Item C24
BOARD OF COUNTY COMMISSIONERS
AGENDA ITEM SUMMARY
Meeting Date: 9/15/04
Division:
Management Services
Bulk Item: Yes X
No
Department: Administrative Services
AGENDA ITEM WORDING:
Approval to purchase Specific Excess Workers' Compensation Insurance from Midwest Employers
Casualty Company in the amount of$168,443.00 for FY 04/05. Approval for the AD&D Policy in the
amount of $2,822.00 included in the current proposal was given on 9/17/03 for 10/1/03-10/1/05.
ITEM BACKGROUND:
The County is currently using Midwest as excess insurer for this fiscal year. The current premium is
$197,295.00. The reduction in premium is due to the softening workers' compensation insurance
market. Midwest Employers Casualty is being recommended by Risk Consultant, Interisk, to the
County .
PREVIOUS RELEVANT BOCC ACTION:
N/A
CONTRACT/AGREEMENT CHANGES:
N/A
STAFF RECOMMENDATIONS:
Approval
TOTAL COST: $ 168,443.00
BUDGETED: Yes X No
COST TO COUNTY: $168,443.00
SOURCE OF FUNDS: Primarily ad valorem
REVENUE PRODUCING: Yes
No X AMOUNT PER MONTH
Year
APPROVED BY: County Atty _ OMB/Purchasing _ Risk Management_
DIVISION DIRECTOR APPROVAL: ~;!-:: a~
Sheila A. Barker
DOCUMENTATION:
Included X
To Follow Not Required_
AGENDA ITEM #~4
DISPOSITION:
Revised 1/03
INTERISK
CORPORA TION
Consultants
Risk Management
Employee Benefits
1111 North Westshore Boulevard
Suite 208
Tampa, FL 33607-4711
Phone (813)287-1040
Facsimile (813) 287-1041
August 26, 2004
Ms. Nancy Cohen
Workers' Compensation Manager
Monroe County
1100 Simonton Street
Suite 2-274
Key West, Florida 33040
Re: Renewal of Excess Workers' Compensation Insurance for the 2004/2005 policy year
Dear Nancy:
I have completed my review of Arthur J. Gallagher's proposal for the renewal of the County's
Excess Workers' Compensation insurance for the 2004/2005 policy year. Gallagher submitted
proposals from two different insurers, Midwest Employers Casualty Company (the incumbent
insurer) and Safety National Casualty Company. Both Midwest and Safety National enjoy a
favorable rating from the A.M. Best and Company, the leading evaluator of insurance
company operatlOns.
Both Midwest and Safety National offered various retention levels ranging from $500,000 per
occurrence to $1 million per occurrence for consideration. The current program for the
County requires that a $1 million per occurrence retention be retained. The following
summarizes the proposed premiums for the various retention levels for both Midwest and
Safety National.
Retention Midwest Safety National
Emplovers
$1 million $168,443 $166,708
$750,000 $210,008 $200,274
$750,000/$500,000 * No Proposal $347,794
$500,000 $333,477 $401,947
* A $750,000 retention would apply to all claims involving police officers and a $500,000
retention would apply to all other claims.
The terms and conditions of the Midwest and Safety National proposals were the same with
the exception that Safety N ationa! was only willing to offer an aggregate limit of liability of
Ms. Nancy Gohen
August 26, 2004
2
$50 million as compared to Midwest who was willing to offer full statutory limits. The
County's current policy has an aggregate limit of $25 million and an annual premium of
$197,295.
A review of the historical losses for the County revealed that since 1977 there has only been
one claim that has exceeded $750,000 and only two other claims that have exceeded $500,000.
Based on the County's favorable historical loss experience, it is believed that the additional
premium ($41,565 for Midwest and $33,566 for Safety National) to reduce the retention to
$750,000 is not justified at this time. The proposed additional premium to reduce the
retention lower than $750,000 is even more. It is therefore believed that the County would
best be served by retaining its current $1 million per occurrence retention.
Midwest proposed an annual premium of $168,443 for its $1 million retention option while
Safety National proposed a premium of $166,708. Normally it is in an organization's best
interest to renew with the current insurer unless there is a significant difference in the
premiums or the organization is dissatisfied with the insurer. It is believed that Midwest has
served the County well as its insurer. This coupled with the fact that Safety National's
premium is only $1,735 lower than Midwest's, it is being recommended that Monroe County
renew its Excess Workers' Compensation insurance with Midwest Employers Casualty
Company with a $1 million retention as proposed be Arthur J. Gallagher. This
recommendation is further supported by the fact that Safety National is only offering
aggregate limits of $50 million while Midwest is offering full statutory limits.
It is believed that the County has received an extremely favorable renewal from Gallagher.
Not only will the County be able to reinstate full statutory limits, the annual premium will be
reduced nearly $30,000.
As always, please do not hesitate to call if you have any questions.
Cordially,
INTERISK CORPORATION
~ /j
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Sidney G. Webber
CPCU, ARM
MONROE COUNTY BOARD OF COUNTY
COMMISSIONERS
SPECIFIC EXCESS WORKERS' COMPENSATION INSURANCE
AND
ACCIDENTAL DEATH & DISMEMBERMENT
OCTOBER 1, 2004 - OCTOBER 1, 2005
Submitted Bv:
SUSAN AINSZTEIN, ARM
Area Vice President
susan _ ainsztein@ajg.com
KATHY HILL, CIC
Account Manager
kathy_hill@ajg.com
JORI L. VAN DER VOORT, ARM
Area Vice President
Jori_ van_der_ voort@ajg.com
Arthur J. Gallagher & Co.
2255 Glades Road, Suite 400E
Boca Raton, FL 33431
Telephone: (561) 995-6706
Fax: (561) 995-6708
ajg.com
Date Presented:
August 24,2004
TIDS PROPOSAL IS ISSUED AS A MATTER OF INFORMATION ONLY AND DOES NOT AMEND,
EXTEND, OR ALTER THE COVERAGE PROVIDED BY THE ACTUAL INSURANCE POLICIES.
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MONROE COUNTY BOARD OF COUNTY COMMISSIONERS
IMPORTANT DISCLOSURES
The proposal is an outline of the coverages proposed by the insurers, based on the information
provided by your company. It does not include all the terms, coverages, exclusions, limitations,
or conditions of the actual contract language. The policies themselves must be read for those
details. Policy forms for your reference will be made available upon request.
In addition to the fees and/or commissions retained by Arthur J. Gallagher & Co., it is
understood and agreed that other parties, such as excess and surplus lines brokers, wholesalers,
reinsurance intermediaries, underwriting managers, and similar parties, some of which may be
owned in whole or in part by Arthur J. Gallagher & Coo's corporate parent, may earn and retain
usual and customary commissions and/or fees in the course of providing insurance products.
Any such fees and/or commissions will be the responsibility of the client and not Arthur J.
Gallagher & Co.
The information contained in this proposal is based on the historical loss experience and
exposures provided to Arthur J. Gallagher & Co. This proposal is not an actuarial study. Should
you wish to have this proposal reviewed by an independent actuary, we will be pleased to
provide you with a listing of actuaries for your use.
Gallagher from time to time enters into arrangements with certain insurance carriers or those
carriers' reinsurers providing for compensation, in addition to commissions, to be paid by such
carriers or reinsurers to Gallagher or its affiliates based on, among other things, the volume of
premium and/or underwriting profitability ofthe insurance coverages written through Gallagher
by such carriers or reinsurers. In addition, Gallagher and its affiliates provide management and
other services to, and receive compensation for those services from; certain reinsurers that
reinsure insurance coverages written through Gallagher by other insurance carriers. The
insurance coverages you purchase through Gallagher might be issued by an insurance carrier or
reinsured by a reinsurer that has such a relationship with Gallagher or its affiliates.
C:\lJon\Monroe County BOCC\MONR-BCC-WC 0804 rev by jon.doc
MONROE COUNTY BOARD OF COUNTY COMMISSIONERS
TABLE OF CONTENTS
Description
Section
Transmittal LetterlExecutive Summary.......................................................................... .......1
Marketing Review and Guide to AM Best Ratings ...............................................................2
-Midwest Employers Casualty Company - Quote Options
-Safety National Casualty Corp.-Quote Options
Specific Excess Workers Compensation Proposal ................................................................3
-Midwest Employers Casualty Company
-Safety National Casualty Corp.
Accidental Death and Dismemberment Proposal..................................................................4
Signatures Required.......................................................................... .....................................5
. Client Authorization to Bind
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MONROE COUNTY BOARD OF COUNTY COMMISSIONERS
TRANSMITTAL LETTER
August 24, 2004
Ms. Nancy Cohen
Workers Compensation Manager
Monroe County Board of County Commissioners
1100 Simonton Street, Room 2-213
Key West, FL 33040
RE: Specific Excess Workers Compensation and Accidental Death and Dismemberment
Renewal October 1, 2004 - 2005
Dear Nancy;
On behalf of Arthur J. Gallagher & Co. and the Account Service Team, we are pleased to offer a
Renewal Insurance Proposal for the upcoming year. We feel confident that you will find the
terms offered in our proposal are quite competitive in today's marketplace.
Excess Workers Compensation:
The Florida Excess Workers Compensation market continues to be difficult. Carriers are:
. No longer writing this coverage.
. Increasing their attachment points.
. Increasing rates
Despite the difficult Workers Compensation marketplace, we are pleased to report we have been
successful in negotiating a 15% rate reduction from your current carrier Midwest Employers
Casualty Corporation. Midwest will also remove the previous $25,000,000 Limit and provide
Statutory Coverage and has offered options to reduce your Self Insured Retention.
Additionally, we have been able to obtain alternative quotations from Safety National Casualty
Corporation. Our proposal provides you with a comparison of the quotations to help you
determine what best suits the County's budget and your appetite for risk.
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MONROE COUNTY BOARD OF COUNTY COMMISSIONERS
TRANSNDTTALLETTER
(continued)
Accidental Death and Dismemberment
The Accidental Death and Dismemberment coverage with Hartford Life and Accident Insurance
Company is a three-year policy. As this is the third year of this policy, the annual renewal
premium of $2,822.00 has not changed.
We appreciate your trust in our service. We value your business and are happy to have the
Monroe County Board of County Commissioners as a client.
Sincerely, /. f7(',
/ ,i
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/' (1/ n ?/,,' ,
! I " ./ j i i J.
/1 \1; ! i "j-J
I/J'I!JC(~{(I-~ /
! UlI
{JOrj L. Vander V oort, ARM
~ea Vice President
,/ I Jill'
/Y,/r;r' -4f // //1/;/ ',/
! ([ll?!,I ,II
/,i-////' .,..'/_
L/ ' I
Kathy Hill, cYc
Account Manager
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MONROE COUNTY BOARD OF COUNTY COMMISSIONERS
MARKET REVIEW
Obtaining a comprehensive and competitively priced program of insurance in the marketplace
requires more than access to the market. Past experience and credibility with markets are the
foundation of a successful campaign for your company. Complete and accurate submissions,
with detailed specifications, are essential. Arthur J. Gallagher & Co. made a complete and
personal presentation to each company contacted.
Best's Surplus Carrier's Position
Rating Lines (Quoted/Declined &
Insurance Carrier Coverage's 08/24/04 (Yes/No) Reason)
Midwest Employers Excess AXIl No Current carrier
Casualty Co. Workers' presented
Compensation
Safety National Excess AIX No Quoted and presented
Casualty Corp. Workers '
Compensation
ACE American Ins. Co. Excess AXN No Quoted-Not Competitive
Workers '
Compensation
AIG Excess A++ XV No No response
Workers'
Compensation
Clarendon Excess A-X No No response
Workers'
Compensation
CNAlWexford Excess AXV No Declined due to aircraft
Workers ' exposure
Compensation
Note: If the above indicates coverage is placed with a Non-Admitted Carrier, the carrier is
doing business in the state as a surplus lines or non-admitted carrier. As such, this carrier is not
subject to the same regulations, which apply to an admitted carrier nor do they participate in any
insurance guarantee fund applicable in that state.
C:\IJori\Monroe County BOCC\MONR-BCC-WC 0804 rev by jori.doc
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MONROE COUNTY BOARD OF COUNTY COMMISSIONERS
GUIDE TO AM BEST RATINGS
If coverage is placed with a Non-Admitted Carrier, the carrier is doing business in the state as a
surplus lines or non-admitted carrier. As such, this carrier is not subject to the same regulations,
which apply to an admitted carrier nor do they participate in any insurance guarantee fund
applicable in that state.
Guide to Best Ratings
Rating Levels and Categories
Level Category
A++, A+ ................Superior
A, A- ................... Excellent
B++, B+ ........... Very Good
Level Category
B, B-..........................Fair
C++, C+ ........... Marginal
C, C-.......................Weak
Level Category
o ....................................................Poor
E........... Under Regulatory Supervision
F ..................................... In Liquidation
S ............................... Rating Suspended
Financial Size Categories
(In $000 of Reported Policyholders' Smplus Plus Conditional Reserve Funds)
FSCI
FSCn
Fscm
FSC IV
FSCV
FSC VI
FSC vn
FSC VIII
Up to
to
to
to
to
to
to
to
1,000
2,000
5,000
10,000
25,000
50,000
100,000
250,000
FSC IX
FSCX
FSC XI
FSC XII
FSC XIII
FSC XIV
FSC XV
1,000
2,000
5,000
10,000
25,000
50,000
100,000
250,000
500,000
750,000
1,000,000
1,250,000
1,500,000
2,000,000
to 500,000
to 750,000
to 1,000,000
to 1,250,000
to 1,500,000
to 2,000,000
or more
Best's Insurance Reports, published annually by A.M. Best Company, Inc., presents comprehensive reports on the
financial position, history, and transactions of insurance companies operating in the United States and Canada.
Companies licensed to do business in the United States are assigned a Best's Rating which attempts to measure the
comparative position of the company or association against industry averages.
Copies of the Best's Insurance Reports on the insurance companies are available upon your request.
Arthur J. Gallagher & Co. uses A.M. Best & CO.'s rating services to evaluate the financial condition of insurers
whose policies we propose to deliver. The rating of the carrier and the year of publication of that rating are
indicated. Arthur J, Ga1!agher & Co. makes no representations and warranties concerning the solvency of any
carrier, nor does it make any representation or warranty concerning the rating of the carrier which may change.
C:\\Jon\Monroe County BOCC\MONR-BCC-WC 0804 rev by jon.doc
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MONROE COUNTY BOARD OF COUNTY COMMISSIONERS
SPECIFIC EXCESS WORKERS' COMPENSATION
Policy Term: October 1, 2004 - October 1, 2005
Carrier: MIDWEST EMPLOYERS CASUALTY COMPANY
A.M. Best's Rating: A XI as of August 24, 2004
Admitted/Non-admitted: Admitted
Coverage: Specific Excess Workers' Compensation Coverage
Specific Limit: Cov. A- Workers' Compensation Statutory
Cov. B- Employers Liability $1,000,000 per employee/
aggregate per accident for
Employers Liability
Estimated Annual Payroll: $55,942,463
Self-Insured Retention: See option schedule
Rate: See option schedule
Annual Minimum and
Deposit Premium: See option schedule
Audit Terms: Subject to year-end audit (rates per option schedule)
Volunteer exposure is also subject to audit, we have used the
following payroll to include volunteers for coverage:
Based on hours worked at minimum wage ($5.15 perhr)
. Poll Sitters - $37,080 (7,200 hours)
. Library - $20,525 (3985.5 hours)
Based on $100. paid per month
. Firefighters - $129,600 (108 hours)
. Ambuiance/EMT - $22,800 (i9 hours)
. Police - $88,800 (74 hours)
Total Payroll included $298,805 for volunteers
C:\\Jori\Monroe County BOCC\MONR-BCC-WC 0804 rev by jori.doc
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MONROE. COUNTY BOARD OF COUNTY COMMISSIONERS
SPECIFIC EXCESS WORKERS' COMPENSATION
(Continued)
Major Exclusions: . Punitive or Exemplary Damages
(including but not limited . Employment Related Practices Claims
to) . Serious or willful misconduct of the employee, including
intentional acts
Coverage form and Policy form - MWE-200 form currently in use by the carrier
Endorsements: Endorsements included same as expiring:
. 10-32 - USL&H Limited to Florida Benefits
. 10-34 - Jones Act Limited to Florida Benefits
. 1066 - Definition of Payroll Pertaining to Volunteer Workers
. SO 10 - Amending item 10 - Classification of Operations
. 10-74 Aircraft Coverage limitation
Aircraft Endorsement-$1 ,000,000 maximum anyone
Life/$5,000,000 maximum per policy
. 10 77A - Terrorism Risk Insurance Act
. 10 FL - Florida Amendatory
New endorsements added:
. 1038 - Foreign Endorsement (Endemic Disease and
Repatriation)
. SO 43 - Deleting Commutation Clause
. C0-44 Deleting Late Reporting Penalty
Copies are available upon request
Terms and Conditions: . Defense Costs are included in Retention
. 60 day cancellation clause, except 10 days for non-payment of
premIum
. On-site claims audit during policy term
. Minimum earned and deposit premiums are shown in the
premium option exhibits I
. Premium is annual and payable upon binding
. Premium subject to annual audit based on payroll
Third Party Preferred Governmental Claim Solutions
Administrator:
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MONROE COUNTY BOARD OF COUNTY COMMISSIONERS
SPECIFIC EXCESS WORKERS' COMPENSATION
OPTION II
Policy Term: October 1, 2004 - October 1, 2005
Carrier: SAFETY NATIONAL CASUALTY CORPORATION
A.M. Best's Rating: A XI as of August 24, 2004
Admitted/Non-admitted Admitted
Coverage: Specific Excess Workers' Compensation Coverage
Specific Limit: Cov. A- Workers' Compensation $50,000,000
Cov. B- Employers Liability $1,000,000 per employee/
aggregate per accident for
Employers Liability
Estimated Annual Payroll: $55,942,463
Self-Insured Retention: See option schedule
Rate: See option schedule
Annual Minimum and
Deposit Premium: See option schedule
Audit Terms: Subject to year-end audit (rates per option schedule)
Major Exclusions: . Punitive or Exemplary Damages
(including but not limited . Employment Related Practices Claims
to) . Serious or willful misconduct of the employee, including
intentional acts
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MONROE COUNTY BOARD OF COUNTY COMMISSIONERS
SPECIFIC WORKERS' COMPENSATION
(Continued)
Coverage form and Coverage form currently in use by the carrier
Endorsements: Endorsements:
. 90 day cancellation clause, except 10 days for non-payment
. Voluntary Compensation
. Foreign Voluntary Compensation
. USL&H on an "if any" basis - Florida Benefits
. Florida Mandatory Endorsement( s)
. Coverage for certified acts of terrorism included
Under the terms of the Federal Terrorism Risk Insurance Act
of 2002 ("TRIA), be advised that any losses caused by certified
acts of terrorism, would be partially reimbursed by the United
States under a formula established by federal law. Under this
formula, the United States pays 90% of covered terrorism
losses exceeding a separate statutorily established deductible
applicable to, and paid by, the Corporation. For purposes of
payments made by the United States under TRIA, an act of
terrorism is one so certified by the Secretary of Treasury, in
concurrence with the Secretary of State and the Attorney
General of the United States as meeting established
requirements set forth under TRIA.
Copies are available upon request
Terms and Conditions: . Defense Costs are included in Retention
. Minimum earned and deposit premiums are shown in the
premium option exhibits
. Premium is payable upon binding
. Premium subject to annual audit based on payroll
Third Party Preferred Governmental Claim Solutions
Administrator:
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MONROE COUNTY B.OARD OF COUNTY COMMISSIONERS
ACCIDENTAL DEATH AND DISMEMBERMENT
OCTOBER 1, 2004 - OCTOBER 1, 2005
Policy Term: October 1, 2002 - October 2005
Three (3) Years - Payable in annual installments
Carrier: Hartford Life and Accident Insurance Company
Best Rating: A+ XV as of August 24, 2004
AdmittedINon- Admitted
Admitted
Policy Form: 7679 - B2 (HL) same as expiring
Limit: $ 52,375.50 AD&D in the Line of Duty
$ 52,375.50 Fresh pursuit
$157,126.50 Unlawful & Intentional Death
Eligible Persons: All Full-Time, Part-Time, Volunteer and Auxiliary Firefighters of the
Policyholder -Class I
Premium Based Reported to carrier for 2004-2005
on: 59 Full-time Firefighters
108 Volunteer Firefighters
Exclusions · Intentionally Self-Inflicted Injury
(including but not · Suicide or Attempted Suicide
limited to): · War
· Law Enforcement are not included for coverage
Annual Premium: $2,822 third year of a three-year policy term
Note: New limit reflects amended Florida Statutes 112.19 and 112.191 increasing
benefits - effective July 1,2004.
Binding Terms: · Signed Authorization to Bind
· Premium due prior to 10/1/04
Optional Quote: 19 Volunteer Ambulance Drivers can be added at no additional
premIum.
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MONROE COUNTY BOARD OF COUNTY COMMISSIONERS
CLIENT AUTHORIZATION TO BIND COVERAGE
After careful consideration of your Excess Workers' Compensation and Accidental Death and
Dismemberment proposal dated August 23,2004, we accept your insurance program subject to
the following:
Please check the desired Options:
o Excess Workers Compensation
DOption I
Midwest Employers Casualty Corporation
o $500,000 SIR Deposit Premium $333,473.
o $750,000 SIR Deposit Premium $210,008.
o $1,000,000 SIR Deposit Premium $168,443.
DOption II
Safety National Casualty Corporation
o $500,000 SIR Deposit Premium $166,708.
o $750,000 SIR Deposit Premium $200,274.
o $750,000/$1,000,000 SIR Deposit Premium $347,794.
o $1,000,000 SIR Deposit Premium $401,947.
o Accidental Death and Dismemberment
DOption I
$2,822. Not including 19 Volunteer Ambulance Drivers
DOption II
Including 19 Volunteer Ambulance Drivers for same premium $2,822.
It is understood this proposal provides only a summary of the details; the policies will contain the
actual coverages.
We confirm the values, schedules. and other data contained in the proposal are from our records
and acknowledge it is our responsibility to see that they are maintained accurately. Please
provide us with a binder( s) and invoice( s) for the coverages agreed upon at your earliest
convemence.
Broker's Signature
Client Signature
Dated
Dated
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