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Home My WebLink AboutPR 14607: FIDELITY NAT'L INSURANCE COMPANY - FLOOD COVERAGECITY OF PORT ARTHUR SAFETY 8 RISK MANAGEMENT MEMORANDUM TO: Stephen B. Fitzgibbons, City Manager FROM: Lisa Colten, Safety 8~ Risk Management Coordinator ~ t/ DATE: March 12, 2008 SUBJECT: Resolution- Approving the .Purchase of Flood Coverage through Fidelity National Insurance Company in the Amount of $47;244.00 per Annum COMMENTS RECOMMENDATION: I recommend approval of Proposed Resolution No. 14607 authorizing the purchase of Flood Insurance coverage through Fidelity National Insurance Company via the Texas Municipal League Intergovernmental Risk Pool {TML-IRP) through its agent, Victor O. Schinnerer & Co. (the City's current carrier) at a cost of $22,960.00 with a $500.00 deductible, not including the Sabine Pass Fire Station #4, Sabine Pass Fire Garage, and 3510 Lake Arthur Drive (Dwelling). This represents approximately an 8.3°k increase above last year's cost. It is recommended that the City bind $500,000 coverage on the Sabine Pass Fire Station #4 at a cost of $24,284.00 with a $50,000 deductible per occurrence. This represents approximately a 5.2% incxease above last year's cost. We also received a coverage bid for the Sabine Pass Fire Garage. To insure_at the current level of coverage {building value of $100,000), the cost for the Sabine Pass Fire Garage is $9,113.00 with a $25,000.00 deductible per occurrence (Exhibit "A' attached). This represents approximately a 9.1 increase above last years cost. After considerable review, this cost appears to be excessive; therefore, inasmuch as the City maintains substantial reserves in the .event a flooding disaster should occur, it is recommended that this location be self-insured by the City. In addition, since the property located at 3510 Lake Arthur Drive has flood coverage through Fidelity National Insurance Company until September 9, 2008, it is not recommended to renew until that date. City staff and RWL Group, the City's insurance consultant, do not recommend accepting the inflation option. ; Premiums and rates are set by the National Flood Insurance Program (NFIP) regardless of the agent used. "REMEMBER, WE ARE HERE TO SERVE THE CITIZENS OF PORT ARTHUR" ' Y Stephen B. Fitzgibbons March 12, 2008 Page 2 of 3 BACKGROUND: The City advertised for bids for Insurance Coverage. Four bid specification packets were delivered to: ' Victor O. Schinnerer & Co. via the TML-IRP H & G Insurance Group, LLC Starco Solutions, LLC McGriff, Seibels, & Williams of Texas, Inca The sole bidder was Fidelity National Insurance Company via the Texas Municipal League Intergovemmental Risk Pool (TML-IRP) through its agent, Vctor 0. Schinnerer & Co. Victor O. Schinnerer & Co. acts as the agent fol` TML-IRP in procuring Flood Insurance for the City of Port Arthur. The sole bid was sent to RWL Group for analysis and recommendation. Subsequent to extensive review of the bid, RWL Group submitted its recommendation (Exhibit "A attached) that the bid received-from Fidelity National Insurance Company (via TML-IRPNictor 0. Schinnerer & Co.) be accepted. BUDGETARY/FISCAL EFFECT: The proposed funding is as follows: General Liability Insurance Fund Account No. 612-1702-581.52-00 ..... $47,244.00 STAFFING/EMPLOYEE EFFECT: No effect on staffing levels. SUMMARY: I recommend approval of Proposed Resolution No. 14607 authorizing the purchase of Flood Insurance coverage through Fidelity National Insurance Company via the Texas Municipal League Intergovernmental Risk Pool (TML-IRP) through its agent, Victor O. Schinnerer & Co. (the City's current carrier) at a cost of $22,960.00 with a $500.00 deductible, not incuding the Sabine Pass Fire Station #4, Sabine Pass Fire .Garage, and 3510 Lake Arthur Drive (Dwelling). •This represents approximately an 8.3% incxease above last year's cost. It is recommended that the City bind $500,000 coverage on the Sabine Pass Fire Station #4 at a cost of $24,284.00 with a $50,000 deductible per occurrence. This represents approximately a 5.2°~ increase above last years cost. "REMEMBER, WE ARE HERE TO SERVE THE CITIZENS OF PORT ARTHUR" . Stephen B. Fitzgibbons March 12, 2008 Page 3 of 3 We also received a coverage bid for the Sabine Pass Fire Garage. To insure at the current level of coverage (building value of $100,000), the cost for the Sabine-Pass Fire Garage is $9,113.00 with a $25,000.00 deductible per occurrence (Exhibit "A" attached). This represents approximately a 9.1% increase above last year's cost. After considerable review, this cost appears to be excessive; therefore, inasmuch as the City maintains substantial reserves in the event a flooding disaster should occur, it is recommended that this location be self-insured by the City. In addition, since the property located at 3510 Lake Arthur Drive has flood coverage through Fidelity National Insurance Company until September 9, 2008, it is not recommended to renew until that date. City staff and RWL Group, the City's insurance consultant, do not recommend accepting the inflation option. Premiums and rates are set by the National Flood Insurance Program (NFIP) regardless of.the agent used. Attachment: Exhibit "A" "REMEMBER, WE ARE HERE TO SERVE THE CITIZENS OF PORT ARTHUR" P.R. No. 14607 3/12/08 LJC RESOLUTION NO. ` A RESOLUTION AUTHORIZING THE PURCHASE OF FLOOD COVERAGE THROUGH FIDELITY NATIONAL INSURANCE COMPANY IN THE AMOUNT OF $47,244.00 PER ANNUM PROPOSED FUNDING BY: General Liability Insurance Fund: 612-1702-581.52-00 $47,244 Whereas, bid specifications pertaining to the irisurance coverage specified below were advertised and made available to interested parties on February 5, 2008, and sealed bids for the same were accepted until 3:00 p.m. on March 12, 2008 (at which time all bids were opened and read aloud) in accordance with State law and the City Charter, and, Whereas, RWL Group has recommended that coverage be obtained from Fidelity National Insurance Company via the Texas Municipal League Intergovemmental Risk Pool (TML-IRP) through its agent, Victor O. Schinnerer & Co., as delineated in Exhibit "A"; now, therefore, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF PORT ARTHUR, TEXAS: THAT the City Manager is hereby authorized to purchase insurance confracts and bind coverage for Flood Insurance, effective April 26, 2008, through Fidelity National Insurance Company via the Texas Municipal League Intergovemmental Risk PSI (TML-IRP) through its agent, Yctor O. Schinnerer & Co., as recommended by RWL Group in Exhibit "A" which is for $47,244.00 without the inflation option; and, , THAT the Flood Insurance bid for the Sabine Pass Fire Garage is hereby rejected; and, 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 April 26, 2008, pending receipt of the Contracts of Insurance; and, P.R. No. 14607 3/12(08 LJC Page 2 of 2 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., 2008, at a Meeting of the City Council of the City of Port Arthur, Texas, by the following vote: AYES: Mayor , Councilmembers NOES: Deloris "Bobbie" Prince, Mayor ATTEST: Acting City Secretary A\PrPROVED AS TO FORM: V ~ t1 Mark T. Sokolow, ity Attorney t 0 ht b~hei~-~- ~1 ROVED A TO AVAILABILITY OF FUNDS: w Rebecca Underhill, Director of Finance APPROVED FOR ADMINISTRATION: Stephen B. Fitzgibbons, City Manager i ur~~. a va c ATTACHMENT "A" I icy (_nlfan from: "Carolyn Miller" <carolyn@nvlgroup.com> To: °Lisa Colten'" <Icotten@portarthur.net> Sent: Thursday, March 13, 2008 12:00 PM' Attach: VOSCO 3-10-08 Letter.pdf Subject: Flood RFP Response Evaluation Lisa: I have reviewed the Flood RFP response received from Victor O. Schinnerer 8 Company and have the following comments and recommendations. Comments: 1. First, because of flood coverage primarily being available through the National Flood Insurance Program, it is not surprising that you received only one response to the RFP, that being from the incumbent provider. 2. On an individual location basis, there is little or no advantage to increasing the deductible currently carried. Currently with the exception of the $50,000 deductible on the Sabine Fire Station ft4, the deductible on each insured location is $500 per occurrence. If you increase each location's deductible to $5,000, $10,000 or $25,000 you would have a program savings of $2,832, $5,071 or $8,834 respectively. However, in the event of a flood, the deductible chosen would apply to each location if you chose to increase the deductible across the board. 3. Most of the savings is realized from increasing the deductible on five locations: A. Municipal Service Station, 101 H.O. Mills Blvd. B. Water Warehouse - 111 E. Hwy 73 C. Municipal Garage - 103 H.O. Mills Blvd. D. Port Acres WWTP - 2992 Hwy 365 E.• Public Works Operations Center - 201 H.O. Mills blvd. 4. If.you wanted to consider;increasingthe deductible on these five locations, the savings at $5,000, $10,000 and $25,000 deductible would be $2,200, $3,822 and $6,368 respectively. 5. The cost of purchasing flood coverage on the garage at Sabine Fire Station #4 has increased over last year, being $9,113 for $100,000 coverage at a $25,000 deductible; or $7,467 for $100,000 of coverage at a $50,000 deductible. 6. The policy currently on the house on Lake Arthur Drive could be cancelled and re-written as of the April 26th date. However, the only thing that I can see~as a benefit is that you avoid for one year the premium increases that are to be implemented in May. ,I have no idea what the increase will be, but the current premium at a $500 deductible is $231; the quoted premium to change effective date is $335. You would end up paying a 45% higher premium now to avoid an unknown additional increase in September. I do not see that as an advantage to the City. Recommendations: 1. I would not recommend increasing the deductible across the board. There is not enough premium savings to wan'ant the additional risk retained by the City. 2. If you are looking-for a way to save money on this program, then I recommend you consider increasing the deductible on the five locations indicated above. However, keep in mind that the deductible is . applicable per location, per occurrence. If the. $47,244 is in the City's budget to renew all coverages as currently written, then I would recommend that the deductible not be increased at any location. Again, the premium savings on the individual properties is not sufficient enough to warrant the additional risk retained by the City. 3. Regardless of the deductible chosen, carefully review the amount of insurance carried at each location to determine whether or not any of the insured values need to be increased. Although it is my understanding that the flood limits available through NFIP will be increased in the future, they currently still stand at $500,000 per structure, and $500,000 for contents at each structure. - 3/13/2008 i' arc c ~i c 4. Since FEMA has not yet assisted the City with cost of repairs to the Fire Station #4 garage, the most economical route would be to not purchase flood until unless it become necessary to do so. 5. I recommend that you not change the effective date on the Lake Arthur Drive location. The only certainty is more premium dollars now, and more paperwork now to make the change. 6. Remember to follow the renewal instructions contained in the March 10n' letter from Donna Hill at Victor O. Schinnerer & Company. I have attached a copy of that letter for your convenience. Lisa, please let me know rf you have any questions, or if you would want my analysis in a different format. Carolyn Miller Carotyn A. Miller, CPCU Senior Consultant RWL Group 300 North Cait Rd., Suite 810 Richardson, Texas 75080-5456 Phone: 972.907.9095 Fax: 972.907.9198 CONFIDENTIALITY NOTICE: This a-mail message, including any attachments, is for the sole use of the intended reapient(s). The information contained in this message may be private and confidential, and may also be subject to the work product doctrine. Any unauthorized review, use, disclosure or distribution is prohibited. 3/13/2008 CITY OF PORT ARTHUR 2008 FLOOD COVERAGE BID Current - Deductible Higher Deductible Optio ns: $500 $5,000 $10,000 $25,000 Bldg Value BP P Value Option 1 Option 2 Option 3 Option 4 Policy # Occu anc p Y Address 04126108 Renewal $ 000 500 $ 40,000 $ 679,00 595.00 $ $ 534.00 $ 436.00 422510112350 Fire Station #8 7800 9th Avenue i $ , 000 500 $ 200,000 $24,284.00 '~ $42,214.00 $3 7,609.00 $3 0,342.0 422510112351 Fire Station #4 (Sabine Pass) ve 5030 S Gul(way Dr , 00 317 $ 281.00 $ 254.00 ` 422510112352 Vista Village Pump Station 741 50th Street $ 30,300 $ 110,300 - . $ 00 $ 205 $ 179.00 $ 162.00 " 422510112353 Golf Carl Barn 3500 75th Street $ 84,700 $ . 00 $ 419 $ 362.00 $ 323.00 $ 246,00 422510112354 Golf Course Clubhouse 3500 75th Street $ 260,000 $ - 1 . 422510112356 Foster Estates Pump House 6000 Lewis Drive $ 00 00 $ 267 $ 236.00 $ 284.00 $ 179,00 422510112361 ~ Golf Course Pump House #1 3500 75th Street $ 60,500 $ 55,1 . 422510112362 Golf Course Pump House #2 3500 75th Street $ 60,500 $ 55,100 $ 243 00 $ $ 212,00 $ 191.00 $ 150.00 422510112363 Maintenance Building 3500 75th Sireel $ 103,900 000 $ $ - 300 110 . 328.00 $ 4 771,00 $ 3, $ 3,361.00 $ 2,718.00 422510112364 Municipal Service Station 101 H.O. Mills Blvd $ 500, 000 $ , 000 105 , $ 809.00 ~ $ 708.00 $ 634.00 $ 518.00 422510112366 Water Service Center 111 H.O. Mifls Blvd $ 500, 000 500 $ , 000 250 $ 1,006.00 $ 881.00 $ 788.00 $ 641.00 422510112367 Water Warehouse 111 E Hwy 73 $ , 000 356 $ , 600 27 $ 971.00 $ 849.00 $ 761.00 $ 620.00 422510112368 Sabine Pass WNIrP 8530 S 4th Avenue $ , 000 $ , 000 500 649.00 $ 5 $ 4,920.00 $ 4,385.00 $ 3,543.00 422510112369 Municipal Garage 103 H.O. Mills Blvd $ 500, , , 00 $ 599 $ 515.00 $ 457.00 $ 344.00 422510112371 YMCA 6790 9th Avenue $ 500,000 000 500 $ $ - 000 40 . $ 679.00 $ 595.00 $ 534.00 $ 436.00 422510112374 Fire Station #5 6099 Lewis Foster Drive $ , 000 $ , 000 500 315.00 $ 1 $ 1,149.00 $ 1,027.00 $ 835.00 422510112376 Port AcresVVVVTP 2992 Hwy 365 $ 500, 000 500 $ , 000 200 , $ 4,8,51.00 $ 4,226.00 $ 3,766.00 $ 3,044.00 422510113184 Public Works Operations Center 201 H.O. Mills Blvd $ , , PLEASE NOTE: * °The current deductible for Fire Station #4 (Sabine Pass) is $50,000.; Higher Deductible does not apply. x+ "In order to obtain a common anniversary date of 04/26 for the Di~~ellin9. (policy #42251027090700 with a 09109 anniversary dale;, we v~ill need the follovaing forwarded to our office PRIOR TO 03/21/07: (1) A chact: for the annual premium for th=deductible option selected, and (2) a signed Flood Insurance CanrellalionlNullification Requ°.si Ferm !attached). We will submit the check and cancellation form. as ~:~ell as any ether required documentation, to Fidelity to cancellrewrite this polio. 'ti'e will notify you if any further dooumantation is required by Fideli'ry. Indicate Option Selected 3110/2008