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Home My WebLink AboutPR 20482: PURCHASE OF EXCESS COMMERCIAL FLOOD COVERAGE Energy City of ort rthu f 7Exas INTEROFFICE MEMORANDUM Office of Safety & Risk Management Date: September 19, 2018 To: Harvey Robinson, Interim City Manager From: Trameka A. Williams, Asst. Director of Human Reso rt�c� ), RE: A Resolution Authorizing the Purchase of Excess Commercial Flood Coverage With a Projected Budgetary Impact of$405,851.25 Nature of the request: The bid specifications pertaining to the insurance and coverage specified below were made available to interested parties on August 3, 2018, and sealed bids for the same were accepted until September 5, 2018 (at which time all bids were opened and read aloud) in accordance with State law and the City Charter. Staff Analysis, Considerations: The City Manager is hereby authorized to purchase an insurance contract and bind coverage for Commercial Flood Insurance (limit of$12,500,000 per occurrence) from USI Southwest Inc. with a projected budgetary impact of $405,851.25 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 3% or $25,000 minimum per occurrence deductible (wind/hail only) for a non-named storm. Recommendation: I recommend approval of Proposed Resolution No. 20482 authorizing the purchase of an insurance contract and bind coverage for Commercial Flood Insurance (limit of $12,500,000 per occurrence) from USI Southwest Inc. with a projected budgetary impact of $405,851.25 for a non-named storm. The effective dates of the policy will be October 1, 2018 — May 1, 2019. RWL Group, consultants for the City of Port Arthur, recommend that the City accept the best and final offer from USI and add $12,500.000 in additional flood coverage over the NFIP and TML coverages. The additional pro-rata premium for this coverage would be $405,851.25 including estimated taxes and fees. Budget Considerations: The funds for the coverage are available in account 612-1702- 581.52-00, General Liability Expenses — Insurance. The account currently has a budgeted amount of $300,000 for increasingly flood cost and an additional $100,000 for property coverage. "Remember we are here to serve the Citizens of Port Arthur" P.R. No. 20482 09/19/18 TAW RESOLUTION NO. A RESOLUTION AUTHORIZING THE PURCHASE OF EXCESS COMMERCIAL FLOOD COVERAGE WITH A PROJECTED BUDGETARY IMPACT OF $405,851.25 WHEREAS, bid specifications pertaining to the insurance and coverage specified below were made available to interested parties on August 3, 2018, and sealed bids for the same were accepted until September 5, 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 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 Flood Insurance with a projected budgetary impact of S405,851 .25. 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. Section 2. That, the City Manager is hereby authorized to purchase an insurance contract and bind coverage for Commercial Flood Insurance (limit of $12,500,000 per occurrence) from USI Southwest Inc. with a projected budgetary impact of $405,851 .25, with a deductible of three percent of the total insurable value per unit of insurance/$1,000,000 maximum per named storm, or 3% or $25;000 minimum per occurrence deductible (wind/hail only) for a non-named storm. ATTEST: Sherri Bellard, City Secretary APPROVED AS TO AVAILABILITY OF FUNDS: Ut Andrew Vasquez, irector of Finance (1( ,a_ Clifton illiams, Purchasing Manager APPROVED AS TO FORM: �l►• 4'r—Ae (! Val "eno ity Attorney APPROVED FOR ADMINISTRATION: Harvey L. Robinson, Interim City Manager P.R. No. 20433 09/04/18 TAW Section 3. That the City Manager is hereby 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 October 1, 2018, pending receipt of the Contracts of Insurance. Section 4. That, a copy of this Resolution be spread upon the minutes of the City Council. READ, ADOPTED, AND APPROVED this day of , AD, 2018, at a Meeting of the City Council of the City of Port Arthur, Texas, by the following vote: AYES: Mayor , Councilmembers NOES: Derrick Ford Freeman, Mayor Exhibit " A " R' TIGRoJp Independent Risk Management and Insurance Consultants 300 N.Coit Road,Suite 810,Richardson,Texas 75080-5456 Phone:972-907-9095 Fax:972-907-9198 E-mail: rwlgroup@rwlgroup.com Internet:www.rwlgroup.com September 18,2018 Ms.Trameka A.Williams Safety and Risk Manager City of Port Arthur P.O. Box 1089 Port Arthur,Texas 77641-1089 Re: 2018 Excess Flood RFP Analysis and Recommendations Dear Trameka: RWL Group was commissioned to obtain competitive excess flood proposals by preparing and conducting an excess flood RFP. The RFP specifications and exhibits were picked up by multiple agents, but in the end only one proposal was received. That proposal was from USI,who is the current agent for the City's wind program. The best and final offers from various insurance companies are outline in the attached diagram. As a result of the Excess Flood RFP, if accepted,there will be a new structure to the current wind insurance program,with the first$5,000,000 of the excess flood coverage being added to the first layer of the wind program. The NFIP coverage will continue to be your first line of flood coverage for those properties currently protected through that program. TML will then respond with a total of$5,000,000 of flood coverage per occurrence and annual aggregate, including$2,500,000 sub-limit for SFHA flood zones per occurrence and annual aggregate. The existing wind program would be endorsed to include flood in the first$5,000,000 layer to go over the underlying NFIP and TML coverages. The existing$15,000,000 excess of$5,000,000 wind layer would be endorsed to provide 66.67%of$5,000,000 flood ($3,333,500) per occurrence and annual aggregate to be provided by Starr. A new policy would be issued for flood only in the amount of $1,666,500(33.33%of$5,000,000)to be provided by Markel. Another new policy would be written at a limit of$2,500,000 excess of$10,000,000 with the coverage provided 100%by Aspen. The total of all layers of the excess flood program would equate to$12,500,000 per occurrence and annual aggregate for flood excess of NFIP and TML with respect to flood. The total wind limits would still be$20,000,000 but could be eroded by losses arising out of flood. Ms.Trameka Williams Page Two September 18, 2018 The proposed flood coverages include several material limitations,with the two most notable being: 1. Underground property is specifically excluded from coverage and this exclusion cannot be removed. 2. There is no coverage for property located partially or totally in flood zone V and this restriction cannot be removed. Having completed this RFP process RWL has concluded this is the only available program that the market will offer at this time, especially in light of the damages Port Arthur sustained during Hurricane Harvey and the most recent hurricane activity. Therefore, it is our recommendation that the City accept the best and final offer from USI and add $12,500,000 in additional flood coverage over the NFIP and TML coverages. The additional pro-rata premium for this coverage would be$405,851.25 including estimated taxes and fees. The pro-rata term for these coverages would be October 1,2018 to May 1, 2018. Currently the City has 27 properties covered by NFIP,and the properties are primarily in SFHA zones. We recommend that consideration be given to examining the feasibility of adding NFIP coverage to properties located in flood zones other than SFHA. On an incidental note,the attached exhibit references an optional quote to increase the wind coverage from $20,000,000 to$25,000,000 for a premium of$55,125 including estimated taxes and fees. The purpose for considering this optional quote is because the flood coverage could reduce the available wind coverage limit by up to north of$8,300,000. Please let me know if you have any questions regarding this matter. Sincerely yours, Carolyn A. Miller,CPCU Senior Consultant c: Rebecca Underhill Elizabeth Villarreal Robert W. Lazarus City of Port Arthur 10-1-2018 Excess Flood RFP USI Best and Final Offer $2.5M xs$10M Flood 100%Aspen $93,712.50 (Includes estimated taxes and fees) $ 93,712.50 $5M xs$5M 66.67%Starr-$3,333,500(included in$15M x$5M layer of current wind program) 33.33%Markel-$1,666,500 (New policy) $198,450(Includes estimated taxes and fees) $ 198,450.00 $SM xs of NFIP and TML (to be endorsed onto current wind program) RSUI 50% LIU 50% $119,373.19 (Includes estimated taxes and fees) $ 113,688.75 Total - Pro-rata $ 405,851.25 Total -Annualized $ 708,540.22 TML $5,000,000 excess of NFIP including$2,500,000 for SFHA locations, per ocurrence and annual aggregate NFIP Various limits and deductibles Optional Quote: $5 M xs$20 M wind/hail only with Starr(new policy)$55,125 (including estimated taxes and fees)