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HomeMy WebLinkAbout11/1/2000 - STAFF REPORTS (11) 9 DATE: November 1, 2000 TO: City Council FROM: Risk Manager via City Manager INSURANCE RENEWALS FOR THE CITY'S EARTHQUAKE/FLOOD AND MULTI-MEDIA INSURANCE RECOMMENDATION: It is recommended that the City Council adopt a Resolution approving the City's Earthquake/Flood and Multi-Media Insurance renewals effective November 1, 2000. BACKGROUND: The City of Palm Springs contracted with Aon Risk Services, Inc., on January 5, 2000, to perform services as the City's Insurance Broker of Record to solicit insurance proposals from qualified carriers upon renewal of policies as they expire. Risk Management began working with Aon on September 16, 2000 concerning the November 1, 2000 renewals for earthquake/flood and multi-media insurance. The Broker was provided the City's updated property schedule and staff responded to specific questions asked by prospective carriers. Aon was given an October 12, 2000 deadline to submit quotes for renewals in order for staff to present the information to the City Council on October 18, 2000. On October 4, 2000 Aon advised staff that the earthquake insurance markets would not release their quotes prior to October 12, because most of the earthquake insurance markets will not quote any sooner than 14 days prior to the expiration date. Aon requested the City extend Aon's deadline to October 27, 2000. Aon has solicited quotes from eighteen (18) companies. Aon advises they are experiencing a hard market and that earthquake/flood Insurance is becoming more difficult to obtain in California. A summary of all quotes received by Aon along with the previous insurance coverage and 1999 premiums will be provided to the City Council as a supplemental report on November 1, 2000. NANCY JO Mq4NTOSH Risk Manager APPROVED_ '�-� �✓� City Manager Attachment: (1) Resolution DATE: November 1, 2000 TO: City Council FROM: Risk Manager via City Manager INSURANCE RENEWALS FOR THE CITY'S EARTHQUAKE/FLOOD (EXCESS LAYERS) AND MULTI-MEDIA INSURANCE. RECOMMENDATION: It is recommended that the City Council adopt a Resolution approving Excess Earthquake and Flood Insurance Limits of $50,000,000 for premiums of $136,462.14 effective November 1, 2000, and $1,000,000 MultFMedia Insurance for a premium of $5,349.54 effective November 9, 2000. BACKGROUND: The City of Palm Springs contracted with Aon Risk Services, Inc., a California corporation, on January 5, 2000, to perform services as the City's Insurance Broker of Record to solicit insurance proposals from qualified carriers upon renewal of policies as they expired. Aon approached 19 Earthquake carriers. Their Quotation Summary attached details the names of the carriers who declined due to the City's high property values ($176,400,394) and the corresponding high maximum loss. It also details the companies who were not able to compete with the incumbents' prices. The markets that Aon did not approach were Lloyds of London and Bermuda captives, because they do not satisfy Aon's minimum financial requirements. A comparison of last year's premiums to the current quote is shown below The City was able to take advantage of the very favorable pricing for Earthquake Insurance over the past few years and had increased program limits without any resulting increases in premium. The quotes for this year's renewals, however, reflect a 25%increase in premium cost. Aon attributes the increase to a combination of the 24% increase in the City's property values, the hardening insurance marketplace, and limitations on the monies available for earthquake insurance. Difference in Condition Premium 11/1/99 through 10/31/00 Premium 11/1100 through 10/31/01 (Quake/Flood) Net of Commission Net of Commission Excess of$2,500,00 Primary Values of$142,249,764 Values of$176,400,39 Quake/Flood First Layer Excess $ 62,152.66 $ 70,672.80 Insurance Companies Caliber One Indemnity Company Caliber One Indemnity Company Gulf Underwriters Insurance Company Specialty Surplus Insurance Company Best's Rating A VI,A VII A VI,A VII Limit of Coverage $ 10,000,000 $ 10,000,000 Quake/Flood Second Layer Excess $ 9,340.00 $ 12,222.00 Insurance Companies Agricultural Insurance Company Agricultural Insurance Company 1 Greenwich Insurance Company Greenwich Insurance Company d` Best's Rating AXIII,A+XI AXIII,A+XI Ad Limit of Coverage $ 2,500,000 $ 2,500,000 17- Quake/Flood Third Layer Excess $ 14,242.21 $ 19,849.40 Insurance Companies Fulcrum Insurance Company Agricultural Insurance Company Fulcrum Insurance Company Greenwich Insurance Company Pacific Insurance Company,Ltd. Best's Rating AVIII AVIII,AXIII,A+XI,A-Xv Limit of Coverage $ 10,000,000 $ 10,000,000 Quake/Flood Fourth Layer Excess $ 32,386.93 $ 20,928.38 Claredon Insurance Company Insurance Companies Excess Insurance Company Claredon Insurance Company Insurance company of the West Excess Insurance Company Best's Rating A VIII,A IX,A VIII A VIII,A IX Limit of Coverage $ 35,000,000 $ 15,000,000 Quake/Flood Excess Fifth Layer $ 12,789.57 Insurance Companies Clarendon Insurance Company Insurance Company of the West Best's Rating A VIII,AVIII Limit of Coverage $ 10,000,000 TOTAL EARTHQUAKEIFLOOD $ 108,121.78 $ 136,462.14 Since Multi-Media Liability Insurance is a specialty line of coverage, there are a limited number of markets that will write this coverage. Aon requested quotations from three markets specializing in the area, and received one quotation from the incumbent. The other two could not meet the incumbents pricing. Multi-Media Insurance Premium 1119/99 through 1118100 Premium 11I9/00 through 11/8101 Multi-Media Insurance Premium $ 4,925.50 $ 6,349.54 Insurance Company American International Specialty American International Specialty Lines Lines Insurance Company Insurance Company Best's Rating A+XV A+XV Limits $ 1,000,000 $ 1,000,000 TOTAL RENEWALS I $ 113,047.201 $ 141,811.681 Funding for the Earthquake Insurance is available as follows: $102,000.00 in Earthquake Insurance Account 540-5905-48655 and $34,462.14 in Policy Premium Excess Account 540-5904-48410. Funding for the Multi-Media Insurance is available in Multi-Media Professional Insurance Account 540-5904-43820. kk // NANCY JO MCI COSH Risk Manager APPROVED:�2✓� City Manager Attachments: 1. Aon's Quotation Packet 2. Resolution REVIEWED BY DEPT.OF FINANCE _W RESOLUTION NO. OF THE CITY COUNCIL OF THE CITY OF PALM SPRINGS, CALIFORNIA, APPROVING INSURANCE RENEWALS FOR THE CITY'S EXCESS DIFFERENCE IN CONDITION (EARTHQUAKE/FLOOD) INSURANCE AND MULTI-MEDIA INSURANCE. WHEREAS the City's Excess Difference in Condition (Earthquake/Flood) Insurance coverage expired at midnight on October 31, 2000; and WHEREAS the City's Multi-Media insurance coverage expires at midnight on November 8, 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 City's Insurance Broker of Record to solicit insurance proposals from qualified carriers upon renewal of these policies, and WHEREAS the City of Palm Springs received insurance quotations on these renewals on October 27, 2000. NOW THEREFORE BE IT RESOLVED by the City Council of the City of Palm Springs, approve the following insurance coverage renewals: Difference in Condition(Quake/Flood) Premium 1111/00 through 10/31/01 Excess of$2,500,00 Primary Net of Commission Quake/Flood First Layer Excess $ 70,672.80 Insurance Companies Caliber One Indemnity Compan} Specialty Surplus Insurance Compan} Best's Rating A VI,A VII Limit of Coverage $ 10,000,000 Quake/Flood Second Layer Excess $ 12,222.00 Insurance Companies Agricultural Insurance Company Greenwich Insurance Company Best's Rating AXIII,A+XI Limit of Coverage $ 2,500,000 Quake/Flood Third Layer Excess $ 19,849.40 Insurance Companies Fulcrum Insurance Company Agricultural Insurance Company Greenwich Insurance Company Pacific Insurance Company, Ltd. Best's Rating A VIII,A XIII,A+XI,A-XIV Limit of Coverage $ 10,000,000 Quake/Flood Fourth Layer Excess $ 20,928.38 Insurance Companies Claredon Insurance Company Excess Insurance Company Best's Rating A VIII,A IX Limit of Coverage $ 15,000,000 Quake/Flood Excess Fifth Layer $ 12,789.57 Insurance Companies Clarendon Insurance Company Insurance Company of the West Best's Rating A Vill,AVIII Limit of Coverage $ 10,000,000 Multi-Media Insurance Premium 11/9100 through 11/8101 Multi-Media Insurance Premium $ 5,349.54 Insurance Company American International Specialty Lines Insurance Company Best's Rating A+XV Limits $ 1,000,000 TOTAL $ 141,811.68 ADOPTED this 1st day of November, 2000. AYES: NOES: ABSENT: ATTEST: CITY OF PALM SPRINGS, CALIFORNIA By City Clerk City Manager REVIEWED &APPROVED AS TO FORM RESOLUTION NO. OF THE CITY COUNCIL OF THE CITY OF PALM SPRINGS, CALIFORNIA, APPROVING INSURANCE RENEWALS FOR THE CITY'S EXCESS DIFFERENCE IN CONDITION (EARTHQUAKE/FLOOD) INSURANCE AND MULTI-MEDIA INSURANCE. WHEREAS the City's Excess Difference in Condition (Earthquake/Flood) Insurance coverage expired at midnight on October 31, 2000; and WHEREAS the City's Multi-Media insurance coverage expires at midnight on November 8, 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 City's Insurance Broker of Record to solicit insurance proposals from qualified carriers upon renewal of these policies, and WHEREAS the City of Palm Springs received insurance quotations on these renewals on October 27, 2000. NOW THEREFORE BE IT RESOLVED by the City Council of the City of Palm Springs, approve the following insurance coverage renewals: Difference in Condition(Quake/Flood) Premium 11/1100 through 10/31/01 Excess of$2,500,00 Primary Net of Commission Quake/Flood First Layer Excess $ 70,672.80 Insurance Companies Caliber One Indemnity Company Specialty Surplus Insurance Company Best's Rating A VI,A VII Limit of Coverage $ 10,000,000 Quake/Flood Second Layer Excess $ 12,222.00 Insurance Companies Agricultural Insurance Company Greenwich Insurance Company Best's Rating AXIII,A+XI Limit of Coverage $ 2,500,000 Quake/Flood Thud Layer Excess $ 19,849.40 Insurance Companies Fulcrum Insurance Company Agricultural Insurance Company Greenwich Insurance Company Pacific Insurance Company, Ltd. Best's Rating A VII I,A XI II,A+XI,A-XIV Limit of Coverage $ 10,000,000 Quake/Flood Fourth Layer Excess $ 20,928.38 Insurance Companies Claredon Insurance Company Excess Insurance Company Best's Rating A Vill,A IX Limit of Coverage $ 15,000,000 Quake/Flood Excess Fifth Layer $ 12,789.57 Insurance Companies Clarendon Insurance Company Insurance Company of the West Best's Rating A Vill,AVIII Limit of Coverage $ 10,000,000 Multi-Media Insurance Premium 11/9100 through 1118/01 Multi-Media Insurance Premium $ 5,349.64 Insurance Company American International Specialty Lines Insurance Company Best's Rating A+XV Limits $ 1,000,000 TOTAL $ 141,811.68 ADOPTED this 1 st day of November, 2000. AYES: NOES: ABSENT: ATTEST: CITY OF PALM SPRINGS, CALIFORNIA By City Clerk City Manager REVIEWED &APPROVED AS TO FORM 1 CITY OF PALM SPRINGS ! 1 1 , 1 DIFFERENCE IN CONDITIONS ! INSURANCE PROPOSAL 1 NOVEMBER 1, 2000 - 2001 1 Presented By: ! AON Aon Public Sector Alliance 1 A Division of Aon Risk Services, Inc. License #0363334 1 One Market, Spear Tower, Suite 2100 San Francisco, CA 94105 1 (415) 543-9360 1 1 E i 7"1 1. ,I R TT 1 1 ' Exc-ess Difference in Conditions ' PROPOSED PROGRAM STRUCTURE Combined Program Limit: Insurance Carrier(s) ' $12,500,000 Caliber One Indemnity Company Specialty Surplus Insurance Company $10,000,000 Excess$2,500,000 Primary " ' Agricultural Insurance Company $15,000,000 Greenwich Insurance Company $2.500,000 Excess$12,500,000 Fulcrum Insurance Company Agricultural Insurance Company ' $25,000,000 Greenwich Insurance Company Pacific Insurance Company,Limited ' $10,000,000 Excess$15,000,000 Clarendon Insurance Company ' $40,000,000 Essex Insurance Company $15,000,000 Excess$25,000,000 Clarendon Insurance Company $50,000,000 Insurance Company of the West $10,000,000 Excess$40,000,000 Clarendon National Insurance Company $60,000,000 Essex Insurance Company Insurance Company of the West $10,000,000Excess$50,000,000 $57,500,000 Total Excess Limits �P ^cn¢4"inw ',s00,000 �"C layer vv¢dG �1fjilid-:'r� llaasrrna°�cs�� �Cdaaaa��a "j" "q"pleevedbyYhe Czliy fenenna.cft 1,vk' + akv date qi`.j7gY1y 1, 200,. ' CITY OF PALM SPRINGS i' ovetr bch- 1, 20,06 to PiTovevnnbp2— 1, 2001 ' Insured: City of Palm Springs 3200 East Tahquitz Palm Springs, CA 92263 Covered Locations: On file with insurance companies ' Policy Term: November 1, 2000 to November 1,2001 Coverage: Difference in Conditions including Earthquake and Flood, per ' Occurrence and in the Annual Aggregate as respects the perils of Earthquake and Flood, subject to the term, conditions and exclusions contained in the actual policy forms. Total Insurable Values: Option I. $176,400,394 ' Option II. $142,680,379 (Bond Debt locations only) Deductible(s): Earthquake: 5% of the combined value of Buildings, Personal ' Property, Media, Valuable Papers, Extra Expense, Earning, Rental Interruption, and Debt service, subject to a minimum of$25,000 Per Occurrence Flood: $50,000 Per Occurrence All Other Insured Perils: $5,000 Per Occurrence Limit of Liability: Limits per the attached "Quotation Summary' are Per Occurrence and in the Annual Aggregate separately as respects the perils of ' Earthquake and Flood excess of $2,500,000 (primary), Per Occurrence and in the annual aggregate separately respects the perils of Earthquake and Flood. Reporting and Adjustments: Prorate premiums for additions or deletions during the policy term Valuation: Buildings and Contents: Replacement Cost Time Element: Actual Loss Sustained IVhde we believe[his Proposal of Ltsvnrance fairly represents the terms. conditions and evcbes toll v/ound m r oil r mvnr once polrcl. in the erect of anp difference beh i eeu/hepoGcr and this proposal, the pohcr provision, will Jn ect all I)I evolatiori 1 This proposal is not nnended to replace or supersede nnr o/I our uisarmice oonb ileac. TOTAL INSURABLE VALUES $176,400,394 Excess ess Difference in Conditions Quotation Summary Underwriters ' Insurer Limit of Liability Premium $10,000,000 Caliber One Indemnity Company, AVI Excess of $70,672.80 Specialty Surplus Insurance Company,AVII $2,500,000 Primary' ' Agricultural Insurance Company, AXIII 1 $2,500,000 Greenwich Insurance Company, A+XI Jr Excess of $12,222.00 $12,500,000 ' Fulcrum Insurance Company, AVIII Agricultural Insurance Company,AXIII $10,000,000 Greenwich Insurance Company, A+XI Excess of $19,849.40 Pacific Insurance Company, Ltd, A-XIV $15,000,000 Clarendon Insurance Company, AVIII $15,000,000 ' Essex Insurance Company, AIX Excess of $20,928.38 $25,000,000 Clarendon Insurance Company,AVIII $10,000,000 Insurance Company of the West,AVIII Exsa.of $12,789.57 ..,uV..MFlkM'A&dMd i'MtwW.I{AAkx,k,u,�p�F1tl�5h,RIb'�M„k Clarendon Insurance Company, AVIII �'i.ra:" Essex Insurance Company,AIX 0000000 $11,370.15 Insurance Company of the West,AVIII lw•W`fnYYWVM"WYr tlWiWlM:iFF'k14,'�"L'�'VY.1'0 u -wew+ r�rruawrwr .. Premium/Rate wr+rsr�wwrir �� r�� - Totals Option 1: 41182�7 201.WA2 Option 2: y , 7r11 ' Option 4: (CurrentLimk) -, *7diuuarry 52,500,000 DIC layer with E,°ffffitiatem Insurance C'onmpatay approved Ib 6ie City C®nnee9 wv ai ana effective date of July i,2000 to.Dniy i,200L '"Prernfiums, allun©ted above are 1"Ict of Coffim�rnissuon�reE nc➢unshiL,mu_2H anpPHc*Wc ' Taut ane,Dees, 1 ' TOTAL INSURABLE VALUES $142,680,379 ' Bond Requirements TErcess Difference in Conditions Quotation Summary Underwriters Insurer Limit of Liability Premium $10,000,000 ' Caliber One Indemnity Company, AVI Excess of $63,560.26 Specialty Surplus Insurance Company,AVII $2,500,000 Primary Agricultural Insurance Company, AXIII 1 $2,500,000 Greenwich Insurance Company, A+XI T Excess of $11,358.17 ' $12,500,000 Fulcrum Insurance Company, AVIII Agricultural Insurance Company, AXIII $10,000,000 ' Greenwich Insurance Company,A+XI Excess of $18,000.00 Pacific Insurance Company, Ltd, A-XIV $15,000,000 Clarendon Insurance Company, AVIII $15,000,000 $20,739.19 Essex Insurance Company,AIX Excess of $25,000,000 Clarendon Insurance Company,AVIII l $10,000,000 $9,913.31 Insurance Company of the West, AVIII Jr Excess of $40,000,000 Clarendon Insurance Company, AVIII $10,000,000 Essex Insurance Company, ADC Excess of $9,344.61 Insurance Company of the West, AVIII $50,000,000 ' Premium/Rate Total Premium: $609000,W $132,915.54/.0931 *Paae aaay '0 ,sdd®,©add DIClayea vvelda 9 ' leta�e�JlariasnuicerCaana& any dppl-?z�oved by the City Council with an ejy"eefive date of'.Uaaly /, 2000 to J7Ydja ,?, 2001, **Pa-ru hwas quoted above are Net of Commission, and inc➢usive of a➢➢ 2Pj,) ecab1--tax dz fecs. City of Palm Springs Excess DIC Premium Comparison �IP'7I`IICi`! II 1999 to 2000 2000 to 2001 Limit Premium Rate Limit Premium Rate $60,000,000 $1089121.70 .0760 $25,000,000 $102,744.20 .0582 ' $40,000,000 $123,672.57 .0701 $50,000,000 $136,462.14 .0773 $60,000,000 $147,832.29 .0838 ' Quotes based on values of$176,400,394 Quote based on values of$142,249,764 .0773 rate, per $100 of values at a $50 million .0760 rate, per$100 of values limit (Rate increase of.0013%) tD�l'�'11,1 �C�I`i ➢�' 1999 to 2000 2000 to 2001 $60 million for a premium of$108,121.70 $60 million for a premium of$132,915.54 Quotes based on values of$142,680,379 Quote based on values of$142,249,764 .0931 rate,per $100 of values .0760 rate,per$100 of values (Rate increase of.0017%) Prew uni� are Net of CommisAonn and nnnrflushie of al9 21iMp uaab]e ' saxes and i'ee& ' City of Palm Springs DIC Marketing Efforts ' We have approached the following carriers: Carrier Results Caliber One Indemnity Company Submitted quote, included in proposal Specialty Surplus Insurance Company Submitted quote, included in proposal Agricultural Insurance Company Submitted quote,included in proposal Greenwich Insurance Company Submitted quote,included in proposal Fulcrum Insurance Company Submitted quote, included in proposal Pacific Insurance Company Submitted quote, included in proposal Clarendon Insurance Company Submitted quote, included in proposal ' Essex Insurance Company Submitted quote,included in proposal Insurance Company of the West Submitted quote, included in proposal St Paul Fire &Marine Quoted $65,000 for the $10 x $40 layer limit American National Fire Declined due to high ll"I/f Northfield Insurance Company Declined due to high 1P IAL Royal Insurance Company Declined due high PT'k , age of some buildings Westport Insurance Declined due to high;-ONJi L Diamond State Quoted $52,500 for the $10 x $50 layer limit Hudson(Northshore) Quoted $52,500 for the $10 x $50 layer limit TIG Insurance Declined, expected 25-30% increase in premium Westchester Fire Declined, could not compete with incumbent r r r r _ r r r r r r 1 r r r 1 i CITY OF PALM SPRINGS N9 L� d-1 a m 1LllAON II' 1Y Pkv01P0SAIL 1'�19vtema ben- '9, 2000 Fro 9, 2001 Insured: City of Palm Springs 3200 East Tahquitz Palm Springs, CA 92263 Company: American International Specialty Lines Insurance Company ' Policy Term: November 9, 2000 to November 9, 2001 Coverage: Multi-Media Professional Liability—Claims Made tCarrier agrees to pay, on behalf of the insured, those sums in excess of the Deductible and within the applicable limit of which the insured becomes legally obligated to pay as damages to which this insurance applies. I Limits: $1,000,000 Each Wrongful Act $1,000,000 Annual Aggregate Deductible: $5,000 Conditions: Original completed, signed and dated Multimedia Professional Liability application SLA Form SL-2 Policy Form 65957 as expiring Endorsements: Date Recognition Endorsement Annual Premium: $5,031.00 >,Jet of fo mammnsszem, $ 150.00 Policy Fee $ 150.93 State Tax $ 17.61 Stamping Fee $ 5,349.54 14'111he we heheve thee Proposal nj,lneurartce fatrh, represents the telnar, emalitrmts and erclIM017V found ni vour msurmtce polio in the event of any difference behveen the policy and this proposal, the policy provisions w ill dvect am re.sohuaon. This proposal I.s not Intended to replace or supersede and, o/ vour mseunnce cotdracts 1 ' City of Palm Springs ' Multi-Media Premium Comparison 1 1999 to 2000 2000 to 2001 $1 MM limit for a premium of$5,317.50 $1 MM limit for a premium of$5,349.54 The p,I eh5(l'uniAs Q1j C'ct"-Id Ralr oVP, c"11 ri" Net 'DJ t��ti�.7L+_=1.�'s�A�Lfl all'�11 "IDI 1➢11m'Ve D'U w�N r aprAca"PiDllr, tan-a 2>md Acess0 City of Palm Springs Multi-Media Marketing Efforts We, ]dove zrppironlc➢nedf the fa lo,Gvhng carn-aeus: Carrier Results ' Royal Surplus Insurance Company Could not compete with the incumbent Evanston Insurance Company Expected a 20%increase in premium Media Professional Insurance Could not meet incumbents pricing Unbil b n spedauty fl ne "�E cavvenmge i�n�w✓u�E�al by 0, 1