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Home My WebLink AboutPR 19736: PURCHASE OF COMMERCIAL WINDSTORM COVERAGE City of iz cert r t h r....+°' INTEROFFICE MEMORANDUM Human Resources Department Date: March 31, 2016 To: Brian McDougal, City Manager From: Trameka Williams, Interim Safety& Risk Management Coordinat RE: A Resolution Approving the Purchase of Commercial Windstorm Coverage Nature of the request: This insurance provides Commercial Windstorm coverage for all City properties in the event of Windstorm damage (hurricane, tornado, etc.) with an aggregate limit of $20,000,000 per occurrence. The total estimated value of listed City properties is $191,838,126. In the past, City Council has opted, due to cost constraints, to cover only $15,000,000 of listed City properties, assuming, in the case of catastrophic disaster, the Federal Government will provide additional assistance necessary to replace such facilities. This policy will provide coverage of$20,000,000 per occurrence. A named storm carries a deductible of three percent of the total insurable value per affected unit, subject to a $100,000 minimum/$1,000,000 maximum per named storm, or a$25,000 per occurrence deductible (wind/hail) for a non-named storm. StaffAnalysis, Considerations: The City advertised for bids for Windstorm coverage. Five agencies requested and received bid packets. Only one response was received back and was analyzed by RWL Group, the City's Risk Management Consultant. RWL Group and City staff recommend that the City accept the Commercial Windstorm bid received and underwritten on a quota share basis by certain Underwriters at Lloyd's of London, Colony, and RSUI/Landmark American for a $20,000,000 limit per occurrence, with USI Southwest, Inc. which provides coverage on all City properties, including streetlights and the Water Treatment Plant. "Remember we are here to serve the Citizens of Port Arthur" • Brian McDougal, City Manager Page 2 of 2 P.R. #19736 Recommendation: I recommend approval of Proposed Resolution No. 19736 authorizing the purchase of Commercial Windstorm Insurance (limit of $20,000,000 per occurrence) with a projected budgetary impact of $270,556.65, underwritten on a quota share basis by certain. Underwriters at Lloyd's of London, Colony, and RSUI/Landmark American from USI Southwest, Inc. This amount represents a 4% increase in cost ($10,839.14) when compared to last year's annualized premium of$259,717.51. Damages sustained during Hurricane Rita were less than the $15,000,000 limit carried at that time. The proposed $20,000,000 limit is recommended as sufficient for coverage. Budget Considerations: General Liability Insurance Fund#612-1702-581.52-00 $270,556.65 "Remember we are here to serve the Citizens of Port Arthur" P.R. No. 19736 3/31/17 TAW RESOLUTION NO. A RESOLUTION AUTHORIZING THE PURCHASE OF COMMERCIAL WINDSTORM COVERAGE IN AN AMOUNT NOT TO EXCEED $270,556.65 PER ANNUM PROPOSED FUNDING BY: General Liability Insurance Fund: 612-1702-581.52-00 $270,556.65 WHEREAS, bid specifications pertaining to the insurance coverage specified below were made available to interested parties on January 18, 2017, and sealed bids for the same were accepted until 3:00 p.m. on March 1, 2017 (at which time all bids were opened and read aloud) in accordance with State law and the City Charter; and, WHEREAS, one (1) bid was received back and subsequently reviewed, as shown in Exhibit "A" (attached); and, WHEREAS, after due consideration, RWL Group and City staff recommends that the City bind Commercial Windstorm Insurance (limit of $20,000,000 per occurrence) underwritten on a quota share basis by certain Underwriters at Lloyd's of London (Primary $5,000,000), Colony (Excess of Primary 68.33% of $15,000,000) and RSUI/Landmark American (Excess of Primary 31.66% of $15,000,000) from USI Southwest, Inc. with a projected budgetary impact of $270,556.65 per annum. NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF PORT ARTHUR, TEXAS: Section 1. That the facts and opinions in the preamble are true and correct. P.R. No. 19736 3/31/16 TAW Page 2 of 3 Section 2. That the City Manager is hereby authorized to purchase an insurance contract and bind coverage for Commercial Windstorm Insurance (limit of $20,000,000 per occurrence) underwritten on a quota share basis by certain Underwriters at Lloyd's of London (Primary $5,000,000), Colony (Excess of Primary 68.33% of$15,000,000), and RSUI/Landmark American (Excess of Primary 31.66% of$15,000,000) from USI Southwest, Inc. with a projected budgetary impact of $270,556.65 per annum, with a deductible of three percent of the total insurable value per unit of insurance, subject to a $100,000 minimum/$1,000,000 maximum per named storm, or a$25,000 per occurrence deductible(wind/hail only) for a non-named storm; and, Section 3. That the City Manager is hereby further authorized to execute all necessary instruments on behalf of the City of Port Arthur, with approval of the City Attorney, and to make payment of necessary premiums to bind coverage effective May 1, 2017, pending receipt of the Contracts of Insurance. Section 4. That a copy of the caption of this Resolution be spread upon the Minutes of the City Council. READ, ADOPTED, AND APPROVED this day of , A.D., 2017, at a Meeting of the City Council of the City of Port Arthur, Texas, by the following vote: AYES: Mayor , Councilmembers • NOES: P.R.No. 19736 3/31/16 TAW Page 3 of 3 Derrick Ford Freeman, Mayor ATTEST: Sherri Bellard, City Secretary APPROVED AS TO FORM: Val Tizeno, Ci Attorney APPROVED AS TO AVAILABILITY OF FUNDS: Rosie Vela, Interim Director of Finance 3-4111/411, Clifton Williams,Acting Purchasing Manager APPROVED FOR ADMINISTRATION: Brian McDougal, City Manager EXHIBIT "A" l? WLGROUn Independent Risk Management, Insurance, and Employee Benefits Consultants 300 N. Coit Road, Suite 810, Richardson, Texas 75080-5456 15201 Lucian Street, Austin, Texas 78725-1751 Phone: 972-907-9095;512-904-0048 Fax: 972-907-9198 E-mail: carolynCcilrwloroun.com Internet: www.rwlaroup.com 2017 WINDSTORM RFP RESPONSE ANALYSIS AND RECOMMENDATION MARCH 27, 2017 Although five agents requested market assignments, only one agent provided a viable response to the 2017 Windstorm RFP. Currently, the City's wind coverage is $20,000,000 per occurrence subject to a $25,000 deductible for non-named storm wind, and 2% minimum $100,000 deductible for named storm wind, subject to a theoretical maximum of$3,780,562 (theoretical because there is no stated maximum and the $3,780,562 represents 2% of the total values insured). The premium at policy inception, including taxes and fees was $262,867.51. The incumbent agent, USI provided an initial proposal in response to the RFP which offered several options both a $20,000,000 per occurrence limit and a $30,000,000 per occurrence limit. As is the common practice, we offered USI an opportunity to improve on its initial offerings. Unfortunately, even though two opportunities were given, USI was not able to improve upon its initial offerings. Each option provided is for replacement cost; no exclusion for signal lights and poles, decorative lighting or fences; $1,000,000 Business Interruption/Extra Expense; $25,000 deductible for non-named storm wind. Named storm wind deductibles and premium are as follows: $20,000,000 Per Occurrence Limit $30,000,000 Per Occurrence Limit Description Premium Description Premium 1%, minimum $25,000, maximum $321,318.90 1%, minimum $25,000, maximum $361,218.90 $750,000 $750,000 1%, minimum $25,000, maximum $310,556.40 1%, minimum $25,000, maximum $350,456.40 $1,000,000 $1,000,000 1% minimum $100,000, maximum $314,861.40 1% minimum $100,000, maximum $354,761.40 $750,000 $750,000 1% minimum $100,000, maximum $304,412.78 1% minimum $100,000, maximum $344,312.78 $1,000,000 $1,000,000 2%, minimum $25,000, maximum $300,318.90 2%, minimum $25,000, maximum $340,218.90 $750,000 $750,000 2%, minimum $25,000, maximum $290,606.40 2%, minimum $25,000, maximum $330,506.40 $1,000,000 $1,000,000 2% minimum $100,000, maximum $294,806.40 2% minimum $100,000, maximum $334,706.40 $750,000 $750,000 2% minimum $100,000, maximum $285,369.53 2% minimum $100,000, maximum $325,269.53 $1,000,000 $1,000,000 3%, minimum $25,000, maximum $284,568.90 3%, minimum $25,000, maximum $324,468.90 $750,000 $750,000 3%, minimum $25,000, maximum $275,643.90 3%, minimum $25,000, maximum $315,543.90 $1,000,000 $1,000,000 3% minimum $100,000, maximum $279,213.40 3% minimum $100,000, maximum $319,113.40 $750,000 $750,000 3% minimum $100,000, maximum $270,556.65 3% minimum $100,000, maximum $310,456.65 $1,000,000 $1,000,000 2017 WINDSTORM RFP RESPONSE ANALYSIS AND RECOMMENDATION MARCH 27, 2017 PAGE TWO We have still been seeing some premium reductions on other Tier I cities. Unfortunately, this did not carry over to the Port Arthur RFP. The cost of the offer that most closely meets the current coverage $20,000,000 per occurrence with a named storm deductible of 2%, minimum $100,000, maximum $1,000,000 is $285,369.53. This is approximately an 8% increase over last year. We still feel the $20,000,000 per occurrence limit is sufficient to meet the City's needs. However, in an effort to keep the premiums closer to the expiring, we are recommending that you accept the offer that has the named storm deductible at 3%, minimum $100,000, maximum $1,000,000 with the premium $270,556.65. The minimum and maximum deductibles are the same, and the premium increase is held at slightly over 3%. Please let me know if you have any questions. Sincerely yours, (. j/lu.(9�'1.1... Carolyn A. Miller, CPCU Senior Consultant COPA Adv. for R uposals 1 -18-17.crtr - Page 1 - Composite CITY OF PORT ARTHUR, TEXAS ADVERTISEMENT FOR PROPOSALS NOTICE IS HEREBY GIVEN THAT sealed Proposals, addressed to the City of Port Arthur, will be received at the Office of the City Secretary, City Hall 444 4th Street or P. 0 . Box 1089, Port Arthur, Texas 77641 no later than 3:00 p.m., Wednesday, March 1, 2017. Applicant names will be read aloud beginning at 3:15 p.m., Wednesday, March 1, 2017 on this date in the City Council Chambers, City Hall, 5th Floor for certain services briefly described as: REQUEST FOR PROPOSALS WINDSTORM INSURANCE Proposals received after the deadline stated above, regardless of method of delivery, will not be considered and returned unopened. Copies of the Specifications and other Contract Documents will be available on January 26, 2017 at 9:00 am. in the Human Resource Office, 444 4th Street, City of Port Arthur, and are open for public inspection without charge. They can also be retrieved from the City's website at www.portarthur.net or www.publicpurchase.com. The City of Port Arthur reserves the right to reject any and all bids and to waive informalities. Per Chapter 2 Article VI Sec. 2-262(C) of the City's Code of Ordinance, the City Council shall not award a contract to a company that is in arrears in its obligations to the City. Clifton Williams,CPPB Acting Purchasing Manager FIRST PUBLICATION: January 15, 2017 SECOND PUBLICATION: January 22, 2017