M&C Review


COUNCIL ACTION:  Approved on 12/11/2018 

DATE: 12/11/2018 REFERENCE NO.: **G-19434 LOG NAME: 14FY2019 COMMERICAL INSURANCE
CODE: G TYPE: CONSENT PUBLIC HEARING: NO
SUBJECT:   Authorize Purchase from Hub International Rigg, Broker of Record, of the City's Multiple-Layered Property Insurance, Boiler and Machinery and Commercial Liability Insurance Policies in an Amount Not to Exceed the Current Year Budgeted Amount of $2,664,563.00, and to Pay the Yearly Broker of Record Fee of $39,000.00 (ALL COUNCIL DISTRICTS)

RECOMMENDATION:

It is recommended that the City Council authorize the purchase from Hub International Rigg, Broker of Record, of the City's Multiple-Layered Property Insurance, Boiler and Machinery and Commercial Liability Insurance Policies in an amount not to exceed the current year budgeted amount of $2,664,563.00, in accordance with the Broker Agreement with Hub International Rigg, City Secretary Contract No. 47080.

 
DISCUSSION:

The purpose of this Mayor and Council Communication (M&C) is to authorize the purchase of the City's 2019 Commercial Property and Liability insurance policies from its broker of record and to pay the broker of record fee.

On June 16, 2015, the City Council approved (M&C C-27333) designating Hub International Rigg as the City's broker of record for a three-year initial term with two, one-year renewal options for a fee of $39,000.00 annually. The broker of record is authorized to provide consulting and brokerage services associated with the placement and administration of the following insurance policies: property, boiler and machinery, environmental liability insurance and other casualty policies as needed.

The Broker of Record fee for Fiscal Year 2019 is $39,000.00.

The commercial insurance renewal for Fiscal Year 2019 has a total estimated cost of $2,664,563.00 which is an increase in the annual amount of $449,561.00 across all policies.  The increases are a result of a more complete inventory and appraisal of City properties and the rate impacts across the state resulting from hurricane losses.

Property Insurance: The City's all-risk commercial property insurance is provided through a layered structure, involving multiple insurers employing a reinsurance quota share approach, which is a form of cost sharing. The multiple layer structure provides a $500,000,000.00 coverage limit with a $250,000.00 deductible.

The Fiscal Year 2019 premium cost for a Total Insured Value (TIV) of $2,178,357,400.00 is $1,659,741.00.

RSUI Indemnity Company insures 100 percent of the primary layer, which provides a $2.5 million coverage limit.

The second layer quota share carriers are Evanston Insurance Company (25.71 percent), Ironshore Specialty Insurance Company (11.43 percent) Westchester Surplus Lines Insurance Company (28.57 percent) Princeton Excess Insurance Company (11.43 percent) and Brit/Lloyds Insurance Company (22.86 percent). Altogether, this layer provides $17.5 million in coverage in excess of the $2.5 million limit of coverage for the primary layer.

The third layer quota share carriers are Colony Insurance (33.33 percent, $10 million coverage limit) and Steadfast Insurance Company (33.33 percent, $20 million coverage limit) and Hallmark Insurance Company (33.33 percent, $10 million coverage limit); this layer provides $30 million coverage in excess of the combined $20 million in coverage from the primary and secondary layers.

The fourth layer quota share carriers are First Specialty Insurance Corp (45 percent, $22.5 million coverage limit) and Starr Specialty Lines Insurance (45 percent, $22.5 million coverage limit) and Princeton Excess and Surplus Lines Insurance Company (10 percent, $5 million coverage limit) for a total coverage of $50 million in excess of the total $50 million in coverage provided by the previous layers.

The fifth layer quota share carriers are RSUI Indemnity Company (65 percent, $260 million coverage limit) and Homeland Insurance Company of New York (25 percent, $100 million) and Princeton Excess and Surplus Lines Insurance Company (10 percent, $40 million coverage limit) for a total coverage of $400 million in excess of the total $100 million in coverage provided by the previous layers.

Terrorism: Lloyds of London was identified by the broker of record as offering the line of insurance coverage most beneficial to the City. The premium cost is $32,500.00, which provides a $100,000,000.00 limit of coverage with a $25,000.00 deductible for losses caused by terrorism.

Boiler and Machinery Insurance: Hartford Steam Boiler Insurance Coverage was identified by the broker of record as offering the line of insurance coverage most beneficial to the City. The premium cost is $126,596.00, which provides a $100,000,000.00 limit of coverage with a $25,000.00 deductible.

Auto Physical Damage: Atlantic Specialty Insurance Company was identified by the broker of record as offering the line of insurance coverage most beneficial to the City. The premium cost is $145,673.00 and provides $109,736,000.00 in total insurable value for damage to City Owned vehicles.

The City's commercial liability insurance policies include the following policies and will become due prior to the End of FY2019 at an estimated cost of $1,028,822.00.


Airport Liability: Ace Property and Casualty Insurance Company was identified by the broker of record as offering the line of insurance coverage most beneficial to the City, and provides a $100,000,000.00 limit of coverage with a current premium due of $61,190.00.

Aircraft Liability and Hull Coverage: Westchester Fire Insurance Company was identified by the broker of record as offering the line of insurance coverage most beneficial to the City, and provides $5,000,000.00 Liability and $1,000,000.00 and $2,000,000.00 limit(s) of coverage with $1,000.00 not in motion and $50,000.00 in motion deductible(s) with a current premium due of $52,058.00.

Crime Insurance: Great American Insurance Company was identified by the broker of record as offering the line of insurance coverage most beneficial to the City and provides a $5,000,000.00 limit of coverage with a $25,000.00 deductible with a current premium due of $27,636.00.

Liquor Liability: Illinois Union Insurance Company was identified by the broker of record as offering the line of insurance coverage most beneficial to the City in Fiscal Year 2018 at a cost of $4,695.00.

Parking Garage Liability: AmWins Insurance Company was identified by the broker of record as offering the line of insurance coverage most beneficial to the City in Fiscal Year 2018 at a cost of $2737.75.

Cyber/ Privacy/ Network Security: Endurance American Specialty Insurance Company was identified by the broker of record as offering the line of insurance coverage most beneficial to the City in Fiscal Year 2018 at a cost of $99,730.05.

Site Specific Pollution: Nautilus Insurance Company was identified by the broker of record as offering the line of insurance coverage most beneficial to the City in Fiscal Year 2018 at a cost of $56,152.95.

Umbrella (The Herd): Admiral Insurance Company was identified by the broker of record as offering the line of insurance coverage most beneficial to the City in Fiscal Year 2018 at a cost of $7,455.00.

General Liability (The Herd): Admiral Insurance Company was identified by the broker of record as offering the line of insurance coverage most beneficial to the City in Fiscal Year 2018 at a cost of $17,036.25.

Pollution/ Legal Liability: Navigatior's Specialty Insurance Company was identified by the broker of record as offering the line of insurance coverage most beneficial to the City in Fiscal Year 2018 at a cost of $18,554.55.

Pollution/Environmental: Chubb Insurance was identified by the broker of record as offering the line of insurance coverage most beneficial to the City in Fiscal Year 2018 at a cost of $55,652.95

Equipment Floater: XL Specialty Insurance Company was identified by the broker of record as offering the line of insurance coverage most beneficial to the City in Fiscal Year 2018 at a cost of $7575.00.

Contract Instructors/General Liability: International Insurance Company of Hannover SE was identified by the broker of record as offering the line of insurance coverage most beneficial to the City in Fiscal Year 2018 at a cost of $7,507.00.

Contract Instructors/Blanket Accident: United States Fire Insurance Company was identified by the broker of record as offering the line of insurance coverage most beneficial to the City in Fiscal Year 2018 at a cost of $17,036.25.

Policy Renewal Options: None

This M&C does not request approval of a contract with a business entity.
 
FISCAL INFORMATION/CERTIFICATION:

The Director of Finance certifies that upon approval of the above recommendations, funds are available in the current operating budget, as appropriated, of the Risk Financing Fund.
















TO
    Fund Department
ID
Account Project
ID
Program Activity Budget
Year
Reference #
(Chartfield 2)
Amount

FROM
    Fund Department
ID
Account Project
ID
Program Activity Budget
Year
Reference #
(Chartfield 2)
Amount
1) 60111 0147130 5330201       2019   $39,000.00
1) 60111 0147130 5520201       2019   $346,488.00
1) 60111 0147130 5520202       2019   $17,135.00
1) 60111 0147130 5520203       2019   $54,607.00
1) 60111 0147130 5520204       2019   $64,109.00
1) 60111 0147130 5520205       2019   $173,378.00
1) 60111 0147130 5520206       2019   $121,000.00
1) 60111 0147130 5520207       2019   $30,400.00
1) 60111 0147130 5520208       2019   $1,748,393.00
1) 60111 0147130 5520209       2019   $88,888.00
1) 60111 0147130 5520210       2019   $5,165.00

Submitted for City Manager's Office by:
Susan Alanis (8180)
Originating Department Head:
Brian Dickerson (7783)
Additional Information Contact:
Mark Barta (7790)

 
 
ATTACHMENTS