HomeMy WebLinkAboutPR 21780: PURCHASE OF WINDSTRORM COVERAGE RENEWAL FROM USI 'serve
City of
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INTEROFFICE MEMORANDUM
Office of Safety & Risk Management
Date: April 6, 2021
To: Ronald Burton, City Manager
From: Trameka A. Williams, Director of Human Res&C<CU
RE: A Resolution Authorizing the Purchase of Windstorm Coverage Renewal from USI —
Effective May 1, 2021
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
$202,768,678. The annual renewal amount for the coverage for the period of May 1, 2021 to
May 1, 2022 is $905,933.99. This amount represents an approximate increase in the amount of
$204,542.38 when compared to last year's annualized premium of$701,391.61.
In the past, City Council has opted, due to cost restraints, 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 $25,000 ininimum/$1,000,000 maximum
per named storm, or a $25,000 per occurrence deductible (wind/hail) for a non-named storm.
Staff Analysis, Considerations: The City advertised for bids for Windstorm coverage. Two
agencies requested and received bid packets. Two responses were 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 and RSUI, Starr and Sompo
Endurance for $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."
Recommendation: I recommend approval of Proposed Resolution No. 21780 authorizing the
purchase of Commercial Windstorm Insurance (limit of $20,000,000 per occurrence) with a
projected budgetary impact of $905,933.99, underwritten on a quota share basis by certain
Underwriters at Lloyd's of London and RSUI, Starr and Sompo Endurance from USI Southwest,
Inc. This amount represents an approximate $204,542.38 increase when compared to last year's
annualized premium of$701,391.61. This is fair and reasonable.
The damages sustained during Tropical Storm/Hurricane Harvey, Hurricanes Delta and Laura
were less than the $20,000,000 limit carried. The proposed $20,000,000 limit is recommended as
sufficient for coverage.
Budget Considerations: General Liability Insurance Fund #612-11-025-5410-00-00-000,
$905,933.99.
"Remember we are here to serve the Citizens of Port Arthur."
P.R. No. 21780
04/01//21 TAW
RESOLUTION NO.
A RESOLUTION AUTHORIZING THE PURCHASE OF COMMERCIAL WINDSTORM
COVERAGE IN AN AMOUNT NOT TO EXCEED $905,933.99 PER ANNUM
PROPOSED FUNDING BY: General Liability Insurance Fund
612-11-025-5410-00-00-000, $905,933.99
WHEREAS, bid specifications pertaining to the insurance coverage specified
below were made available to interested parties on December 23, 2020, and sealed
bids for the same were accepted until 3:00 p.m. on February 24, 2021 (at which time all
bids were opened and read aloud) in accordance with State law and the City Charter;
and,
WHEREAS, two (2) bids were received back and subsequently reviewed, as
shown in Attachment "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 Lloyd's of London and RSUI each 50%
(Primary $5,000,000), Sompo Endurance (Excess of Primary 33.33% of $15,000,000) and
Sompo Endurance (Excess of Primary 66.67% of $5,000,000) from USI Southwest, Inc.
with a projected budgetary impact of $905,933.99 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.
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 Lloyd's of London and
RSUI each 50% (Primary $5,000,000), Sompo Endurance (Excess of Primary 33.33% of
$1 5,000,000) and Sompo Endurance (Excess of Primary 66.67% of $5,000,000) from
USI Southwest, Inc. with a projected budgetary impact of $905,933.99 per annum,
with a deductible of three percent of the total insurable value per unit of insurance,
subject to a $25,000 minimum/$1 ,000,000 maximum per named storm, or a $25,000
per occurrence deductible (wind/hail only) for a non-named storm. This resolution is
contingent on passing of P.R. 6954.
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 ,
2021, 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, 2021, at a
Meeting of the City Council of the City of Port Arthur, Texas, by the following
vote: AYES: Mayor , Councilmembers
NOES:
Thurman "Bill" Bartie, Mayor
ATTEST:
Sherri Bellard, City Secretary
APPROVED AS TO THE AVAILABILITY OF FUNDS:
Gv\ �r
Kandy Daniel Interim Director of Finance
APPROVED AS TO FORM:
UkrAft-e t b °a
al Tizeno CityAttorney
Y
APPROVED FOR ADMINISTRATION:
Ronald Burton, City Manager
Attachment "A"
RWL GR OUP 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
E-mail: carolvnArw aroup.com
Internet: www.rwlgroup.com
2021 WINDSTORM RFP RESPONSE ANALYSIS AND RCOMMENDATION
MARCH 15, 2021
Currently,the City's wind coverage is$20,000,000 per occurrence subject to a 3% per occurrence deductible, minimum
$25,000, maximum $1,000,000 for named storm wind, and $25,000 deductible for all other wind losses. The premium at
inception for this coverage was$700,390.96. Although six agents requested markets assignments,only two agents,the
incumbent USI and HCDT provided a response to the 2021 Wind RFP.
Broker interviews were held via telephone conference with each of the two responders, and each was asked to submit a
best and final offer. Unfortunately, due to the losses the City has experienced in recent years, as well as the current
market conditions, neither agent was able to offer any reduction in premium or enhancement of the terms and
conditions originally offered. Attached is my spreadsheet which details each broker's proposals and options.
USI offered the best options for coverage and cost. The HCDT offers through AmRisc had more restrictive coverage,
higher deductibles, included no flood coverage, and had higher premiums. The cost of the USI offering for the same
coverage a expiring is$905,933.99,which represents a 29.35% increase over the expiring premium. The remaining three
options offered by USI through current carriers were for a lower deductible (2% rather than 3%)or higher limit
($30,000,000 rather than $20,000,000). USI also provided a quote through another carrier group,Chronos, but there
was no flood included no coverage on buildings with existing damage,and no limit to the 3%deductible. The cost of
those three options are$1,027,331.55,$1,053,587.55 and $1,116,554.00 respectively.
Considering the limits and coverages offered, I feel either the$20,000,000 loss limit with the 3% minimum $25,000
maximum $1,000,000 deductible, or the$20,000,000 loss limit with the 2% minimum $25,000 maximum $1,000,000
deductible would best serve the City's needs. Although the 2% deductible is over$120,000 more in premium,there is a
potential cost of over$2,000,000 for the additional percentage deductible with a 3%deductible.
Please let me know if you have any questions.
Sincerely yours,
&A2+, (f:A;&
Carolyn A. Miller, CPCU
Senior Consultant
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