Item H1BOARD OF COUNTY COMMISSIONERS
AGENDA ITEM SUMMARY
Meeting Date: April 18, 2012
Bulk Item: Yes _ No X
Division: Employee Services
Department:_ Risk Mana ement
Staff Contact Person/Phone #: Maria L. Slavik X3178
AGENDA ITEM WORDING: Approval to accept proposal from Marsh USA for Property Insurance
package through Lexington Insurance Company and Landmark American Insurance Company.
ITEM BACKGROUND: Provides replacement cost property insurance coverage for county
buildings, contents, communication towers and contractors equipment.
PREVIOUS RELEVANT BOCC ACTION: This policy was bid last year and approved by the
BOCC on April 20, 2011.
CONTRACT/AGREEMENT CHANGES: The County's insurable values have increased nearly
$9.7 million (5%) since the last renewal. This increase was due to a revised appraisal that raised
property values by roughly $4 million. In addition $4.5 million is included for the EMAS blocks and
$2 million for the communication equipment based on updated values received from the Monroe
County Sheriff's office.
STAFF RECOMMENDATIONS: Negotiations are still taking place with the underwriters and it is
possible that the renewal amount be less than quoted therefore staff is requesting for the approval to
renew the policy not to exceed an annual premium of $766,188.
Not to exceed
TOTAL COST: $766,188 yr INDIRECT COST: N/A BUDGETED: Yes X No
DIFFERENTIAL OF LOCAL PREFERENCE: N/A
Internal Service Fund
COST TO COUNTY: $766,188 YR SOURCE OF FUNDS: Primarily Ad Valorem
REVENUE PRODUCING: Yes _ No X AMOUNT PER MONTH Year
p (,
APPROVED BY: County Atty OMB/P> asing Risk Management
DOCUMENTATION: Included X Not Required
DISPOSITION: AGENDA ITEM #
Revised 7/09
MONROE COUNTY BOARD OF COUNTY COMMISSIONERS
CONTRACT SUMMARY
Contract #
Contract with Marsh USA, Inc. Effective Date: 5/1/12
Expiration Date: 5/1/13
Contract Purpose/Description: Property Insurance Policy Renewal
Contract Manager Maria Slavik
(Name)
for BOCC meeting on
3178 Employee Services
(Ext.) (Department)
Agenda Deadline: April 3, 2012
CONTRACT COSTS
Total Dollar Value of Contract: $766,188 Current Year Portion: $605,055.82
Budgeted? Yes® No ❑ Account Codes:-503-08502-530-450
Grant: $
County Match: $
ADDITIONAL COSTS
Estimated Ongoing Costs: $0/yr For:
(Not included in dollar value above) (eg. maintenance, utilities, janitorial, salaries, etc
CONTRACT REVIEW
Changes Date Out
DAtIP In Needed Reviewer
Division Director E-i Yes❑ No[� a /a
Risk Mana a ent Yes❑ No[h
O.M.B./Purc asing 4]j-LL-' Yes[:] No®
County Attorney I a00- Yes❑ No L $ 0/ �-
f
Comments:
vivi13 rviiii AXVIbGU Y/I JIYJ mur ifz
I NTERISK
Consultants
Risk Management
Employee Benefits
April 2, 2012
Ms. Maria Slavik, CPM
Risk Administrator
Monroe County
1100 Simonton St.
Suite 268
Key West, Florida 33040
CORPORATION
Subject: Renewal of Monroe County's Property Insurance
Dear Maria:
1111 North Westshore Boulevard
Suite 208
Tampa, FL 33607-4711
Phone (813) 287-1040
Facsimile (813) 287-1041
Monroe County's Property Insurance expires on May 1, 2012. The expiring program is provided by
Lexington Insurance Company and Landmark American Insurance Company. Both Lexington 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 $594,386 for this coverage.
Marsh USA (the County's insurance agent) has proposed to renew the County's Property Insurance with
Lexington and Landmark for an annual premium of $766,188.
The following table compares the major features of the proposed renewal program to those of the program
that is about to expire.
Expiring Program
Renewal Program
Total Insurable Limit
$199,507,030
$209,118,812
Overall Policy Limits
$199,507,030
$209,118,812
Major Sub -Limits
Named Windstorm
$5,000,000
$5,000,000
Flood
$5,000,000
$5,000,000
Boiler and Machinery
$5,000,000
$5,000,000
Bui ing and Ordinance
$5,000,000
$5,000,000
Builders Risk
$2,500,000
$2,500,000
Extra Expense
$5,000,000
$5,000,000
Deductibles
Basic
$50,000 per Occurrence
$50,000 per Occurrence
Named Windstorm
$1 Million pr Location/Per
$1 Million pr Location/Per
Occurrence
Occurrence
Flood losses at properties not
o
5 /o of the property damaged,
located in Flood Zones A & V
subject to a minimum of
$100,000
and Flood losses not related to a
$100,000
Named Windstorm
Flood losses at properties located
5% of the property damaged,
5% of the property damaged,
in Flood Zones A & V
subject to a minimum of $1
subject to a minimum of $1
Million
Million
Flood losses resulting from a
$1 Million per location per
$1 Million per location per
Named Windstorm
occurrence
occurrence
Boiler and Machinery Losses
$5,000 each Loss
$5,000 each Loss
Contractors Equipment
$5,000 except $50,000 for Named
$5,000 except $50,000 for Named
Windstorm
Windstorm
Communication Towers
$5,000 except $50,000 for Named
$5,000 except $50,000 for Named
Windstorm
Windstorm
Emergency Materials Arresting
$50,000 except 25% of loss
System (EMAS)
$50,000 per Occurrence
subject to a $500,000 minimum
for damage caused by aircraft
Essentially the only two differences between the expiring program and the one that is being proposed are:
➢ Flood losses at properties not located in Flood Zones A & V and are not a result of a Named
Windstorm currently has a deductible equal to 5% of the property damaged, subject to a minimum of
$100,000 and the proposed renewal program will have a flat deductible of $100,000.
➢ Damage to the Emergency Materials Arresting System (EMAS) located at KWIA currently is subject
to a $50,000 flat deductible and the proposed renewal program will be subject to a deductible of 25%
of the damages, subject to a $500,000 minimum if the damage is caused by an aircraft.
It is not believed that the difference in the Flood deductibles for properties not located in Flood Zones A&
V or not caused by a Named Windstorm will impact the County significantly because most of the County's
property is located in an A or V Flood Zone. In addition, it is believed that any significant Flood losses
will be associated with a Named Windstorm.
The difference in the EMAS deductible is viewed as being more significant. Over the past year the County
has experienced three separate incidents that resulted in damage to the EMAS blocks. Claims were filed on
two of these incidents and the County received claim payments totaling $610,223. When the blocks were
originally installed, the insurers had concerns with insuring them because they are designed to be damaged
if they were ever called upon to be put to use for their intended purpose. A claim for the third incident was
not filed because the damages resulting from this incident were within the County's deductible. The
insurers have now insisted on the higher deductible for the EMAS blocks or otherwise totally exclude them
from the coverages they are providing.
As mentioned earlier, the proposed annual premium for the County's 2012/13 Property program is
$766,188. This represents an increase of $171,802 (29%) when compared to the expiring premium.
Several factors are contributing to this increase. First the County's Insurable Values have increased nearly
$9.7 Million (5%). This increase was in part due to a revised appraisal of the County's Property that raised
its Property values by roughly $4 million shortly after the 2011/12 policy went into effect. In addition, the
insurers failed to include roughly $4.5 million for the EMAS blocks when the 2011/12 policy took effect.
This was not discovered until the first claim for the blocks was filed. When this discrepancy was
discovered, the insurers did not increase their premium for the additional values. The County also had to
raise the values of its communication equipment nearly $2 million based on updated values received from
the Monroe County's Sheriff's Office. Subtracting the percentage increase of the County's Property values
from the projected increase in the County's premiums, the overall increase is lowered to approximately
24%. Many entities are reporting similar, and in some cases, much higher increases in their Property
Insurance premiums.
It is therefore believed that Lexington's and Landmark's proposal as submitted by Marsh USA for Monroe
County's 2012/13 Property Insurance program is consistent with the premiums being paid by other
governmental and non -governmental entities and the terms and conditions of the program are the best that
can be achieved in the current market place. It is therefore recommended that Monroe County renew its
Property Insurance with Lexington Insurance Company and Landmark American Insurance Company for
its 2012/13 policy year as being proposed by Marsh USA.
Please give me a call if you have any questions or wish to discuss this issue in more detail.
Cordially,
INTERISK CORPORATION
o
Sidney G. Webber
CPCU, ARM
CC: Teresa Aguiar