HomeMy WebLinkAboutPR 14898: WINDSTORM COVERAGECITY OF PORT ARTHUR
SAFETY ~ RISK MANAGEMENT
MEMORANDUM
TQ: 5tephen B. Fitzgibbons, City Manager `~
FROM: Lisa Cotten, Safety 8< Risk Management Coordinator C~
DATE: August 28, 2008
SUBJECT: A Resolution Authorizing the Purchase of Winds#orm Coverage
(Commercial and Residential)
COMMENTS
RECQN~M Np
f recommend approval of Proposed Resolution No. 14898 which authorizes the purchase of
Commercial Windstorm coverage in the amount of $419,540 from Westchester Surp[us/AmRisc
(Lloyd's) through McGriff, Seibels & Williams of Texas, Inc., the City's current carrier. This also
authorizes the purchase of Residential Windstorm coverage in the amount of $1,573 from Texas
Windstorm Insurance Association (TWIA) via Texas Municipal League intergovemrnental Risk Poot
(TML) through its agent, Victor O. Schinnerer & Company, inc. (VOSCO). This tota~i amount for
Windstorm coverage of $421,213 represents a decrease of $39,132.25 when compared to last
year's bid of $460,345.25.
The Commercial Windstom~ policy provides $20,000,000 aggregate limit per named storm with a
$250,000 or five percent per affected unit deductible per occurrence. All other wint~lhaii storms
(unnamed) carry a deductible of $900,000 per occurrence.
The coverage period is from October 1, 2008 through October 1, 2009, and will provide Windstorm
coverage for ail City properties in the event of Windstorm damage (hurricane, tornado, etc.)
BACKC~RC~t~,NQ:
This insurance provides Windstorm coverage for all City properties in the event of Windstorm
damage (hurricane, tornado, etc.}with an aggregate limit of $20,000,000 per ocxurren~ce. The tote{
estimated value of fisted City properties is $130,139,039.
A. Commercial Wind
in the past City Council has opted, due to cost constraints, to cover only $15,00,000 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 five percent: of the total
insurable value per affected unit subject to a minimum of $250,000 per occurrence..An unnamed
storm (alt other windthai!) carries a deductible of $100,000 per occurrence.
B. Residential Wind
This policy will provide full coverage to the two (2) caretaker homes (Pompeiian Villa and
Department Club) and the leased residence (on Lake Arthur Dr.} with a deductible of oine percent of
total insurable value per affected unit subject to a minimum of $100 per occurrence.
"REMEMBER, WE ARE HERE TO SERVE THE CITIZENS QF PORT ARTHUR"
Stephen B. Fitzgibbons, City Manager
August 28, 2~8
Page 2 of 2
The City advertised for bids for Windstam7 coverage. Eleven (11 } agencies requested and,
accordingly, received bid packets. Two responses were received back, which were .sent to RWL
Group, the City's consultant, for analysis and recommendation. Subsequent to their extensive
review of the bids, the consultant submitted its recommendation (Exhibit "A" to the Resolution) that
the City accept the Commercial bid received ftom Westchester Surplus/AmRisc (Lloyd's) through
McGriff, Seibels & Williams of Texas, Inc., which provides coverage for streetlights and ail City
properties including the Water Treatment Plant, and the Residential bid received from Texas
Windstorm Insurance Association (TWIA) via Texas Municipal League Intergovemmental Risk Pool
(TML) through its agent, Victor O. Schinnerer & Company, Inc. (VOSCO).
BUDGETARY/FI~C~AL EFFECT:
Proposed funding is as follows:
General Liability Insurance Fund,..Account#612-1702-581.52-00 ... $421,2'13
STAFFIN~MPLOYEE EFFECT:
No effect on sung levels.
SUMMARY:
I recommend approval of Proposed Resolution No. 14898 which authorizes the purchase of
Commercial Windstorm coverage in the amount of $419,640 from Westchester Suiplus/AmRisc
(Lloyd's) through McGriff, Seibels & Williams of Texas, Inc., the City's current carrier. This also
authorizes the purchase of Residential Windstorm coverage in the amount of $1,573 from Texas
Windstorm Insurance Association (TWIA) via Texas Municipal League Intergovemmental Risk Pool
(TML) through its agent, Victor O. Schinnerer ~ Company, Inc. (VOSCO). This total amount for
Windstorm coverage of $421,213 represents a decrease of $39,132.25 when compared to last
year's bid of $460,345.25.
The Commercial Windstorm policy provides $20,000,000 aggregate limit per named stomp with a
$250,Q00 or five percent per affected unit deductible per occurrence. All other wirrd/hail stomis
(unnamed) cant' a deductible of $100,00 per occurrence.
The coverage period is from October 1, 2008 through Octaber 1, 2009, and will provide Windstorm
coverage for all City properftes in the event of Windstorm damage (humcane, tomada, etc.)
Attachmen# "A" to the Resolution: RWL Group (Recommendation)
"REMEMBER, W~ ARE HERE TO SERVE THE CITIZENS OF PORT ARTHUR"
P.12. No. 14898
8/28/08 LJC
RESOLUTION NO.
A RESOLUTION AUTHORIZING THE PURCHASE OF
WINDSTORM COVERAGE (COMMERCIAL AND RESIDENTIAL)
IN THE AMOUNT of $421,213 PER ANNUM
PROPOSED FUNDING BY: General Liability Insurance Fund:
612-1702-581.52-00 $421,213
WHEREAS, bid specifications pertaining to the insurance coverage specified below were
made available to interested parties on June 24, 2008, and sealed bids for the same were accepted
until 3:00 p.m. on August 20, 2008 {at which time all bids were opened and re<~d aloud) in
accordance with State law and the City Charter; and,
WHEREAS, one bid was received back and thereby submitted to RWL Group, the City's
consultant, for analysis and recommendation, as described in the memo attached as Exhibit "A".
WHEREAS, after due consideration, RWL Group and City staff have recommended that the
City bind Commercial Windstorm coverage with Westchester Surplus/AmRisc (Lloyd's) through
McGriff, Seibels & Williams of Texas, Inc., and Residential Windstorm coverage with Texas
Windstorm Insurance Agency (TWIA) via Texas Municipal League Intergovernmental Risk Pool
(TML) via its agent, Victor 0. Schinnerer & Company, Inc. (VOSCO), in accordance with Exhibit "B"
attached hereto and hereby made a part of.
NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CIT`r' OF PORT
ARTHUR, TEXAS:
Section 1. That the facts and opinions in the preamble are true and correct.
P.R. No. 14898
8/28/08 LJC
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),
with Westchester Surplus/AmRisc (Lloyd's) through McGriff, Seibels & Williams of Texas, Inc. for a
premium of $419,640 per annum, with a $100,000 per occurrence deductible (WindlHail only) or, for
a Named Storm, a deductible of five percent of the total insurable value per affected unit subject to a
minimum of $250,000 per occurrence; and,
Section 3. That the City Manager is also hereby authorized to purchase <~n insurance
contract and bind coverage for Residential Windstorm coverage, from Texas Windstorm Insurance
Agency (TWIA) via Texas Municipal League Intergovernmental Risk Pool (TML) via its agent, Victor
O. Schinnerer & Company, Inc. (VOSCO), at a premium of $1,573 per annum with a ore percent or
$100 deductible (whichever is greater).
Section 4. 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 October 1, 2008, pending receipt of the
Contracts of Insurance.
Section 5. That a copy of the caption of this Resolution be spread upon the Minutes of
the City Council.
P. R. No. 14898
8/28/08 LJC
Page3of3
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:
Terri Hanks, Acting City Secretary
APPROVED AS O FORM:
Mark T. Sokolow, Attorney
~~~ ~
C ~ -U
APPROVED AS TO AVAILABILITY OF FUNDS:
Rebecca Underhill, Director of Finance
APPROVED FOR ADMINISTRATION:
Stephen B. Fitzgibbons, City Manager
EXHIBIT "A"
Lisa Cotten
From: "Carolyn Miller" <carolyn@rwtgroup.com>
To: "'Lisa Cotten"' <Icolten~portarthur.net>
Cc: "'Harvey L. Robinson"' <hlrobinson~portarthur.net>
Sent: Tuesday, August 26, 2008 8:27 AM
Attach: Wind Opfions for 10-1-08.pdf
Subject: Wind Renewal Options far 10-1-2008
Lisa
Once again McGriff was the only agent to offer a proposal in response to the October 1, 2008 Windstorim Coverage
Renewal RFP. Attached is the summary page for the options contained in the RFP. Also attached is the underwriters'
response to our request for additional options at lower limits of coverage.
For the 10-1-07/08 policy term, the City is carrying a $20,000,000 per occurrence limit (which covers all City properties),
subject to a $100,000 deductible for all losses other than those sustained from a Named Storm, and 5% deductible for
damages caused by a named storm, subject to a $250,000 minimum. Cost of the coverage for 2007/2008, including all
taxes and fees, is $460,481.25.
TWIA offered a quote; however, I do not feel it is a viable quote. Although the deductible is only 1% of the values of the
effected structures, the policy does not include coverage for aNl City properties. At a premium of $955,~i84 I do not feel
it is a viable proposal.
The remaining options are all per occurrence limits, covering all City properties that were listed in the underlying
schedule included in the RFP. Alt would be written on a quota share basis, meaning that no one insurance company
would be writing the full limit of coverage, and that the limits and losses would be shared proportionately by the
participating insurance companies. Each option, including the additional alternatives we requested, is addressed below.
Option lA:
This option would provide $30,000,000 per occurrence, subject to a $100,000 deductible for other thane Named Storm,
and a 5% deductible for damage caused by a named storm, subject to a $250,000 minimum. The cost of this option
would be $442,720.20
Option 16:
This option would provide $50,000,000 per occurrence, subject to a $100,000 deductible for other than Named Storm,
and a 54~o deductible for damage caused by a named storm, subject to a $250,000 minimum. The cost c-f this option
would be $626,312.70
Option 1C: (Received in response to our request for additionaN options)
This option would provide $20,000,000 per occurrence, subject to a $100,000 deductible for other than Named Storm,
and a 5% deductible for damage caused by a named storm, subject to a $250,000 minimum. The cost of this option
would be $419,640.
Optjon iD: (Received in response to our request for additional options)
This option would provide $25,000,000 per occurrence, subject to a $100,000 deductible for other than Named Storm,
and a 59~o deductible far damage caused by a named storm, subject to a $250,000 minimum. The cost of this option
8/28/2008
would be $432,230. EXHIBIT "A" {continued)
Option 2•
This option would provide $30,000,000 per occurrence, subject to a $100,000 deductible for other than Named Storm,
and a 3% deductible for damage caused by a named storm, subject to a $250,000 minimum. The cost o~F this option
would be $538,712.86
Although Victor O. Shinnerer did not submit a proposal in direct response to the RFP, they have provided various quotes
outside of the RFP to cover the residential properties. Currently the City has coverage for three residential locations; the
caretaker's house located at 3542 9th Avenue and its contents are not currently covered. In addition, one location, 3510
Lake Arthur Drive, is currently insured for $135,000, and the TML insurable value is $150,000. There are four renewal
quotes. The first quote is renewing as per expiring, at a cost of $1,474; the City paid $1,362 last year. The second quote
is to insure the existing three locations, but increase the value of the Lake Arthur Drive residence to $150,000 at a cost
of $1,573. The third quote is to insure all residential locations, keeping the Lake Arthur Drive value at $135,000 for a
cost of $1,971. The last quote is to insure all residential locations, and increasing the Lake Arthur Drive value to
$150,000, at a cost of $2,070.
As previously discussed, I do not feel the City needs the higher limits of $30,000,000 or $50,000,000. In the loss
sustained during Rita, the City's damages were approximately $8,000,000. Given the severity of Rita, and the amount of
loss caused by Rita, l feel the current level of coverage, $20,000,000, is sufficient to address the City's needs. As such, I
would recommend that you accept the $20,000,000 option (Option iC) for everything except the residential properties.
It is not in the City's best interests to insure the residential properties on the commercial policy due to i:he high
deductible. Therefore, I recommend that the City continue the coverage on the residential properties through TWIA as
currently handled by Victor O. Shinnerer. I believe that the premium is small enough that it is not necessary for the City
to issue a separate RFP to address the residential coverage. At a minimum, I recommend that the City 1:ake option two
on the residential coverage. If the Lake Arthur Drive location is not insured to value, in the event of a loss the City could
be faced with a coinsurance penalty. From that point, you need to decide whether or not you want to spend another
$500 to insure the caretaker's house and its contents against wind. One thing to consider is even if you would not
rebuild/repair that dwelling in the event of windstorm damage, you would be able to collect the actual cash value of the
loss, which would help offset the cost of demolition and debris removal. Keep in mind that for losses other than
windstorm, these properties are all covered under your TML program.
After you have had the opportunity to consider your options, please give me a call so we can discuss how the City wants
to proceed.
Carolyn Miller
Carolyn A. Miller, CPGU
Senior Consultant
RWL Group
300 North Coit Rd., Suite 810
Richardson, Texas 75080-5456
Phone: 972.907.9095 Fax: 972.907.9198
8/28/2008
_.-
O ion 1A - $30m Limit with 5°k Deductible
. ~-
Llo d's i Princeton Excess $15rn art of $30m Limit $222 409.20
Westchester Sur ius $15m rt of $30m Limit $220.311.00
Total Premlum $442 720.2fl
O tion 1 B - $50m Limit with 5% Deductible
Lla d's /Princeton Excess $15m art of $30m Limit $222,409.20
Westchester Sur lus $15m Part of $30m Limit $220 311.00
Arch $20m excess of $30m Limit $183,592.50
Total Premlum $626 312.70
O tion 2 - $30m L€mit with 3% Deductible
Llo d's /Princeton Excess $15m art of $30m Limit $270 405.53
Westchester Su lus $15m Part of $30m Limit $268,307.33
Tota€ Premium $538,712.86
O tion 3 - Texas W indstorm Insurance $955,584.00
Total Premium
* Add€t€onal ca city can be obtained subject to ful€ martcet assignment.
(i:lneNerasSCiry o(Pa1 RriFwr120UBWropossWlOB-20 RFP Responsa.PrapeaY.ac.doc
a+ s
PREMIUM SUMMARY EXHIBIT "A" (continued)
EXHIBIT "A" (continued)
Carol~rn N]'sNer
From: Olga Saenz (OSaenz~McGriff.com]
Sent: Monday, August 26, 2t?08 2:36 PM
To; Carolyn Miller; Lisa Gotten
Cc: Joe Blasi
Subject: City of Port Arthur
fmpartance: High
Carolyn,
Per the underwriter, additional options are as 1'aflows:
• $20m Loss Limit with 5% per accurrence deductible
o $348,000 Premium
~ $ 2,000 Inspection Fee
o $ 19,64D Surplus Lines Taxes & Fees
Q $419,640 Total Premium
• ~25m Loss Limit with 5% per occurrence deductible
o $414,000 Premium
o $ 2,400 Inspection Fee
a $ 20,230 Surplus Lines Taxes $~ Fees
o $432,230 Total Premium
All other terms & conditions remain as quoted. Please call me should you have any further
questions.
C)I~~u co,_>5_
Assistant Vice President
McGriff, Seibels & Williams of Yexas, Inc
10375 Richmond Avenue, Suite 1700
Houston, TX 770$4
Direct: 713-102-1475
Ceti: 713-213-6930
EXI-IIBIT "B"
This insurance provides Windstorm coverage for all City properties in the eve:~rt 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 $130,139,039.
A. Commercial Wind
This policy will provide coverage of $20,000,000 per occurrence. A named storm carries a
deductible of five percent of the total insurable value per affected unit subject to a minimum
of $250,000 per occurrence. An unnamed storm (all other wind/hail) carries a deductible of
$100,000 per occurrence. The cost for this coverage is $419,640.
B. Residential Wind
This policy will provide full coverage to the two (2) caretaker homes (Pompeiian Villa and
Department Club) and the teased residence (on Lake Arthur Dr.) with a deductible of one
percent of total insurable value per affected unit subject to a minimum of $100 per
occurrence. The cost far this coverage is $1,573.