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Home My WebLink AboutPR 18934: PURCHASE OF COMMERCIAL WINDSTORM COVERAGE CITY OF PORT ARTHUR SAFETY & RISK MANAGEMENT MEMORANDUM TO: Brian McDougal, City Manager FROM: Lisa Colten, Safety & Risk Management Coordinator DATE: March 27, 2015 SUBJECT: A Resolution Authorizing the Purchase of Commercial Windstorm Coverage COMMENTS RECOMMENDATION: I recommend approval of Proposed Resolution No. 18934 which authorizes the purchase of Commercial Windstorm Insurance (limit of $20,000,000 per occurrence) in an amount not to exceed $332,030 underwritten on a quota share basis by First Specialty Insurance Corporation (75%) and Underwriters at Lloyds (25%) from McGriff, Seibels & Williams of Texas, Inc. This amount represents a 30.3% reduction in cost ($144,573) when compared to last year's annualized premium of $476,603. The Commercial Windstorm policy provides $20,000,000 aggregate limit per named storm with a two percent per affected unit deductible, subject to a minimum of $100,000, per occurrence. All other wind/hail storms (non-named) 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 , 2015 through May 1, 2016, 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. 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 $180,305,569.08. 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 two percent of the total insurable value per affected unit, subject to a minimum of $100,000 per occurrence. A non-named storm (all other wind/hail) carries a deductible of $25,000 per occurrence. "REMEMBER, WE ARE HERE TO SERVE THE CITIZENS OF PORT ARTHUR" Brian McDougal, City Manager March 27, 2015 Page 2 of 2 The City advertised for bids for Windstorm coverage. Fifteen agencies requested and, accordingly, received bid packets. Four 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 First Specialty Insurance Corporation (75%) and Underwriters at Lloyds (25%) for a $20,000,000 limit per occurrence, with McGriff, Seibels & Williams of Texas, Inc. which provides coverage for all City properties, including streetlights and the Water Treatment Plant. BUDGETARY/FISCAL EFFECT: Proposed funding is as follows: General Liability Insurance Fund...Account#612-1702-581.52-00 ... $332,030 STAFFING/EMPLOYEE EFFECT: No effect on staffing levels. SUMMARY: I recommend approval of Proposed Resolution No. 18934 which authorizes the purchase of Commercial Windstorm Insurance (limit of $20,000,000 per occurrence) in an amount not to exceed $332,030 underwritten on a quota share basis by First Specialty Insurance Corporation (75%) and Underwriters at Lloyds (25%) from McGriff, Seibels & Williams of Texas, Inc. This amount represents a 30.3% reduction in cost ($144,573) when compared to last year's annualized premium of$476,603. The Commercial Windstorm policy provides $20,000,000 aggregate limit per named storm with a two percent per affected unit deductible, subject to a minimum of $100,000, per occurrence. All other wind/hail storms (non-named) 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, 2015 through May 1, 2016, 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. 18934 3/27/15 LJC RESOLUTION NO. A RESOLUTION AUTHORIZING THE PURCHASE OF COMMERCIAL WINDSTORM COVERAGE IN AN AMOUNT NOT TO EXCEED $332,030 PER ANNUM PROPOSED FUNDING BY: General Liability Insurance Fund: 612-1702-581.52-00 $332,030 WHEREAS, bid specifications pertaining to the insurance coverage specified below were made available to interested parties on January 21, 2015, and sealed bids for the same were accepted until 3:00 p.m. on March 4, 2015 (at which time all bids were opened and read aloud)in accordance with State law and the City Charter; and, WHEREAS, four (4) 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 Insurance (limit of$20,000,000 per occurrence)underwritten on a quota share basis by First Specialty Insurance Corporation (75%) and Underwriters at Lloyds (25%) from McGriff, Seibels & Williams of Texas, Inc. in an amount not to exceed$332,030 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 First Specialty Insurance Corporation (75%) and Underwriters at Lloyds (25%) with McGriff, Seibels & Williams of Texas, Inc. in an amount not to exceed $332,030 per annum, with a deductible of two percent of the total insurable value per affected unit, subject to a minimum of$100,000 per occurrence for a named storm, or a$25,000 per occurrence deductible (wind/hail only) for a non-named storm,; and, P.R.No. 18934 3/27/15 LJC Page 2 of 3 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, 2015,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., 2015, at a Meeting of the City Council of the City of Port Arthur, Texas, by the following vote: AYES: Mayor , Councilmembers NOES: . Debris "Bobbie"Prince, Mayor ATTEST: Sherri Bellard, City Secretary APPROVD AS TO FORM: \I Q 12 Val Tizeno, i ttorney APP VED AS TO AVAILABILITY OF FUNDS: A± nii,lb Deborah Echols,Director of Finan Shawna Tubbs, Purchasing Manager APPROVED FOR ADMINISTRATION: Brian McDoutal, City Manager P1*b1� Dr. • bert T. 'gpen, Directo of an Resources and Director of Parks&Recreation Exhibit "A" City of Port Arthur 2015 Windstorm RFP Response Comparison Agent Carrier Total Limit Deductible Premium McGriff, Seibels & First Specialty Corp. (75%) & $ 20,000,000.00 2%, minimum $ 332,030.00 Williams of Texas, Inc. Lloyd's of London (25%) $100,000 named storm, $25,000 non-named Victor 0. Schinnerer& Co. AmRisc $ 20,000,000.00 2%, minimum $ 525,546.65 $25,000 named storm, $25,000 non-named Willis of Texas, Inc. Lloyd's of London, $ 20,000,000.00 2%, minimum $ 551,827.00 Price Forbes, & Partner Re $500,000 named storm, $25,000 non-named Carlisle Insurance Agency AXIS Surplus, International, $ 20,000,000.00 5%, minimum $ 810,429.75 Hanover SE, &Arch Specialty $100,000 named storm, Insurance Companies $25,000 non-named