HomeMy WebLinkAboutPR 20210: PURCHASE OF COMMERCIAL WINDSTORM COVERAGE C.'in nt. 74,---A,
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INTEROFFICE MEMORANDUM
Office of Safety & Risk Management
Date: April 17th, 2018
To: Harvey L. Robinson, Interim City Manager
From: Monique LeFlore MA, SHRM-SCP, HR & Civil Service Director
RE: A Resolution Authorizing the Purchase of Windstorm Coverage Renewal from USI —
Effective May, 15`, 2018
Nature of the request:
The City is taking a hit this year, and it will be vitally important to make sure all necessary
underwriting information is available for next year's RFP. However, to give this some perspective,
after Hurricane Rita, the City has paid on average up to $503,060.00 annually for windstorm
coverage. We budgeted $320,650.00 for annual premium,however the renewal cost is $380,516.98
not including properties needing and currently under construction which is approximately
$75,000.00. After reviewing funds available in budget# 612-1702-581.52.00,paying annual
premium and pending claims will cause budget shortfall.
We recommend approval of Proposed Resolution No. 20210 which authorizes the purchase of
Commercial Windstorm coverage in amount up to $455,517.00 from USI.
Staff Analysis, Considerations:
(Exhibit"A"attached)
Recommendation:
We recommend approval of Proposed Resolution No. 20210 which authorizes the purchase of
Commercial Windstorm coverage in amount up to $455,517.00 from USI.
Budget Considerations:
Prior management reduced budget from account# 612-1702-581.52.00 for expected claims during
FY 2015-16 by approximately$450,000.00.
Requesting budget amendment from fund balance for up to $600,000.00 to fund account# 612-1702-
581.52.00 to purchase annual Windstorm coverage effective Tuesday, May Pt, 2018.
"Remember we are here to serve the Citizens of Port Arthur"
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P.R.No.20210
4/18/2018 HRD
RESOLUTK)NNO.
A RESOLUTION AUTHORIZING THE PURCHASE OF COMMERCIAL WINDSTORM
COVERAGE IN AN AMOUNT NOT TO EXCEED$455,431.00 PER ANNUM
PROPOSED FUNDING BY: General Liability Insurance Fund:
612-1702-581.52-00 $455,431.00
WHEREAS,bid specifications pertaining to the insurance coverage specified below were made
available to interested parties on January 21' & 28 2018, and sealed bids for the same were
accepted until 3:00 p.m. on March 14th, 2018 (at which time all bids were opened and read aloud) in
accordance with State law and the City Charter;and,
WHEREAS,one(1)bid with 4 options 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 with a projected budgetary impact of$380,516.98 per annum.
WHEREAS,RML is Group is also recommending the City budget an additional$74,914.00 for
approximately$30,000,000 values not currently on this schedule. Acceptance of the 3%/$21</$1M
option, the approximate cost per$100 of value to add properties would be $0.25 which
translates to additional $74,914.00.
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.
Section2. That the City Manager is hereby authorized to purchase an insurance
P.R. No. 20210
4/18/2018 HRD
Page 2 of 3
contract and bind coverage for Commercial Windstorm Insurance (limit of $20,000,000 per
occurrence) from USI Southwest, Inc. with a projected budgetary impact of $380,516.98 per
annum, with a deductible of three percent of the total insurable value per unit of insurance
/$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 farther 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 15t, 2018, 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.
P.R. No. 20210
4/18/2018 HRD
Page 3 of 3
READ, ADOPTED, AND APPROVED this day of 2018, at a
Meeting of the City Council of the City of Port Arthur, Texas by the following vote: A YES:
Mayor , Councilmembers
NOES:
Derrick Ford Freemen, Mayor
ATTEST:
Sherri Bellard, City Secretary
APPROV 1 AS TO FORM:
/
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al Tizelsr, ityj. ttomey
APPLL
D AS AVAILABILTY OF FUNDS:
`,...,.
Andy Vasquez, Dire tor of Finance
/ `l,A- cd44 420—
Clifton Williams, Purchasing Manager
APPROVED FOR ADMINISTRATION:
Harvey Robinson, Interim City Manager
EXHIBIT "A"
CITY OF PORT ARTHUR, TEXAS
REQUEST 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. O. Box 1089, Port Arthur, Texas 77641 no later than 3:00 P.M., Wednesday,
March 14, 2018 and all bids received will thereafter be opened and read aloud on
Wednesday, March 14, 2018 at 3:15 P.M. in the City Council Chambers, 5th Floor,
City Hall, Port Arthur, Texas for certain services briefly described as:
REQUEST FOR PROPOSALS
WINDSTORM INSURANCE
Proposals received after closing time will be returned unopened.
Copies of the Specifications and other Contract Documents are on file in the Purchasing
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.portarthurtx.gov 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
Purchasing Manager
FIRST PUBLICATION: January 21, 2018
SECOND PUBLICATION: .January 28, 2018
CITY OF PORT ARTHUR
ADVERTISEMENT FOR BIDS
Request for Proposals Windstorm Insurance
January 21, 2018 January 28, 2018
•CITY'OFPORT ARTHUR,TEXAS
• REQUEST 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.O.Boz,1089,Port Arthur,Texas 77641
no.later than 3:00 P.111.,Wednesday,March 14,2018 and all bids received thereafter be opened and read aloud
on-Wednesday,March.14,2018 at 3:15 P M.in the City Council Chambers,5th Flair.City Hall,Port Arthur,
Texas for certain services briefly described as:
- REQUEST FOR PROPOSALS.•.
-
WINDSTORM INSURANCE
Proposals received after closing time will be returned unopened
Copies of the Specifications and other Contract Documents are onfile in the Purchasing Office,44--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 wwiv.portarthur.net or www.publicpurchasc.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
Purchasing Manager
GTTY F PORT ARTHUR,TEXAS
REQUEST FOR PROPOSALS
FIRST PUBLICATION: January 21,2018
NOTICE IS HEREBY GIVEN THAT sealed Proposals,addressed to the City of Port Arthur,will be received
SECOND PUBLICATION: January 28,2018 i at the Office of the City Secretary,City Hall 444-4th Street or P O.Box 1089,Port Arthur,Texas 77641
no later than 3:00 P.M.,Wednesday,March 14,2018 and all bids received thereafter be opened and read aloud
on Wednesday,March 14,2018 at 3:15 P.hL in the City Council Chambers,5th floor,City Hall,Port Arthur,
Texas for certain services briefly described as:
REQUEST FOR PROPOSALS
WINDSTORM INSURANCE
Proposals received after closing time will be returned unopened.,. •
Copies of the Specifications and other Contract Documents are on file in the Purchasing Office,444-4th Street,1
City of Port Arthur,and are open for public inspection without charge.They can also be retrieved from the City's
website at yvww.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.
Purchasing Manager . - •
•
FIRST PUBLICATION: January 21,2018
SECOND PUBLICATION: January 28,2918
•
RWLGRouP 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: carolyria)rwlgrouo corr
Internet: www.rwigroup ,;on
2017 WINDSTORM RFP RESPONSE ANALYSIS AND RECOMMENDATION
MARCH 30, 2018
Although four agents requested market assignments, only one agent provided a viable response to the 2018
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 3% minimum $100,000 deductible for named storm wind, subject to
a maximum of$1,000,000. The premium at policy inception, including taxes and fees was $270,819.16.
The incumbent agent, USI provided an initial proposal in response to the RFP which offered four options at a
$20,000,000 per occurrence limit. We offered USI an opportunity to improve on its initial offerings.
Unfortunately, USI was not able to offer any improvements. 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
Description Premium
2%, minimum $25,000, maximum $394,900.28
$1,000,000
2% minimum $25,000, no maximum $362,596.61
3%, minimum $25,000, maximum $380,516.98
$1,000,000
3% minimum $25,000, no maximum $349,993.88
We are seeing some premium increases on other Tier I cities. Unfortunately, the increase Port Arthur is seeing
is higher than most. The reasons for such a high increase include the losses sustained in Hurricane Harvey
last year, much of which is not yet resolved, and lack of complete underwriting information.
We still feel the $20,000,000 per occurrence limit is sufficient to meet the City's needs. We do not feel it is in
the City's best interest to have an unlimited deductible. Therefore, we recommend only the two offers with the
$1,000,000 maximum deductible be considered for acceptance. In the event of another hurricane such as
Harvey with wide-spread damage, it is likely the maximum deductible will be reached. Given that, we are
recommending that the City accept the 3% minimum $25,000, maximum $1,000,000 deductible option.
Please note there is no flood coverage included this year, and those buildings that were damage by
Hurricane Harvey but will not be repaired by May 1, 2018 are not included for coverage at this time. They are
to be added as repairs are completed and an additional charge will be made as each property is added.
Please let me know if you have any questions.
Sincerely yours,
7
Carolyn A. Miller, CPCU
Senior Consultant