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Home My WebLink About7/5/2000 - STAFF REPORTS (12) DATE: Juy 5,2000 TO: City Council FROM: Risk Manager via City Manager INSURANCE RENEWALS FOR THE CITY'S GENERAL LIABILITY, AIRPORT LIABILITY, AERO SQUADRON AIRCRAFT,ALL-RISK PROPERTY, BOILER&MACHINERY,CRIME, EARTHQUAKEIFLOOD(PRIMARY LEVEL)AND WORKERS'COMPENSATION EXCESS INSURANCE. RECOMMENDATION: It Is recommanded that the City Council adopt the Resolution approving the Ckft insurance renewals effective July 1,2000. BACKGROUND: The City of Palm Springs c ont aded with AON Risk Services, Inc., a CaRfomia corporation, on January 5, 2000, to perform services as the Ckft Insurance Broker of Record to sollck insurance proposals from qualified carriers upon renewal of policies as they expired. A comparison of last year's premiums to the cuffed quote is detailed in the folkw ft su COVERAGE Premium 7MM twough s/AM PromI m 7nA0 6MM1 CammWbnlncArded Not of Commission ataias uehaty Premki n i 193,090 S 130,000 InwanosCompeny A.I.G. AmakenSerety Insurance Group east's Rating A++XV A VII Self4mumed Retention $ 2%000 $ 250,000 Limib s 1000000D 10000000 Qua WFk)od Primary level Premium $ 37,500 S 50,000 Insurance Company Ate FM Insurance Affiliated FM Insurance Co. gars Rating A+X A+X Deducible 6%of Valua1f25,00D MhNmum M of ValuarS25.000 Mi nim m L4rdb 3 60,000,00D s SM000.000 All.Rbk Property Ins.Prendurn = 53,751 = 6%354 Ineuernce Company AfflNdbd FM Insurance Co. Atlaabd FM Insurance Co. Bafs Rating A+X A+X DeduoWle If 6,ODD If 5.000 Property SdwdubAjnft 157425 18 0005430 Airport Liability Insurance Pra i m i 32.254 $ 27,00 Insurance Company Gnat American Inarance Co. ACE USA Bare RMing A)W AD( Deducible $ 1.5w If 0 Units If M000,0DO If 50,OOD.000 BOIWMachinery ; 16,564 $ 17,216 Insurance Company Tra ebre Travelers Bays Raft A+XV A+XV Deducible 5,00(k Cogen;s2.5001AN odw 5,11MACogen;52.600/AI Ww Liniis 25.000.000 5 25 000,000 Cane Insurance Premium ; 46" $ 3,752 Insurance Company Metity&Deposit Co.of MD Hertford Fire Insurance Company Beats Re" A+XV A+XV Deductitle s 1,000 s 1,000 Lhnib 1000 1000000 13A Aaro Squadron Insurance Premium = 8,100 $ 3,40g lauranncs Compaq Reliance NeliaW Indermily Ca ACE USA Beef's Re" A.XIV A W Deducible $ 1.000 $ Soo Limb 000 ow D0o wakes Cane kwm ce PwMn $ 19,928 $ 18,932 lrowsm Campry EmOW=R*m ance Corp. Ba ftam R*ww=Corp. SuftRWM Sd knurod R�tlOn A++XV i 250,000 i 250,000 i 5000000 i 5,000,000 TOTALS $ s 319183 ro r oEcwASE IN TOTAL $ 49,710 AON was sucoessful in achieving reductions In all the City s policies with the oceplion of the All-Risk Property Insursnoe and the primary WM of Earthquakefflood insurance. The WgAsnstion provided by AON is attached to this staff report In summary,the the om in the Pr0perly/Earthquake premium is generally a result of an increase in our property schedule, and "hardening" In the property Insurance marketplace. Additim*, AON was negotiating reductiorhs in our property insurancs premium at the time of the fire on June 6, 2000, at the d4%MAned Property located at SM North Palm Canyon. � �- NANCYJO MCIWAM Risk Mares APPROVED: Attadxrwds: 1. Letter from AON 2. Resolution REVIEWED BY DW E DF FMNCE 3i�� AoN Aon Risk Services June 27, 2000 Mr. David FI. Ready City Manager City of Palm Springs 3200 E. Tahquitz Canyon Way Palm Springs, CA 92263-2743 Dear David, It was a pleasure meeting with you yesterday. In accordance with your instructions enclosed is a list of insurance carriers we approached on behalf of the City of Palm Springs, along with their indicated premiums (Exhibit 2). With regard to the increase in price for the all risk property renewal and the DIC (earthquake) insurance,we would like you to know that the property and property related markets are becoming much more conservative, which means prices are going up. The major reason for the magnitude of the increase in the all risk property and DIC insurance is that the values insured by the City of Palm Springs increased from $155,000,000 for the 1999-2000 policy year to $180,000,000 for the 2000-2001 policy year. This is a 16% increase in values to be insured. This is the basis for the bulk of the premium increase in these lines of coverage. The fact that a serious fire occurred shortly before the policy expired that will most likely result in a six-figure settlement also had an effect on the insurer's willingness to negotiate a premium reduction relative to the all risk property insurance. Total premiums for the July 1 renewal were reduced by$49,710, Exhibit 2 illustrates the savings. Exhibit 1 provides an explanation of the insurers we approached on behalf of the City of Palm Springs along with the premiums. We will be submitting a stewardship report in the near future which will deal with all of the cost savings Aon has brought to the City of Palm Springs since we became your broker in January of this year. We look forward to continued service to the City of Palm Springs in the coming years. If you have any questions please let me know. Sincerely, Donald Shaffer,ARM Vice President Cc: Nancy McIntosh 1 o3 A 3 Aon Risk Services,Inc. of Southern California Insurance Services 707 Wilshire Blvd., Suite 6000 • Los Angeles,California 90017 . tel:(213)630-3200 • fax:(213)689-4450 Mailing.P.O.Box 54670,Los Angeles, California 90054-0670 a License No. 0530733 CITY OF PALM SPRINGS MARKETING SUMMARY July 1, 2000 to 2001 Carriers Approached,A.M. Best Rating& Responses Exhibit I EXCI SS LIABILITY Carriers Best's Rating Response Proposal Insurance Company of the A++XV Reduced Rates $173,781 State of Pennsylvania (Current Carrier) American Safety Insurance AVII Very interested in writing coverage; fairly $130,000 Group new carrier for public sector Evanston Insurance Interested in writing; currently writes a $134,355 Company number of accounts for other municipalities Coregis Insurance Company AIX Wanted to quote, but didn't feel they could $225,000 be competitive; would have to write a separate policy for liability, public officials liability& employment practices liability Royal Insurance Company A+XIV Could not be competitive $250,000 PERMA N/R Not Competitive $175,000 PROPERTY* Carriers Best's Rating Response Proposal Affiliated FM Insurance A+XV Interested in holding account; increase in Prop $68,354 Company values from $155 to $180 Million (16%) DIC $50,000 (Current Carrier) based on updated appraisals. Also applied standard rate increase, applied to all of FM's renewals. Travelers Insurance A+XV Offered a quote due to relationship with Prop $81,006 Company Aon. Not pursuing new business in general, due to the hardening of the Property Market Chubb Group A++XV Writes some municipal property, but would $141,256 be double the expiring premium. Coregis Insurance Company AIX Declined. Could only write in conjunction $I68,000 with liability Insurance Company of the AVII Cannot write any new business as of July 1, Declined to West 2000 (Fortunately, your city's Auto PD had submit quote been previously negotiated) *We have agreed to the concept of re-marketing a combined Property and Earthquake program 11/I/00, when DIC's renew. The 25% minimum earned premium on the Affiliated FMpolicy will be satisfied and with the deterioration of the Property/Earthquake marketplace, this may prove to be cost effective. This proposal represents a summary of the insurance tens and conditmns found in the insurance policy. In the event of any differences between this proposal and the policy,the policy provisions will direct any resolution. C CIEW\City of Pohn Springs Quote Sumout,71 Oo.doc ( 5A CITY OF PALM SPRINGS MARKETING SUMMARY July 1, 2000 to 2001 CRIME Carriers Best's Rating Response Proposal Fidelity&Deposit A+XV Active until cancelled $4,686 Company of MD (premium (Current Carrier) remains unchanged) Hartford Fire Insurance A+XV Writes the majority of the crime coverage $3,752 Company for municipalities. Offered an option for $1 Million Limit , AVIATION : Carriers Best's Rating Response Proposal Intereargo Insurance Aviation Hull & Liability $8,100 Company Airport Liability $28,500 (through W. Brown & Associates) Westchester Fire Insurance A+IX Aviation Hull &Liability $3,409 Company (ACE) Airport Liability $27,500 WORKERS' COMPENSATION Carriers Best's Rating Response Proposal Employers Reinsurance A++XV 3-year policy term written 7/l/1999-02. $18,932 Corporation Penalty imposed for mid-term cancellation. (Current Carrier) Submitted quote for 2nd year installment Genesis A++XV $300,000 minimum SIR and couldn't be Declined to competitive with existing rate submit quote Reliance National B++XIII Aon declined accepting a quote, due to Not Provided deteriorating Best's Rating this month Midwest Employers AVIII $300,000 minimum SIR and estimated Declined to Casualty Company their rate to be about double the existing submit quote BOILER & MACHINERY Carriers Best's Rating Response Proposal Chubb Group A++XV Unable to compete, requires pre-inspection $32,800 Travelers A+XV Automatic renewal generated. 10% increase is $21,520 being applied to all of Travelers B&M policies. The balance of the increase is due to increase in property values. (Did not request any additional increase for the 16% increase in values, that they would be entitled to.) This proposal represents a suimnary of the insurance terms and conditions found in the insurance policy. In the event of any differences henveen this proposal and the policy,the policy provisions will direct any resolution. CATEWTity of Prim Springs Quota Summary 7 100 doc ' A AT CITY OF PALM SPRINGS INSURANCE RENEWAL COMPARISON (Exhibt 2) SELECTED COVERAGE INSURANCE CARRIER RENEWAL PREMIUM EXPIRING PREMIUM DIFFERENCE EXCESS LIABILITY* AMERICAN SAFETY $ 130,000.00 $ 193,090.00 $ (63,090.00) PRIMARY PROPERTY** AFFILLIATED $ 68,354.00 $ 53,751.00 $ 14,603.00 PRIMARY DIG*** AFFILLIATED $50,000 $ 37,500.00 $ 12,500.00 CRIME HARTFORD $ 3,752.00 $ 4,686.00 $ (934.00) AVIATION HULL&LIABILITY ACE $ 3,409.00 $ 8,100.00 $ (4,691.00) AIRPORT LIABILITY ACE $ 27,500.00 $ 32,254.00 $ (4,754.00) WORKERS'COMPENSATION EMPLOYERS RE. $ 18,932.00 $ 19,928.00 $ (996.00) BOILER&MACHINERY TRAVELERS $ 17,216.00 $ 19.564.00 $ (2,348.00) TOTAL $ 319,163.00 $ 368,873.00 $ (49,71000) *American Safety will become an admitted insurer later this year. At that time all or a portion of the$4,355 in taxes and fees will be refunded **The primary property and DIC will be renegotiated at the time the Excess DIC renews in November of this year. The primary property premium increase was due in large part to the updated appraised values increasing by$25,000,000 from the expiring total insured values Applying the expiring rate of.03471$100 in values to the$180,000,000 current values would generate a premium of $62,421 This would generate a premium increase of$7,933 for the renewal of the primary property policy. This would increase the savings to$57,324. 13AG RESOLUTION NO. OF THE CITY COUNCIL OF THE CITY OF PALM SPRINGS, CALIFORNIA, APPROVING INSURANCE RENEWALS FOR THE CITY'S GENERAL LIABILITY, AIRPORT LIABILITY, AERO SQUADRON AIRCRAFT, ALL-RISK PROPERTY, BOILER & MACHINERY, CRIME, EARTHQUAKE/FLOOD (PRIMARY LEVEL) AND WORKERS'COMPENSATION EXCESS INSURANCE. WHEREAS the City's General Liability,Airport Liability, Aero Squadron Aircraft,All- Risk Property, Boiler & Machinery, Crime, Earthquake/Flood (Primary Level) and Workers' Compensation Excess Insurance coverages expired at midnight on June 30,2000; and WHEREAS the City of Palm Springs contracted with AON Risk Services, Inc., a California corporation, on January 5, 2000, to perform services as the CIVs Insurance Broker of Record to sokit insurance proposals from qualified carriers upon renewal of these policies, and WHEREAS the City of Palm Springs received insurance quotations on these coverages on June 26, 2000. NOW THEREFORE BE IT RESOLVED by the City Council of the City of Palm Springs, approve the following insurance coverage renewals: CRAW RemWm 7M/00 8FJW Plat of ComMubn&taps Uwuty ftn* n $ 130 Im xaiee Company Amedcan Safely Iraurarce Gmq Beals Raft A VI salNneaed Pjftn on $ 2. LhoofCovema s 10 QuekalFlood PrMay Leval ftanMn $ ti In��Company AAIMW FM Inerua Bears Raft Deduo" 5%of VaWaalw.000 MI Lkft 80.000. All-Rh k Properly Ins.Premkon = 6 Inwanoe company Aff0 ded FM Inuman Beers ReSng Deduc" $ P sabaulelLhnce 187.0051 I �� AYport Lhbully Irreraaroe PraMun = Z'J, Insane Compaq ACE U Beds Ratlng A Dedua ble $ 1 A 011 Wfichk" $ 17,21 Insaanoe Company T Bases Reft A+ DeduoBbb 5.5 M$2,5MMAA Limb 25 000 Crime krsurance Pramhm $ 3,7 Insuaroe Company Flanks Flro kmwwm eases Re" A+ Deduc" $ 1, LkAs 1 Aao Squadron Insurance Pranium $ s Insuranos Company ACE Bears RAV A ��e $ Limb 6.000. Workers'Camp Inararce Pmnkar $ 1$� Insurance Company Employers rtaYgrrarwe BasesRan7 A++ Se0dmured Reta don $ 250. Unks 5 TOTS : 3181 ADOPTED this a day of July, 2000. AYES: NOES: ABSENT: ATTEST: CITY OF PALM SPRINGS, CALIFORNIA By City Clerk City Manager REVIEWED&APPROVED AS TO FORM 33Z