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HomeMy WebLinkAboutPR 18263: COMMERCIAL WINDSTORM COVERAGE , NOT TO EXCEED $477,602.75 PER ANNUM 4 CITY OF PORT ARTHUR SAFETY & RISK MANAGEMENT MEMORANDUM TO: John A. Comeaux, P.E., Interim City Manager FROM: Lisa Cotten, Safety & Risk Management Coordinator DATE: March 24, 2014 SUBJECT: A Resolution Authorizing the Purchase of Commercial Windstorm Coverage COMMENTS RECOMMENDATION: I recommend approval of Proposed Resolution No. 18263 which authorizes the purchase of Commercial Windstorm coverage in an amount not to exceed $477,602.78 underwritten on a quota share basis by AXIS Surplus Insurance Company (50 %) and Liberty Surplus Insurance Company (50 %) for the first $15,000,000, and $5,000,000 following from Kinsale Insurance Company with Victor O. Schinnerer & Company, Inc. (VOSCO). This amount represents an over 21.5% reduction in cost of $131,137.50 when compared to last year's annualized premium of $608,740.28. The Commercial Windstorm policy provides $20,000,000 aggregate limit per named storm with a five percent per affected unit deductible, subject to a minimum of $100,000, per occurrence. All other wind /hail storms (unnamed) carry a deductible of $25,000 per occurrence. Pre- existing damage must be repaired in order for coverage to apply to a new loss. The coverage period is from May 1, 2014 through May 1, 2015 and will provide Commercial Windstorm coverage for all City properties in the event of Windstorm damage (hurricane, tornado, etc.) Damages sustained during Hurricane Rita were Tess than the $15,000,000 limit carried at that time. The proposed $20,000,000 limit is recommended as sufficient for coverage. 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 $20,000,000 per occurrence. The total estimated value of listed City properties is $174,058,684. 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 $100,000 per occurrence. An unnamed storm (all other wind /hail) carries a deductible of $25,000 per occurrence. "REMEMBER, WE ARE HERE TO SERVE THE CITIZENS OF PORT ARTHUR" John A. Comeaux, P.E., Interim City Manager March 24, 2014 Page 2 of 2 The City advertised for bids for Windstorm coverage. Five agencies requested and, accordingly, received bid packets. Three responses were received back, which were then analyzed. Subsequent to this extensive review of the bids, City staff recommends that the City accept the Commercial bid received and underwritten on a quota share basis by AXIS Surplus Insurance Company (50 %) and Liberty Surplus Insurance Company (50 %) for the first $15,000,000, and $5,000,000 following from Kinsale Insurance Company with Victor O. Schinnerer & Company, Inc. (VOSCO) which provides coverage for streetlights and all City properties including the Water Treatment Plant. BUDGETARY /FISCAL EFFECT: Proposed funding is as follows: General Liability Insurance Fund...Account #612- 1702 - 581.52 -00 ... $477,602.78 STAFFING /EMPLOYEE EFFECT: No effect on staffing levels. SUMMARY: I recommend approval of Proposed Resolution No. 18263 which authorizes the purchase of Commercial Windstorm coverage in an amount not to exceed $477,602.78 underwritten on a quota share basis by AXIS Surplus Insurance Company (50 %) and Liberty Surplus Insurance Company (50 %) for the first $15,000,000, and $5,000,000 following from Kinsale Insurance Company with Victor O. Schinnerer & Company, Inc. (VOSCO). This amount represents an over 21.5% reduction in cost of $131,137.50 when compared to last year's annualized premium of $608,740.28. The Commercial Windstorm policy provides $20,000,000 aggregate limit per named storm with a five percent per affected unit deductible, subject to a minimum of $100,000, per occurrence. All other wind /hail storms (unnamed) carry a deductible of $25,000 per occurrence. Pre- existing damage must be repaired in order for coverage to apply to a new loss. The coverage period is from May 1, 2014 through May 1, 2015 and will provide Commercial Windstorm coverage for all City properties in the event of Windstorm damage (hurricane, tornado, etc.) Damages sustained during Hurricane Rita were less than the $15,000,000 limit carried at that time. The proposed $20,000,000 limit is recommended as sufficient for coverage. Attachment: Exhibit "A" "REMEMBER, WE ARE HERE TO SERVE THE CITIZENS OF PORT ARTHUR" P.R. No. 18263 3/24/14 LJC RESOLUTION NO. A RESOLUTION AUTHORIZING THE PURCHASE OF COMMERCIAL WINDSTORM COVERAGE IN AN AMOUNT NOT TO EXCEED $477,602.78 PER ANNUM PROPOSED FUNDING BY: General Liability Insurance Fund: 612 - 1702 - 581.52 -00 $477,602.78 WHEREAS, bid specifications pertaining to the insurance coverage specified below were made available to interested parties on January 27, 2014, and sealed bids for the same were accepted until 3:00 p.m. on March 5, 2014 (at which time all bids were opened and read aloud) in accordance with State law and the City Charter; and, WHEREAS, three (3) bids were received back and subsequently reviewed, as shown in Exhibit "A" (attached); and, WHEREAS, after due consideration, City staff recommends that the City bind Commercial Windstorm coverage underwritten on a quota share basis by AXIS Surplus Insurance Company (50 %) and Liberty Surplus Insurance Company (50 %) for the first $15,000,000, and $5,000,000 following from Kinsale Insurance Company, with Victor O. Schinnerer & Company, Ins. (VOSCO) in an amount not to exceed $477,602.78 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. P.R. No. 18263 3/24/14 LJC Page 2 of 3 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 AXIS Surplus Insurance Company (50 %) and Liberty Surplus Insurance Company (50 %) for the first $15,000,000, and $5,000,000 following from Kinsale Insurance Company, with Victor O. Schinnerer & Company, Inc. (VOSCO) in an amount not to exceed $477,602.78 per annum, with a $25,000 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 $100,000 per occurrence; and, 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, 2014, 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., 2014, at a Meeting of the City Council of the City of Port Arthur, Texas, by the following vote: AYES: Mayor , Councilmembers _ • NOES: P.R. No. 18263 3/24/14 LJC Page 3 of 3 Deloris "Bobbie" Prince, Mayor ATTEST: Sherri Bellard, City Secretary APPRO D AS TO FORM: Val Tizeno, ity Atto = . y APPROVED AS TO AVAILABILITY OF FUNDS: dtotelit-Cicrkaae/ De.orah Echols, Director of Finance APPROVED FOR ADMINISTRATION: John A. Com- : ux, P.E., Interim City Manager Ara" ° NrSi f Dr. A .ert . 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