HomeMy WebLinkAboutPR 23717: PURCHASE OF WINDSTORM COVERAGE RENEWAL FROM USI - EFFECTIVE MAY 1, 2024 City of "
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INTEROFFICE MEMORANDUM
Office of Safety & Risk Management
Date: April 10, 2024
To: Ronald Burton, CPM, City Manager
From: Trameka A. Williams, Director of Human Resou L s jJ
RE: A Resolution Authorizing the Purchase of Windstorm Coverage Renewal from USI —
Effective May 1, 2024
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, 2024, to
May 1, 2025, is $1,867,754.20. This amount represents an approximate 1.11% increase when
compared to last year's annualized premium of$20,524.39.
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.
The recommendation from RWL Group is to allow USI to be given the authority to approach all
available markets to secure a better option for the renewal wind coverage. Approving Proposed
Resolution is recommended with the intent of the broker to secure a lower offer between now
and May 1, 2023.
StaffAnalvsis, Considerations: The City advertised for bids for Windstorm coverage. Two
responses were received and were 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
"Remember we are here to serve the Citizens of Port Arthur."
Lloyd's of London and RSUI, RLI, 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.
Recommendation: I recommend approval of Proposed Resolution No. 23717 authorizing the
purchase of Commercial Windstorm Insurance (limit of $20,000,000 per occurrence) with a
projected budgetary impact of $1,867,754.20, underwritten on a quota share basis by certain
Underwriters at Lloyd's of London and RSUI, RLI, Starr and Sompo Endurance from USI
Southwest, Inc. This amount represents an approximate 1.11% increase when compared to last
year's annualized premium of$1,847,229.83.
The damage sustained during previous storms were less than the $20,000,000 limit carried. The
proposed $20,000,000 limit is recommended as sufficient for coverage.
Budjiet Considerations: General Liability Insurance Fund #612-11-025-5410-00-00-000,
$1,867,754.20.
"Remember we are here to serve the Citizens of Port Arthur."
P.R. No. 23717
04/1 1 //24 TAW
RESOLUTION NO.
A RESOLUTION AUTHORIZING THE PURCHASE OF COMMERCIAL WINDSTORM
COVERAGE IN AN AMOUNT NOT TO EXCEED $1,867,754.20 PER ANNUM
PROPOSED FUNDING BY: GENERAL LIABILITY INSURANCE FUND
612-11-025-5410-00-00-000, $1,867,754.20 CONTINGENT UPON APPROVAL OF
BUDGET AMENDMENT VIA ADOPTION OF PROPOSED ORDINANCE NO. 7242
WHEREAS, bid specifications pertaining to the insurance coverage specified below
were made available to interested parties on January 15, 2024, and sealed bids for the
same were accepted until 3:00 p.m. on March 27, 2024 (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 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 RLI each 25% and
RSUI with 50% (Primary $15,000,000), Lloyd's of London (Excess of Primary 33% of
$15,000,000), Starr (Excess of Primary 33% of $15,000,000), Sompo Endurance
(Excess of Primary 25% of $15,000,000) and RLI (Excess Primary 8.333% of
$15,000,000) from USI Southwest, Inc. with a projected budgetary impact of
$1 ,867,754.20 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
RLI each 25% and RSUI with 50% (Primary $15,000,000), Lloyd's of London (Excess of
Primary 33% of $15,000,000), Starr (Excess of Primary 33% of $15,000,000), Sompo
Endurance (Excess of Primary 25% of $15,000,000) and RLI (Excess Primary 8.333% of
$15,000,000) from USI Southwest, Inc. with a projected budgetary impact of
$1,867,754.20 per annum, with a deductible of three (3%) 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,
2024, 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, 2024, at a
Meeting of the City Council of the City of Port Arthur, Texas, by the following
vote: AYES: Mayor , Councilmembers
NOES:
Thurman "Bill" Bartle, Mayor
ATTEST:
Sherri Bellard, City Secretary
APPROVED AS TO THE AVAILABILITY OF FUNDS:
Lynda Boswell, Director of Finance
APPROVED AS TO FORM:
IY
James ack, Interim City�Attorney
APPROVED FOR ADMINISTRATION:
Ronald Burton, CPM City Manager
Attachment "A"
UU RWI.1 GROUP Independent Risk Management and Insurance Consulting, LLC
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: carolvnCu�rwlgrou1.com
Internet: www.rwlgroun.com
CITY OF PORT ARTHUR
2024 WINDSTOR RFP RESPONSE ANALYSIS AND RECOMMENDATION
April 10, 2024
RWL Group conducted an RFP for the City of Port Arthur for Windstorm coverage to be effective from May 1, 2024,to
May 1, 2025. Markets were assigned to three agents,two of whom provided a response to the RFP, USI Southwest, Inc.
(USI),the incumbent agent, and McGriff Insurance Services, LLC(McGriff).All carriers offering to provide coverage meet
our A.M. Best financial rating requirements.The limit of coverage offered was$20,000,000 per occurrence in both
proposals.
Virtual meetings were conducted with both submitting agents, and both were given an opportunity to improve upon
their offering, either with additional coverage enhancements,or reduced premium,or both. The attached spreadsheet
reflects a side-by-side comparison of each final offering, as well as a summary of the coverage for May 1, 2023/2024.
Both responses offer essentially the same coverages, conditions,and terms with some major exceptions. First,the USI
offering continues to cap the named storm deductible at$1,000,000.The McGriff offering caps the same loss deductible
at $5,000,000. Second,the USI offering has a 1%deductible on flood damages.The McGriff offering has the flood
deductible at$100,000 except maximum NFIP coverage for properties located in SFHA zones and 3% minimum $100,000
maximum $5,000,000 for flood caused by a named storm.
The USI premium is$1,867,754.20 and the McGriff premium is$2,066,993.81. Both offerings reflect a reduction in the
rate per$100 of value, 13%for the McGriff offering and 26%for the USI offering. Although the premium for each
offering is higher than last year,there was a 20% increase in the total insured values this year over last year.
Consequently,the additional premium is solely due to the increased values.
I recommend that the City accept the best and final offering from USI. Not only are the overall terms more beneficial to
the City, but the USI offering also has the lowest premium associated with the coverages.
Please let me know if you have any questions.
Respectfully submitted,
(7144,t„ A.L(///u
Carolyn A. Miller, CPCU
President/Senior Consultant
Attachment: Comparison Spreadsheet
4 CRC
Placement Update
City of Port Arthur
Stamping EMPA
Company Participation Limit Policy R Premium Fees Total SLTax Fee Fee Total wRax/Fees
All Risk Including Wind/Hail
RLI $2,500.000 Panof$5,000,000 Per Occurrence 460,000.00 1,00000 461,000.00 22.358.50 184.40 483.54290
RSUI $2,500,000 Part of$5,000,000 Per Occurrence 481,162.00 - 481,162.00 23,33636 19246 504,690,82
Sompo $5,000,000 Part of$15,000,000 Per Occurrence xs$5,000,000 Per Occurrence 263.334.00 - 263,334,00 12.771,70 105.33 276,211.03
Starr $5,000,000 Pane$15000,000 Per Occurrence xs$5,000000 Per Occurrence 273,783.00 - 273,783.00 13,278,48 10951 287,170.99
RSUI $1,500,000 Part of$15,000,000 Per Occurrence xs$5,000000 Per Occurrence 75,000,00 - 75,000.00 3,637.50 30.00 78,667.50
RLI $1,500,000 Part of$15,000,000 Per Occurrence xs$5,000,000 Per Occurrence 92,500.00 500.00 93,000.00 4,510.50 37.20 97,54770
Lloyds of London $2,000,000 Part of$15,000.000 Per Occurrence xs$5,000,000 Per Occurrence 133,400.00 - 133.400.00 6.469.90 53.36 139,923.26
Total 20,000,000 $1,779,179.00 $ 1,867,754.20
TIV $ 318,848,649
CITY OF PORT ARTHUR 2024 WIND RFP BEST AND FINAL PROPOSAL COMPARISON
USI Southwest,Inc. McGriff Insurance Services,LLC
Proposed Renewal Coverage May 1,2024/2025 Proposed Renewal Coverage May 1,2024/2025
Current Coverage May 1.2023/2024 Option 1 Option 1
National Fire&Marine(Berkshire Hathaway),Ci
Landmark American,Lloyds of London,Mt. Coleman(Lloyds),Westchster(Chubb),Velocity
Hawley,endurance American,Starr Suplus, (Lloyd's),Risksmith(Sutton Specialty)and
Carriers Natonal fire&Marine RLI,RSUI,Sompo,Starr,Lloyd's of London. Princeton(Munich Re).
Total Limit $ 20,000,000.00 $ 20,000,000.00 $20,000,000
Premium $ 1,847,229.83 $ 1,867,754.20 $2,066,993.81
Coverages 101.11%
Limit subject to underlying schedule of Limit subject to underlying schedule of Limit subject to underlying schedule of
$252,158,732;Replacement cost;No $318,556,649;Replacement cost;No $318,854,769;Replacement cost;No
coinsurance;No exclusion for signal lights and 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 poles,street lights and poles,decorative lighting
lighting or fences and no separate deductible; or fences and no separate deductible;$1,000,000 or fences and no separate deductible;$1,000,00
Ordinance or Law coverage A$5,000,000, BI/EE;Ordinance or Law coverage A included in Extra Expense;Ordinance or Law coverage A
coverage B&C$1,000,000;$5,000,000 flood limit,coverage B&C$1,000,000;$5,000,000 included in limit,coverage B&C$1,000,000;
coverage excess of TML and NFIP except flood coverage excess of TM and NFIP except $2,500,000 flood coverage excess of TM and
$2,500,000 excess of SFHA Zones; 3% $2,500,000 excess of SFHA Zones;storm surge is NFIPincluding$2,500,000 excess of SFHA Zones;
minimum$25,000 named storm deductible included. No coverage for buildings with pre- storm surge is included. No coverage for
with a maximum$1,000,000;wind other than existing damage. 3%minimum $25,000 named buildings with pre-existing damage. 3%
named storm subject to$25,000 deductible. storm deductible with a maximum$1,000,000; minimum$25,000 named storm deductible
wind other than named storm subject to$25,000 with a maximum$5,000,000,wind other than
deductible;1%deductible on flood. named storm subject to$100,000 deductible;
$100,000 deductible on flood,maximum
$5,000,000 except$500,000 per building,
$500,000 contents per building for SFHA flood
zones.
USI and McGriff
I