HomeMy WebLinkAboutPR 22490: PURCHASE OF WINDSTORM COVERAGE RENEWAL FROM USI - EFFECTIVE MAY 1, 2022 :_
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INTEROFFICE MEMORANDUM
Office of Safety & Risk Management
Date: April 14, 2022
To: Ronald Burton, City Manager
From: Trameka A. Williams, Director of Human Resourc U\I
RE: A Resolution Authorizing the Purchase of Windstorm Coverage Renewal from USI —
Effective May 1, 2022
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
$209,025,021. The annual renewal amount for the coverage for the period of May 1, 2022, to
May 1, 2022, is $1,054,598.46. This amount represents an approximate increase in the amount of
$148,664.47 when compared to last year's annualized premium of$905,933.99.
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 minimum/$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. One response was 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. 22490 authorizing the
purchase of Commercial Windstorm Insurance (limit of $20,000,000 per occurrence) with a
projected budgetary impact of $1,054,548.46, 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 $148,664.47 increase when compared to last year's
annualized premium of$905,933.99. This is fair and reasonable.
The damages sustained during Hurricanes Delta and Laura and Tropical Storm Nicholas 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,
$1,054,598.46.
"Remember we are here to serve the Citizens of Port Arthur."
P.R. No. 22490
04/14/22 TAW
RESOLUTION NO.
A RESOLUTION AUTHORIZING THE PURCHASE OF COMMERCIAL WINDSTORM
COVERAGE IN AN AMOUNT NOT TO EXCEED $1,054,548.46 PER ANNUM
PROPOSED FUNDING BY: General Liability Insurance Fund
612-11-025-5410-00-00-000, $1,054,548.46
WHEREAS, bid specifications pertaining to the insurance coverage specified
below were made available to interested parties on January 26, 2022, and sealed bids
for the same were accepted until 3:00 p.m. on March 3, 2022 (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 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 RSUI 50% (Primary $5,000,000), Lloyd's
of London (33.33% of Primary $5,000,000), RLI (16.67% of $20,000,000), Starr (50% of
$15,000,000 in excess of $5,000,000) and Sompo (33.33% of $15,000,000 in excess of
$5,000,000) from USI Southwest, Inc. with a projected budgetary impact of
$1,054,548.46 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 RSUI 50% (Primary
$5,000,000), Lloyd's of London (33.33% of Primary $5,000,000), RLI (16.67% of
$20,000,000), Starr (50% of $15,000,000 in excess of $5,000,000) and Sompo (33.33% of
$15,000,000 in excess of$5,000,000) from USI Southwest, Inc. with a projected
budgetary impact of $1,054,548.46 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.
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,
2022, 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, 2022, 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:
Kandy Daniel, Intm Director of Finance
APPROVED AS TO FORM:
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Val Tizeno, City Attorney
APPROVED FOR ADMINISTRATION:
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Ronald Burton, City Manager Trameka Williams, Dir. of Human Resources
Attachment "A"
RI ?L GROUP 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: carolvn(dlrwlgrouo.com
Internet: www.rwloroup.com
2022 WINDSTORM RFP RESPONSE ANALYSIS AND RCOMMENDATION
APRIL 6, 2022
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$1,116,554. Although three agents requested markets assignments,only one agent,the
incumbent USI provided a response to the 2022 Wind RFP.
A Broker interview was held via telephone conference with USI, and USI 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, USI
was not able to offer any reduction in premium or enhancement of the terms and conditions originally offered.
Attached is my spreadsheet which details USI's proposal.
The proposal is essentially the same coverage as the expiring program: $20,000,000 loss limit subject to a 3% minimum
$25,000 maximum $1,000,000 deductible for named storm damage, $25,000 for all other wind damage. Flood
coverage, including storm surge, is $5,000,000 subject to the following deductibles: SFHA Flood the maximum NFIP
coverage available whether purchased or not, plus $2,500,00 SFHA locations, plus 1%of TIV of affected locations;
$5,000,000 all other flood plus 1%of affected locations per unit. TML coverage is primary except any NFIP coverage
whether purchased or not is primary before TML.
I am recommending the City renew the wind coverage as presented. Even though only one option has been offered,the
increase in premium is only a little over 16%,which is well within what the market as a whole is experiencing for wind
coverage in Tier I locations.
Please let me know if you have any questions.
Sincerely yours,
Carolyn A. Miller, CPCU
Senior Consultant
CITY OF PORT ARTHUR 2022 WIND RFP BEST AND FINAL PROPOSAL COMPARISON
USI Southwest,Inc.
Current Coverage May 1,2021/2022 Proposed Renewal Coverage May 1,2022/2023
Lloyd's of London and RSUI each 50%- RSUI 50%-Primary$5M;Lloyd's of London
Primary$5M;Sompo Endurance 33.33%of 33.33%of Primary$5M;RLI 16.67%of$20M;
$15M Excess of$5M;Starr 66.67%of$15M Starr 50%of$15M excess of$SM;Sompo
Carrier Excess of$5M; 33.33%of$15M excess of$5M
Total Limit $ 20,000,000.00 $ 20,000,000.00
Premium $ 905,933.99 $ 1,054,598.46
Coverages 116.41%
Limit subject to underlying schedule of Limit subject to underlying schedule of
$209,025,021;Replacement cost;No $209,025,021;Replacement cost;No
coinsurance;No exclusion for signal lights and coinsurance;No exclusion for signal lights and
poles,street lights and poles,decorative poles,street lights and poles,decorative lighting
(lighting or fences and no separate deductible; or fences and no separate deductible;$1,000,000
$1,000,000 BI/EE; Ordinance or Law EE; Ordinance or Law coverage A included in
coverage A included in limit,coverage B&C limit,coverage B&C$1,000,000;$5,000,000
$1,000,000;$5,000,000 flood coverage flood coverage including SFHA locations subject
excess of TML;storm surge is included. No to$5,000,000 annual aggregate;storm surge is
coverage for buildings with preexisting included. No coverage for buildings with pre-
damage. 3%minimum $25,000 named existing damage. DEDUCTIBLES: 3%minimum
storm deductible with a maximum $25,000 named storm deductible with a
$1,000,000;wind other than named storm maximum$1,000,000;wind other than named
subject to$25,000 deductible. storm subject to$25,000 deductible;SFHA Flood
the maximum NFIP coverage available whether
purchased or not,plus $2,500,00 SFHA locations,
plus 1%of TIV of affected locations;$5,000,000
all other flood plus 1%of affected locations per
unit. TML coverage is primary except any NFIP
coverage whether purchased or not is primary
before TML.
USI