Item C07BOARD OF COUNTY COMMISSIONERS
AGENDA ITEM SUMMARY
Meeting Date: September 21, 2012 Division: Employee Services
Bulk Item: Yes X No _ Department: Risk Management
Staff Contact Person: Maria L. Slavik X3178
AGENDA ITEM WORDING: Approval to accept renewal with VFIS to provide Portable Equipment
and Emergency Apparatus Insurance.
ITEM BACKGROUND: The policies provide insurance coverage for Emergency Vehicle and
Portable Equipment damages and/or losses.
PREVIOUS REVELANT BOCC ACTION: American Alternative Insurance Company through the
VFIS Insurance Agency is specialized especially for portable equipment used in firefighting,
ambulance and rescue operations. The BOCC approved the last renewal with VFIS on September 15,
2010.
CONTRACT/AGREEMENT CHANGES: American Alternative has proposed the policies with the
same terms and conditions for annual premium of $46,646 for Emergency Vehicle Physical Damage
which represents an increase of $4,719 and $4,628 for the Portable Equipment which represents a
$1,407 decrease. The premium is to be paid in four quarterly payments.
STAFF RECOMMENDATIONS: Approval to accept proposal from VFIS Insurance Agency for the
period of October 1, 2012 to September 30, 2013.
TOTAL COST: $51,991.47 INDIRECT COST: BUDGETED: Yes X No
COST TO COUNTY: $51,991.47 SOURCE OF FUNDS: Internal Service Fund
Primarily Ad Valorem
REVENUE PRODUCING: Yes _ No X A!MTUNT PER MONTH Year _
APPROVED BY: County Atty X OMB/Purch asinX Risk Management
DOCUMENTATION:
DISPOSITION:
Revised 2/27/01
Included X To Follow Not Required
AGENDA ITEM #
MONROE COUNTY BOARD OF COUNTY COMMISSIONERS
CONTRACT SUMMARY
Contract with: VFIS
Contract #
Effective Date: 10/1/2012
Expiration Date: 9/30/13
Contract Purpose/Description:
Portable Equipment and Emergency
Vehicle Physical Damage
Contract Manager: Maria L. Slavik
3178 Employee Services #1
(Name)
(Ext.) (Department/Stop #)
for BOCC meeting on 09-21-2012
Agenda Deadline: 9/4/2012
CONTRACT COSTS
Total Dollar Value of Contract: $ 51,991.47 Current Year Portion: $ ti51
Budgeted? Yes® No ❑ Account Codes: 503-08502-530-450-
Grant: $
County Match: $
ADDITIONAL COSTS
Estimated Ongoing Costs: $ /yr For:
of included in dollar value above) (el. maintenance, utilities, janitorial, sF
CONTRACT REVIEW
Changes
Neede sd
I Z
Division Director 1 YesF-I NNo
Risk Manage ent '' Yes❑ No
(�/7 .�
O.M.B./Puhasing 4• Yes[] NoF/�
County Attorney Yes❑ No
I Comments:
OMB Form Revised 2/2746 MCP #2
Date Out
'Alln
C
UNTY So�MONROE
KEY WESTLORIDA 33040
(305)294-4641
Office of the Employee Services Division Director
The Historic Gato Cigar Factory
1100 Simonton Street, Suite 268
Key west, FL 33040
(305) 292-4458 — Phone
(305) 292-4564 - Fax
TO: Board of County Commissioners
FROM: Teresa E. Aguiar,
Employee Services Director
DATE: August 31, 2012
BOARD OF COUNTY COMMISSIONERS
Mayor David Rice, District 4
Mayor Pro Tem Kim Wigington, District 1
George Neugent, District 2
Heather Carruthers, District 3
Sylvia I Murphy, District 5
SUBJ: Insurance Renewal — with VFIS (Volunteer Fire Insurance Service)
Portable Equipment & Emergency Apparatus
This item requests approval to accept renewal with the American Alternative Insurance Company
through VFIS Insurance Agency to provide Portable Equipment and Emergency Apparatus Insurance
coverage at a premium of $51,991.47 to be paid in four quarterly payments for the 2012/13 policy
term. This insurance provides coverage for damages and/or loss to scheduled Emergency Vehicles
and Portable Equipment.
The Emergency Vehicle policy is designed to provide first party physical damage coverage for the
County's Fire and Emergency vehicles. With some of the covered vehicles on the policy having
values of $500,000 and more, it is believed that the amount is relatively low cost protection.
The Portable E ui ment policy is primarily designed to cover the mobile radios used by the fire
departments.
The premiums have an overall increase of $4,028.96. The increase is partly due to the County
deleting coverage for two vehicles and adding coverage for three new vehicles. To date, the program
offered by American Alternative/VFIS is the only program that offers affordable coverage for the
County's emergency vehicles and equipment. The County would receive few, if any, alternative
insurance programs that can compete with the VFIS program and it is recommended that American
Alternative/VFIS be viewed as a sole source and not seek competitive bids until other insurers offer a
competitive program. It is therefore the recommendation that the Board approve the request to renew
these policies as proposed. If you have any questions on this item, please do not hesitate to contact me
at X4458.
I NTERISK CORPORATION
Consultants
Risk Management
Employee Benefits
August 30, 2012
Ms. Maria Slavik, CPM
Risk Administrator
Monroe County
1100 Simonton St.
Suite 268
Key West, Florida 33040
1111 North Westshore Boulevard
Suite 208
Tampa, FL 33607-4711
Phone (813) 287-1040
Facsimile (813) 287-1041
Subject: Emergency Vehicle Physical Damage and Portable Equipment Damage Insurance
Dear Maria:
The County's Emergency Vehicle Physical Damage and Portable Equipment Damage policies are
scheduled to expire on October 1, 2012. Currently the coverages are provided by the American Alternative
Insurance Company through the VFIS Insurance Agency. Both of these policies provide broad coverages
and have served the County well in years past. The current premium for the Emergency Vehicle Physical
Damage policy is $41,927.06 and the current premium for the Portable Equipment Damage policy is
$6,035.45
I have reviewed VFIS' proposal for the renewal of these two policies. American Alternative has proposed
to renew these policies with comparable terms and conditions for an annual premium of $46,646.00 for the
Emergency Vehicle Physical Damage policy and $4,628.00 for the Portable Equipment policy. In addition
to these premiums, the County will be obligated to pay a total of $717.47 of State imposed taxes,
surcharges and fees. VFIS did not allocate these taxes, surcharges and fees between the Emergency
Vehicle Physical Damage and the Portable Equipment Damage policies. The following table compares the
proposed renewal premiums for these policies as compared to the expiring policies.
Policy
2011/12 Premium
2012/13 Proposed
Increase/(Decrease)
Premium
Emergency
Vehicle Physical
$41,927.06
$46,646.00
$4,718.94
Damage
Portable
Equipment Policy
$6,035.45
$4,628.00
$(1,407.45)
State Imposed
Taxes, Surcharges
Included in above
$717.47
$717.47
and Fees
premiums
Total
$47,962.51
$51,991.47
$4,028.96
The increase in the premium of the Emergency Vehicle Physical Damage coverage is in part due to the fact
that the County deleted coverage for 2 vehicles and added coverage for 3 new vehicles during the year.
It is believed that the proposed renewal premiums for both of these policies are reasonable. It is therefore
recommended that Monroe County renew its Emergency Vehicle Physical Damage and Portable
Equipment insurance policies with American Alternative as proposed by VFIS for the 2012/13 policy term.
VFIS has also requested that the County sign a "Florida Consent-to-Rate/Excess Rate Application. This
authorizes American Alternative to charge rates that are higher than those on file with the State. For the
County to continue the Emergency Vehicle Physical Damage policy, you will have to sign the requested
application. It does not impact the coverages being provided by the policy.
Please give me a call if you have any questions or wish to discuss this issue in more detail.
Cordially,
INTERISK CORPORATION
/� /"j- �) al,14—
Sidney G. Webber
CPCU, ARM
CC: Teresa Aguiar
Acmiar-Teresa
From: Slavik-Maria
Sent: Friday, August 31, 2012 12:00 PM
To: Aguiar-Teresa
Subject: FW: VFIS Insurance
From: Slavik-Maria
Sent: Friday, August 31, 2012 10:03 AM
To: Aguiar-Teresa
Subject: FW: VFIS Insurance
Teresa,
The following will attempt to summarize the challenges we will face in obtaining
competitive bids for the Portable Equipment and Emergency Vehicle Physical Damage
policies currently provided by American Alternative Insurance Company through the VFIS
Insurance Agency. Since the challenges will be different for each policy I will discuss
them separately.
Portable Equipment Policy
An "Inland Marine Coverage" form is used to insure such equipment. While American
Alternative uses a policy that contains language drafted especially for them, it still is
basically an Inland Marine policy form. It provides coverage for "Portable Equipment"
which is defined in the policy as
"Portable firefighting, ambulance or rescue related equipment and portable communications
equipment commonly used in fire and rescue operations away from your premises"
Insurance companies that have the ability and desire to provide Inland Marine coverages
normally require a list of equipment and their associated values before they issue a
proposal or policy. The limits of a traditional Inland Marine policy can be based either
on the cumulative value of all equipment being insured or provide specific limits of
insurance for each piece of equipment. To my knowledge we do not have a detailed
schedule of the Portable Equipment as defined above. If we did, the schedule would be
subject to frequent changes throughout the year and would require considerable time to
manage.
American Alternative has studied the equipment that is typically used in fire and rescue
operations and has structured their policy without the need to schedule such equipment
and establish a value for each piece of equipment. The American Alternative policy also
does not have a policy limit and will pay for damages (subject to policy terms) to the
County's Portable Equipment regardless of the amount.
In addition, most Inland Marine policy forms will pay claims based on the equipment's
"Actual Cash Value". This means that depreciation of the equipment will be factored into
any claim settlement. For example if a portable radio is damaged that would cost $100 to
replace and it is determined that 50% of its useful life has been exhausted, the County's
net recovery would only be $50. This example ignores any policy deductibles. American
Alternatives policy pays for the "Guaranteed Replacement Cost" of the damaged equipment
without applying any depreciation.
In addition, the American Alternative policy provides coverage for damage to "personal
effects belonging to volunteers, employees, directors, officers or trustees while enroute
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to,.during, and returning from any official duty authorized by you."(the County) It is
unlikely that the traditional insurance market place would be willing to replicate this
feature.
It should be noted that the County's Master Property policy already includes Inland
Marine coverages but is subject to a $50,000 deductible (higher for wind and flood
losses) which effectively eliminates coverage for its Portable Equipment.
Emergency Vehicle Physical Damage
American Alternative Insurance Corporation's policy provides Physical Damage
(Comprehensive and Collision) coverage for the County's fire fighting
equipment. Coverage is provided using an industry standard "Business Auto Coverage"
form.
The unique feature of American Alternative's form compared to other Business Auto forms
is that it provides coverage on an "Agreed Amount" basis compared to an "Actual Cash
Value" basis that will apply depreciation to any claim settlement. While we have seen
policies that have provided coverage for damaged Autos on an Agreed Amount basis, it is
normally restricted to one or two specific and unique vehicles and not an entire fleet of
vehicles.
It should also be noted that the County already has a traditional Business Auto policy
issued by the Florida League. If the County was not concerned with loosing the Agreed
Amount feature of the American Alternative policy, the fire fighting equipment could
simply be added to the existing Florida League policy.
In addition, the American Alternative's policy is subject to a $500 per claim deductible
which is considerably lower than most Business Auto policies, especially for highly
priced vehicles such as fire fighting equipment. For example, the County's Master
Business Auto policy (that ensures the County's main fleet of automobiles) contains a per
claim deductible of $1,000.
It is believed that American Alternative is the only insurer that offers the unique
features contained in the VFIS policies. This is why it has been recommended in the past
not to remarket the policies issued by VFIS. Not only would it be surprising to receive
alternative proposals to the American Alternative/VFIS program that contain the same
provisions, it is believed that the RFP process may be extremely confusing due to the
unique features of the VFIS programs.
Also, I had Monique call GSA and the State of Florida Department of Management Services
and ask who they use as a vendor for EMS vehicle/equipment insurance.
GSA stated that they are self -insured and they do not purchase private insurance.
The State of Florida stated that they do not have a policy specifically for any fire
rescue equipment , etc.
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