not
noanally in an mganization's best interest to c:baDge 2gmts unless another agem offea signiiicantly
improved coverages, better pricing or thue is not a good wodDng relationship wi1h the agent. It is
understood that Galbgb<< has senred the Coonty well fot a number of reus. wbic::h Nrthet: supports
the recommendation of selecting the Gallagher program.
If the County seleas limits 01ber 1:han $100 million or m option that contains a deduclible, it still
would be recommended to r.anain with Gal11gher foe the 2000/2001 policy tam.
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