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Home My WebLink AboutPR 15840: PURCHASE COMMERCIAL WINDSTORM COVERAGECITY OF PORT ARTHUR SAFETY 8~ RISK MANAGEMENT MEMORANDUM. TO: Stephen B. Fitzgibbons, City Manager FROM: Lisa Colten, Safety & Risk Management Coordinator DATE: April 13, 2010 SUBJECT: A Resolution Authorizing the Purchase of Commercial Windstorm Coverage COMMENTS RECOMMENDATION: I recommend approval of Proposed Resolution No. 15840 which authorizes the purchase of Commercial 1indstorm coverage in the amount of $505,792 from AmRisc (Lloyd's) through McGriff, Seibels & Williams of Texas, Inc., the City's current carrier. This amount. represents a 1,2% increase of $6,078 when compared to last year's annualized premium of $499,714. The Commercial Windstorm policy provides $20,000,000 aggregate limit. per named storm with 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 forcoverage to apply to a new loss. The coverage period is from May 1, 2010 through May 1, 2011 and will provide Commercial Windstorm coverage for all City properties in the event of Windstorm damage (hurricane, tomado, etc.) BACKGROUND: This insurance provides Commercial Windstorm coverage for all City properties in the event of Windstorm damage {hurricane, tomado, etc:} with 'an aggregate limit of $20,000,000 per occurrence: The total estimated value of listed City properties is $140,367,983. In the past Ciiy 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 wilt 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. Four 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") that the City accept the Commercial bid received from AmRisc (Lloyd's) through McGriff, Seibels & Williams of Texas, Ihc., 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 April 73, 2010 Page 2 of 2 BUDGETARY/FISCAL EFFECT: Proposed funding is as follows: General Liability Insurance Fund...Account #612-1702-581.52-00 ... $505,792 STAFFINGlEMPLOYEE EFFECT: No effect on staffing levels. SUMMARY: I recommend approval of Proposed Resolution No. 15840 which authorizes the purchase of Commercial. Windstorm coverage in the amount of $505,792 from AmRisc (Lloyd's) through McGriff, Seibels & Williams of Texas,. Inc., the City's current carrier. This amount represents a 1.2% increase of $6,078 when compared to last year's annualized premium ofi$499,714. , The Commercial Windstorm policy provides $20,000,000 aggregate limit per named storm with a $250,000 or five percent per affected unit deductible per occurrence. Atl otherwind/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 Mao ertes10 the event of WindsOtorm damaige (hurricane,rtomadol Windstorm coverage for all City p p etc.) Attachment: Exhibft "A" "REMEMBER, WE ARE HERE TO SERVE THE CITIZENS OP PORT ARTHUR" P.R. No. 15840 4/13/10 LJC RESOLUTION NO. A RESOLUTIOONVERAGE INiTHE AMOUNT OF $505,7920PER ANNUM INDSTORM PROPOSED FUNDING BY: 6~2 1702-581 52 OOran$505,792. WHEREAS; bid specifications pertaining to the insurance coverage specked below were made available to interested parties on March 25, 2010, and sealed bids for the same were accepted. until 3:00 p.m. on April 12, 2010 (at which time all bids were opened and read aloud) in accordance with State law and the City Charter, and, WHEREAS, iwo (2) bids were received back and thereby submitted to RWL Group, the City's consultant, for analysis and. recommendation; as described in the memo attached as Exhibit "A": - WHEREAS,. after due consideration, RWL Group and' City staff have recommended that the City bind Commercial Windstorm coverage with AmRisc (Lloyd's) through McGriff, Seibels & Williamsof Texas, Inc. 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 parchase an insurance - -- contract and bind. coverage for Commercial Windstorm Insurance (limit of $20,000,000 per occurrence), with AmRisc (Lloyd's) through McGriff, Seibels & Williams of Texas, Inc. for a premium of $505,792 per annum, with a $100,000 per occurrence deductible (WndlHail 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, P.R. No. 15840 4/13/10 LJC Page 2 of 2 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 fo bind coverage effective May 1, 2010, pending receipt of the Contracts of Insurance.. Section 4. of the City Council. That a-copy of the caption of this Resolution be spread upon the Minutes da of , A.D., 2010, at a READ, ADOPTED, AND APPROVED this Y Meeting of the City Council of the City of Port Arthur, Texas, by the following vote: AYES: Mayor , Councilmembers NOES: Deloris "Bobbie" Prince, Mayor ATTEST: City Secretary APP~ROOVE AS TO FORM: ~1/~- CityAtto ey _ - -_-_-- _- ROVED AS~ TO AVAILABrILITY OF FUNDS: [)~n~ ~1 Director of Finance APPROVED FOR ADMINISTRATION: City Manager EXHIBIT ~~A" Exhibit "A" , Lisa Cotten Carolyn Miller [carolyn@rwlgroup.comj Prom: Wednesday, Apnl 14, 2010 4:05 PM Sent: To: Lisa Cotten Windstorm RFP Response Analysis and Recommendation Subject: Windstorm Cost Recap 2004 to 2010.doc Attachments: Lisa: I have reviewed the two responses to the current wind RFP. Victor O. Shinnerer submitted a p ea ° to cover the fullriers, TWIA and ICAT. Neither proposal was responsive to the RFP. Although the TWIA proposal app schedule of properties, TWIA will only write coverage on properties that meet its requirements. Not all of the Cit~/s properties meet the TWIA requirements. Total cost for TWIA, with TML as excess for those properties with values exceeding the TWIA maximum coverage, is $818,933. ICAT will insure all properties on the schedule, but the maximum per occurrence limit offered is $10,000,000. This option also includes another $3,282,338 limit from TWIA for coverage on the commercial docks.. Total premium for this option is $583,491. McGriff has provided a proposal from AmRisc, the City's current carrier, with 5 options. The first option, $20,000,000 per occurrence limit subject to a 5% deductible, is the same limit and deductible currently carried by the City. Total premium for this option is $505,792; $25.289600 for each $1,000 of coverage., I have attached a recap of the cost per $1,000 of coverage beginning with the October 1, 2004/2005 term. The rate for the proposed renewal is slightly higher than the expiring rate of $24.985700 (this is for 4-1-2009/4-1-2010.. The one month from 4-1-2010 to 5-1-2010 is $24.072600.). Essentially what is being proposed is a flat renewal. The additional premium involves an increase. in the fees and taxes rather than in premium. OpYwns 2, 3 and 5 all include changes thatwould increase the premium over Option 1. ,Options 2 and 3 are offers to reduce the deductible percentage from 5%to 3% and 2% respectively. A reduction in deductible to 3% would increase the premium $100,000; a reduction in deductible to 2% would increase the premium by $192,000. Option 5 offers a higher limit of coverage, $25,000,000 with the-same 5% deductible for a premium of $542,511, or $37,000 for an additional $5,000,000 of coverage. The AmRisc Option 4 offers the City an option to reduce the limit of coverage from $20,000,000 to $15,OOD,000 for a premium of $453,337, or a,savings of $52,000. I believe that the $20,000,000 coverage limit is moreWh'cihtisthe worst s the City's exposure. However, the amount of loss paid as a result of Hurricane Rita was $8,105,000, loss the City has sustain in many years. Consequently, this is an option that the City may want to entertain. Per our conversation, I have attached a recap of the limits of coverage and premiums paid for windstorm coverage since --10=1=2004_ I-have alsa Shawn-the 2ffectiverate per$1;000 of the coverage limit-each-year far yourconvenience:-- Please let me know if you have any questions regarding this matter. Carolyn A. Miller, CPCU Senior Consultant RWL Group 300 North Coit Rd., Suite 810 Richardson, Texas 75080-5456 1 CITY OF PORT ARTHUR WINDSTORM COVERAGE AND PREMIUM RECAP 2004 TO 2010 YEAR LIMIT PREMIUM RATE/51000'COVERAGE 10-1-2004/2005 15,000,000 191,009 12.733933 802533 13 10-1-2005/2006 15,000,000 207,038 907 427 . -6.217464 10-1-2006/2007 68,823,403 , 981 458 22.949050 10-1-2007/2008 20,000,000 , 903 228 22.890300 10-1-2008/4-1-2009 (6 20,000,000 , 4-1-2009/4-1-2010 4-1-2010/5-1-2010 (1 20,000,000 40,121 24.985700 24.072600 a