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Home My WebLink AboutPR 24271: PURCHASE OF WINDSTORM COVERAGE RENEWAL FROM USI, EFFECTIVE MAY 1, 2025 4 -_-,_._ -Feserso ''"Wr City of Po'` r Itiart rthur- Texas INTEROFFICE MEMORANDUM Office of Safety & Risk Management Date: April 11, 2025 To: Ronald Burton, CPM, City Manager From: Trameka A. Williams, Director of Human Resources RE: A Resolution Authorizing the Purchase of Windstorm Coverage Renewal from USI — Effective May 1, 2025 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 $25,000,000 per occurrence. The total estimated value of listed City properties is $332,259,415. The annual renewal amount for the coverage for the period of May 1, 2025, to May 1, 2026, is $1,840,460. This amount represents an approximate decrease in the amount of $27,294.20 when compared to last year's annualized premium of$1,867,754.20. In the past, the 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$25,000,000 per occurrence. In the past, a named storm carried 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. However, this renewal would allow the City to buy down the deductible from three (3) percent with a maximum $1,000,000 to a flat amount of$100,000 representing an approximate 1.5 % reduction in premium when compared to last year, with a much lower deductible and an increase in total insured value. 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 of wind coverage. Approving the Proposed Resolution is recommended as this is the best and final offer. "Remember we are here to serve the Citizens of Port Arthur." Staff Analysis, Considerations: The City advertised bids for Windstorm coverage. One response was received 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 RLI, Ironshare, Berkshire Hathaway, RSUI, Starr, Sompo and WRB Specialty for $25,000,000.00 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. 24271 authorizing the purchase of Commercial Windstorm Insurance (limit of$25,000,000.00 per occurrence) with a projected budgetary impact of $1,840,460.00, underwritten on a quota share basis RLI, Ironshare, Berkshire Hathaway, RSUI Starr, Sompo and WRB Specialty for $25,000,000.00 limit per occurrence, with USI Southwest, Inc., which provides coverage on all City properties, including streetlights and the Water Treatment Plant. This amount represents an approximate decrease in the amount of$27,294.20 when compared to last year's annualized premium of$1,867,754.20. The proposed$25,000,000 limit is recommended as sufficient for coverage. Buduiet Considerations: General Liability Insurance Fund #612-11-025-5410-00-00-000, $1,840,460.00, pending budget amendment PO 7329. "Remember we are here to serve the Citizens of Port Arthur." P.R. No. 24271 04/11//25 TAW RESOLUTION NO. A RESOLUTION AUTHORIZING THE PURCHASE OF COMMERCIAL WINDSTORM COVERAGE IN AN AMOUNT NOT TO EXCEED $1,840,460 PER ANNUM PROPOSED FUNDING BY: General Liability Insurance Fund 612-11-025-5410-00-00-000, $1,840,460.00, Pending Budget Amendment Proposed Ordinance #7329 WHEREAS, bid specifications pertaining to the insurance coverage specified below were made available to interested parties on January 11, 2025, and sealed bids for the same were accepted until 3:00 p.m. on March 26, 2025 (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 $25,000,000 per occurrence) underwritten on a quota share basis by RLI, Ironshare and Berkshire Hathaway (Primary $5,000,000 per occurrence), RSUI (Excess of Primary of $15,000,000), Starr (Excess of Primary of $15,000,000), Sompo Endurance (Excess of Primary of $15,000,000) and WRB Specialty (Excess Primary of $5,000,000) from USI Southwest, Inc. with a projected budgetary impact of $1,840,460 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 $25,000,000 per occurrence) underwritten on a quota share RLI, Ironshare and Berkshire Hathaway (Primary $5,000,000 per occurrence), RSUI (Excess of Primary of $15,000,000), Starr (Excess of Primary of $15,000,000), Sompo Endurance (Excess of Primary of $15,000,000) and WRB Specialty (Excess Primary of $5,000,000) from USI Southwest, Inc. with a projected budgetary impact of $1,840,460 per annum with a deductible of three (3%) percent of the total insurable value per unit of insurance, subject to a flat deductible of $100,000 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, 2025, 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, 2025, 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: 622-1Ceze Lynda Boswell, Director of Finance APPROVED AS TO FORM: Roxann Pais Cotroneo, City Attorney APPROVED FO' ,R ► INISTRATION: 404\ pow— SV Ronald Burton ' , ity Manager Attachment "A" • RWI.. 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: carolyn(a�rwlgroup.com Internet: www.rwlgroup.com CITY OF PORT ARTHUR 2025 WINDSTOR RFP RESPONSE ANALYSIS AND RECOMMENDATION April 11, 2025 RWL Group conducted an RFP for the City of Port Arthur for Windstorm coverage to be effective from May 1, 2025,to May 1, 2026. Markets were assigned to two agents, but only the incumbent agent, USI Southwest, Inc. (USI), provided a response to the RFP. All carriers offering to provide coverage meet our A.M. Best financial rating requirements.Three optional limits of coverage are offered,$20,000,000 per occurrence, $25,000,000 per occurrence, and$30,000,000 per occurrence. A virtual meeting was conducted with USI, and they were given the 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, 2024/2025. This year,for the first time in several years,there are options to buy down the deductible from the$1,000,000 per occurrence maximum to either a$250,000 per occurrence maximum or a $100,000 per occurrence maximum. In addition,the best and final offer includes a further reduction in premium for each of the three offered coverage limits. As the attached spreadsheet shows,the largest premium saving over last year is found in Option 1 at the$1,000,000 maximum deductible option. However,when looking at the total potential out of pocket for any one loss,the least costly option in the event of a loss is Option 1 at the$100,000 maximum deductible. The City has purchased the$20,000,000 loss limit for several years, largely because of the cost of higher limits. This year the City can actually purchase higher limits with lower deductibles and still save over what was paid last year for the wind coverage. Given that, I recommend the City consider increasing the limit of coverage to$25,000,000 at the $100,000 maximum deductible at a total premium cost of$1,840,460. If the City is comfortable with the$20,000,000 coverage limit, I recommend the $20,000,000 at the$100,000 maximum deductible. Please let me know if you have any questions. Respectfully submitted, Carolyn A. Miller, CPCU President/Senior Consultant Attachment: Comparison Spreadsheet CRC GROUP Placement Summary City Of Port Arthur Wind/Hall/Flood as more fully defined in carriers's quotes i Stamp Total Company Participation Limit Policy* Premium Fees Total SLTax Fee w7Tax/Fees RLI $1.500,000 Pat of$5,000,000 Per Occurrence 262.000 500.00 262,500 12,73125 105.00 275,336 Ironshore 61,000,000 Part of$5,000,000 Per Occurrence 150,000 150,000 7,275.00 60.00 157,335 Berkshire Hathaway $2,500,000 Part of$5.000,000 Per Occurrence 412,500 412,500 20,006.25 165.00 432,671 RSUI $5,000,000 Part of$15,000.000 Per Occurrence excess of$5,000,000 Per Occurrence 228,333 228,333 11,074.15 91.33 239,498 Sompo $5,000,000 Part of$15,000,000 Per Occurrence excess of$5,000.000 Per Occurrence 240,000 240,000 11,640.00 96.00 251,736 Starr $5,000,000 Part of 615,000.000 Per Occurrence excess of$5,000,000 Per Occurrence 259,524 259,524 12,586.91 103.81 272.215 Total 20,000,000 1,552,357 $1,628.792 Wind/Hall/Flood as more fully defined in canlers's quotes Stamp Total Company Participation Lirtt Policy* Premium Fees Total SLTax Fee w/Tax/Fees RLI $1,500,000 Pert of$5,000,000 Per Occurrence 262,000 500.00 262,500 12,731.25 105.00 275.336 Ironshore $1,000,000 Part of$5,000,000 Per Occurrence 150,000 150,000 7,275.00 60.00 157,335 Berkshire Hathaway $2,500,000 Part of$5,000,000 Per Occurrence 412,500 412,500 20.006.25 165.00 432,671 Rout $5,000,000 Part of$15,000,000 Per Occurrence excess of$5,000,000 Per Occurrence 228,333 228,333 11,074.15 91.33 239,498 Sompo $5,000,000 Part of$15,000,000 Per Occurrence excess of$5,000,000 Per Occurrence 240,000 240,000 11,640.00 96.00 251.736 Starr $5,000,000 Part of 615,000,000 Per Occurrence excess of$5,000,000 Per Occurrence 259,524 259.524 12,586.91 103.81 272,215 WRB Specialty 65,000,000 Part of 65,000,000 Per Occurrence excess of$20,000,000 Per Occurrence 69,877 69,877 3,389.03 27.95 73,294 Total 25,000,000 1,822.234 $1,702,088 Wind/Hail/Flood as more fully defined in carriers's quotes Stamp Total Company Participation Limit Policy* Premium Fees Total SLTax Fee se/Tax/Fees RLI $1,500,000 Pat of 65,000,000 Per Occurrence 262,000 500.00 262.500 12,731.25 105.00 275.336 Ironshore $1,000,000 Pert of$5,000,000 Per Occurrence 150,000 150.000 7.275.00 60.00 157,335 Berkshire Hathaway $2,500.000 Pan of 65,000,000 Per Occurrence 412,500 412.500 20.006.25 165.00 432,671 RSUI $5.000,000 Pan of$15,000,000 Per Occurrence excess of$5.000,000 Per Occurrence 228,333 228,333 11.074.15 91.33 239,498 Sompo 65,000,000 Part of$15.000,000 Per Occurrence excess of$5,000,000 Per Occurrence 240.000 240,000 11,640.00 96.00 251,736 Starr $5.000,000 Part of$15,000,000 Per Occurrence excess of$5,000,000 Per Occurrence 259,524 259,524 12,586.91 103.81 272,215 WRB Specialty $5,000,000 Part of610,000,000 Per Occurrence excess of$20,000,000 Per Occurrence 65,000 65,000 3,152.50 26.00 68,179 Kinsale 65,000,000 Part of$10,000,000 Per Occurrence excess of$20,000,000 Per Occurrence 150,000 350.00 150,350 7,291.98 60.14 157,702 1,787,357 $1,854,672 Total 30.000,000 TIV 332,259,415 t'Full terms and cond ltion as per Carders'Quotes Named Morin Maximum Deductible Buydown Option Stamp Total Company Participation Limit Policy* Premium Fees Total SLTax Fee w/TaxlFees Convex $750,000 Part of$750,000 Per Occurrence excess$250,000 Per Occurrence 96.188 500.00 96,688 4,689.37 38.68 101,416 Convex $900,000 Part of$900,000 Per Occurrence excess$100,000 Per Occurrence 131,423 500.00 131,923 6,398.27 52.77 138,374