HomeMy WebLinkAboutPR 15159: COMMERCIAL WINDSTORM COVERAGECITY OF PORT ARTHUR
SAFETY & RISK MANAGEMENT
MEMORANDUM
TO: Stephen B. Fitzgibbons, City Manager
FROM: Lisa Cotten, Safety & Risk Management Coordinator ~~
DATE: March 16, 2009
SUBJECT: A Resolution Authorizing the Purchase of Commercial Windstorm Coverage
COMMENTS
RECOMMENDATION:
I recornmend approval of Proposed Resolution No. 15159 which authorizes the purchase of
Commercial Windstorm coverage in the amount of $499,714 from Westchester Surplus/AnnRisc
(Lloyd's) through McGriff, Seibels & Williams of Texas, Inc., the City's current carrier. This
amount represents a 2.9% increase of $14,125 when compared to last year's annualized
premium of $485,589.
The Commercial Windstorm policy provides $20,000,000 aggregate limit per named storm ~n-ith a
$250,000 or five percent per affected unit deductible per occurrence. All other wind/hail storms
(unnamed) carry a deductible of $100,000 per occurrence. Pre-existing damage must be repaired
in order for coverage to apply to a new loss.
The coverage period is from April 1, 2009 through April 1, 2010 and will provide Commercial
Windstorm coverage for all City properties in the event of Windstorm damage (hurricane, tornado,
etc. )
BACKGROUND:
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,OOIJ per
occurrence. The total estimated value of listed City properties is $125,113,999.
In the past City Council has opted, due to cost constraints, 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 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 City advertised for bids for Windstorm coverage. Five 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 from Westchester Surplus/AmRisc (Lloyd's) through McGriff,
Seibels & Williams of Texas, Inc., which provides coverage for streetlights and all City properties
including the Water Treatment Plant.
"REMEMBER, WE ARE HERE TO SERVE THE CITIZENS OF PORT ARTHUR"
Stephen B. Fitzgibbons, City Manager
March 16, 2009
Page 2 of 2
BUDGETARY/FISCAL EFFECT:
Proposed funding is as follows:
General t_iability Insurance Fund...Account #612-1702-581.52-00 ... $499,714
STAFFING/EMPLOYEE EFFECT:
No effect on staffing levels.
SUMMARY:
I recommend approval of Proposed Resolution No. 15159 which authorizes the purchase of
Commercial Windstorm coverage in the amount of $499,714 from Westchester Surplus/AmRisc
(Lloyd':>) through McGriff, Seibels & Williams of Texas, Inc., the City's current carrier. This
amount represents a 2.9% increase of $14,125 when compared to last year's annualized
premium of $485,589.
The Commercial Windstorm policy provides $20,000,000 aggregate limit per named storm vvith a
$250,000 or five percent per affected unit deductible per occurrence. All other wind/hail sl:orms
(unnamed) carry a deductible of $100,000 per occurrence. Pre-existing damage must be repaired
in order for coverage to apply to a new loss.
The coverage period is from April 1, 2009 through April 1, 2010 and will provide Commercial
Windstorm coverage for all City properties in the event of Windstorm damage (hurricane, tornado,
etc.)
Attachment: Exhibit "A"
"REMEMBER, WE ARE HERE TO SERVE THE CITIZENS OF PORT ARTHUR"
Page ]l of 1
Mark Sokolov
From: "Carolyn Miller" <carolyn@rwlgroup.com>
To: "Mark; S" <mark@portarthur.net>
Cc: "Lisa Colten" <Icolten@portarthur.net>
Sent: Wednesday, March 18, 2009 6:37 PM
Subject: City of Port Arthur Windstorm RFP 4-1-2009/2010
Mark:
Confirrning our telephone conversation, the program recommended for the ~-1-09 renewal of the
windstorm coverage is offered by the same insurance companies that currently provide windstorm
coverage to the City. Both companies, Westchester Surplus and AmRisc, are excess and surplus (lines
carriers, not admitted by the state of Texas. As non-admitted carriers, they are not backed by the state
guaranty fund. However, they are both highly rated, and neither, to my knowledge, is under any type of
review for their financial stability. Consequently, even though these are non-admitted carriers, we are
still recommending the renewal program being offered by these companies through McGriff, Seibels &
Williams of Texas, Inc. as outlined in my email of March 13, 2009.
Please let me know if you have any other questions on this matter.
Carolyn Miller
Carolyn A. Miller, CPCU
RWL Group
300 N. Coit Road, #810
Richardson, TX 75080
Telehpone: (972) 907-9095
Fax: (972) 907-9198
3/18/2009
P.R.
No. 1 5159
3/1 E3/09
LJ C
RESOLUTION NO.
A RESOLUTION AUTHORIZING THE PURCHASE OF COMMERCIAL WINDSTORNI
COVERAGE IN AN AMOUNT NOT TO EXCEED 5499,714 PER ANNUM
PROPOSED FUNDING BY: General Liability Insurance Fund:
612-1702-581.52-00
WHEREAS, bid specifications pertaining to the insurance coverage specified bE;low
were made available to interested parties on January 20, 2009, and sealed bids for the
samE; were accepted until 3:00 p.m. on March 1 1, 2009 (at which time all bids ~rvere
opened and read aloud) in accordance with State law and the City Charter; and,
WHEREAS, two (2) bids were received back from Schinnerer Insurance Services
and IVIcGriff, Siebels & Williams of Texas, Inc; and,
WHEREAS, the bids were submitted to RWL Group, the City's consultant,. for
anal}rsis and recommendation, as described in the memo attached as Exhibit "A"; and,.
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.. in the amount of the pro~-osal
c-f 5567,212,.71 less an agreed change order for a deduction of the premium of
567,498.71 wherein the final total premium cost will not exceed $499,714 per annum.
NOV1/ THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY' OF PORT
ARTIHUR, TEx:AS:
Section 1. That the facts and opinions in the preamble are true and correct.
1
P.R. No. 15159
3/16/09 LJC
Page 2 of 2
per occurrence), with Westchester Surplus/AmRisc (Lloyd's) through McGriff, Seibels &
Williams of Texas, Inc. for a premium of $499,714 per annum, with a $100,000 per
occurrence deductible (Wind/Hail 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 hereby further authorized to executes 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 1, 2009, 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.
READ, ADOPTED, AND APPROVED this day of , A.D., 2009, at
a ~_Meeting of the City Council of the City of Port Arthur, Texas, by the following vote:
AYES: Mayor~_ ,
C;our~cilmembers
NOES:
Deloris "Bobbie" Prince, Mayor
2
ATTEST:
Terri Hanks, City Secretary
APPROVED AS TO FORM:
Mark T. Sokolov, City Attorney
APPROVED AS TO AVAILABILITY OF FUNDS:
~~~
Rebecca Underhill
Assistant City Manager/Administration
& Director of Finance
APPROVED FOR ADMINISTRATION:
Stephen B. Fitzgibbons, City Manager
3
Page 1 of 2
Lisa Colten
EXHIBIT "A"
From: "Carolyn Miller" <carolyn@rwlgroup.com>
To: "Lisa Colten" <Lcolten@portarthur.net>
Sent: Friday, March 13, 2009 12:16 PM
Subject: Windstorm RFP 4~-1-2009/2010
Lisa
Two proposals were received in response to the above captioned RFP, one from TML through its contracted agent Victor
O. Shinnerer & Company, Inc. (VOSCO), and the other from McGriff, Seibels & Williams of Texas, Inc. (McGriff), your
incumbent agent for windstorm coverage. Both proposals contain various options.
VOSCO provided quotes through Texas Windstorm Insurance Association (TWIA) subject to optional deductibles of 1%
per effected item per accurrence, 2% per effected item per occurrence, and 5% per effected item per occurrence. Each
optional dE~ductible is subject to a $1,000 minimum per item per occurrence. This minimum deductible would render no
coverage for any item .shown valued at less than $1,000 on the RFP schedule of locations. Premiums quoted are: 1) 1%
Option - $981,501; 2) 2.% Option - 940,749; 3) 5% Option - $862,077.
McGriff also presented a quote through TWIA at the 5% per effected item per occurrence ($1,000 minimum) deductible
level. The premium quoted is $860,153. There is nothing included with McGriff's quote to explain the slightly lower
premium it was able to negotiate with TWIA.
Because of the higher premiums, lack of coverage for smaller items, and less favorable deductible terms, I do rnot
consider either quote through TWIA as a viable option.
In addition, McGriff presented three options quoted through the incumbent carriers, Westchester Surplus and ,AmRisc.
These three optional quotes are based on the full RFP schedule of locations, subject to a per occurrence limit oi`
$15,000,000, $20,000,000, and .$25,000,000 respectively. The current per occurrence limit of coverage carried by the
City is $20,000,000. Each option is subject to a $100,000 deductible, except 5%of effected values ($250,000 minimum) if
damage is caused by a named storm. Premiums originally quoted are: 1) $15,000,000 - $514,757.71; 2) $20,000,000 -
$567,212.7'1; and 3) $2.5,000,000 - $607,078.51.
As you are aware, the City's 10-1-07/08 windstorm coverage was extended to expire 4-1-09 due to the fact that:
Hurricane Ike came through Port Arthur just as the coverage was to renew, and the renewal terms were withdrawn by
the company. Comparing the expiring program's coverage limit and premiums (annualized), should the' City opt to
purchase the same limit of $20,000,000 for the renewal, the $567,212.71 premium quoted represents a 23.7% increase.
This is in line with our expectations due to the impact of the hurricane season last year, capacity issues as the hurricane
season approaches, as well as the current state of the economy.
However, we requested that McGriff go back to the underwriter to determine if there was any room in the premium for
reduction. The revised premiums are based on the full RFP schedule of locations, subject to a per occurrence limit of
$15,000,000 and $20, 000,000. Each option is subject to a $100,000 deductible, except 5%of effected values ($250,000
minimum) if damage is caused by a named storm. These new premiums are: 1) $15,000,000 - $453,554; and 2)
$20,000,000 - $499,714. Comparing the annualized premium from the expiring progar~a~m 485,589) to the final)
premium presented for $20,000,000 coverage, the increase is now at approximately 9'~ if you wish to not cover your
street lights, fences, arrd other unscheduled outdoor property, which is included in the quotes at a $250,000 limit, the
premium can be reduced further as follows: 1) $15,000,000 - $408,670; 2) $20,000,000 - $450,215.
Given the Exposure the City has to catastrophic damage due to windstorm, I recommend that you maintain the
$20,000,000 coverage limit. If you cover the outdoor property, although it is not likely the coverage would repair or
replace they outside property, damage sustained to that property in a covered loss would go toward satisfying your
deductible.. Essentially, you would be spending $45-$50,000 in hopes of saving $250,000 in the event of a loss.
3;17/2009
Page 2 of 2
Please let me know if you have any questions. I look forward to receiving your instructions regarding how you want to
proceed.
Carolyn Milner
Carolyn A. Miller, CPCIJ
Senior Consultant
RWL Group
300 North (:oit Rd., Suite 810
Richardson, Texas 75080-5456
Phone: 972.907.9095 Fax: 972.907.9198
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3'17/2009