HomeMy WebLinkAbout11/26/2002 - STAFF REPORTS (8) DATE: November 20, 2002
TO: City Council
FROM: Risk Manager via Director of Procurement & Contracting
INSURANCE RENEWALS FOR THE CITY'S EXCESS EARTHQUAKE/FLOOD
INSURANCE
RECOMMENDATION:
It is recommended that the City Council adopt a Resolution approving the City's
Earthquake/Flood Insurance renewals effective November 21, 2002.
SUMMARY:
Notwithstanding the increases in property insurance premiums over the past several
years, and the catastrophic losses resulting from the September 11, 2001 terrorist attacks
placing many insurance companies in a reserve position, when this year's marketing
results were received, the City's Insurance Broker found that some insurance
underwriters were willing to quote lower rates for the higher layers of excess insurance
than they were last year. This year's property values increased from $182,071,385 to
$195,186,338. Funds were budgeted to cover the additional insurance costs for the new
parking structure in addition to the annual increase in replacement values and the
anticipated 20 percent increase in premiums. Because the rates are better than
anticipated, if the City Council desires, greater limits can be purchased within the funds
available in the Risk Management insurance budget.
BACKGROUND:
Due to the uncertainty of the continuation of the Utility Users Tax, we extended the
current earthquake/flood insurance coverage at the rate of$522.38 per day, allowing the
City Council sufficient time after the election to determine what, if any, excess
earthquake/flood insurance it desires.
The November 21, 2002 renewals are excess layers of earthquake/flood insurance. The
City Council approved the $2,500,000 primary level of earthquake/flood insurance on July
1, 2002, at a cost of$126,036.
The Insurance Broker's earthquake/flood insurance marketing report and details of each
layer including insurance company financial ratings are attached.
Following is summary of the levels of insurance the City can purchase with each level's
premium cost and the cumulative total of coverage and costs:
Excess Levels of Insurance over primary $2.5 mil
Earthquake/ Cumulative Premium Cumulative
Flood Insurance for each Cost of
Placement Coverage Level Insurance
Next $10 mil $12,500,000 $ 95,500 $ 95,000
Next $40 mil $52,500,000 $103,715 $198,715
Next $15 mil $67,500,000 $ 18,000 $216,715
Next $15 mil $82,500,000 $ 18,000 $234,715
Following is a summary of earthquake/flood insurance purchased over the last ten years:
Year Property Insurance Deductible
Schedule Limit
1993 $135,680,486 $20,000,000 10%
1994 $137,130,461 $20,000,000 10%
1995 $141,071,896 $20,000,000 10%
1996 $142,521,871 $20,000,000 10%
1997 $144,302,534 $86,803,070 5%
1998 $147,823,510 $86,803,070 5%
1999 $149,650,839 $86,803,070 5%
2000 $152,729,810 $50,000,000 5%
2001 $1752042,804 $50,000,000 5%
2002 $182,071,385 $73,500,000 5%
2003 $195,186,338 $82,500,000 5%
Sufficient funds are available in Earthquake Insurance (5905-48655).
NANCY JO Mi:NIWOSH, ARM, MPA
Risk Manager
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HAROLD E. GOOD, CPPO
DIRECTOR OF Procurement & Contracting
APPROVED _ ==r y✓'�
City Manager
Attachments: Davis & Graeber Marketing Report
Resolution
REVIEWED BY DEPT.OF FINANCE
Staff Report and Minute Order Nov2002 ins r --K//7
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Marketing Report for DIC Coverages for the City of Palm Springs 2002
Nov 1,2002
Market Best Ratin Response Layers Rate per million
Affiliated FM A+XV Current primary$2.5 mil $2.5 primary
Great American/Greenwich A XH Proposed P layer(sharing)$10 mil $10 x$2.5 $9,500
Pacific Ins A+IV $2.5 mil x of$12.5 mil @$19,000 $2.5 x$12.5 $7,800
$5 x$12.5 $7,276
Ins Co of the West A VIII $10 mil part of$36 x of$40 $20,000 $10 part$36 x$40 $4,000
Westport Ins Corp A++XV $5 mil part of$15 mil x of$15 mil @$15,000 $5 part S15 x$15 $3,000
$10 mil x of$62.5 mil P.$15,000 $10 x 62.5 $1,500
Clarendon American Ins A VHI Pro osed 2""la er $40 x$12.5 mil $2,592.86
Westchester Fire A XHI Pro osed 3"la er$10 mil $10 part$52.5 $1,200
Essex Insurance Company AIX Proposed 3'layer$10 mil $30 x$52.5 $1,200
Western Re A VHI Can only participate above$15 mil X of$15 mil $8,500
London $145 mil x of$50 mil @$310,000 X of$50 mil $2,137.93
$95 mil x of$100 mil @$150,000 X of$100 mil $1,578.95
First State B+X Can not participate at this pricing No Quote
Mt Hawley A VIH Declined to quote Declined
ARCH Re A-X Declined to quote Declined
ICAT Declined to quote Declined
St Paul/USF&G A+XV Declined to quote Declined
AXA Re A+XHI Declined to quote Declined
United States Fire A+XV Declined to quote Declined
Commonwealth Ins A XH Declined due to pricing Declined
Allianz Underwriters A++XV Declined as the do not write mono-line DIC Declined
General Star A++XV Declined due to age of bld s. Declined
Northshore Management Decline due to pricing Declined
RLI AIX Declined to quote Declined
Ro al Ins A+X1V Declined to quote Declined
1 Lexington/AIG A++XV Declined to quote Declined
Arrowhead A VHI Declined to quote Declined
. Empire Fire & Marine A+VHI Declined to quote Declined
W American Custom A XH Declined to quote Declined
Agricultural A+XV Declined to quote Declined
Rock River Declined to uote Declined
Difference in Condition Premium Rate Per Million Premium % Increase/Decrease in Rate
(Quake/Flood) 11/1101 through 1111102 1111101 through 11/1/02 1111102 through 1111/03 Rate Per Million
Net of Commission Net of Commission Net of Commission 11/1102 through 1111103
Net of Commission
Excess of$2,500,00 Primary Values of$ 195,186,338 Values of$195,186,338
Quake/Flood First Layer Excess $80,356.00 $95,000.00
Insurance Companies Great American Assurance Great American Assurance 18.22
Best's Rating A XII A XII
Limit of Coverage $ 10,000,000 $8,035.60 Per Mil $ 10,000,000 $9,500 Per Mil
Quake/Flood Second Layer Excess $14,965.06 $103,714.63
Insurance Companies Pacific Insurance Cc Clarendon American Ins 56.68
Best's Rating A+IV A Vlll
Limit of Coverage $2,500,000 $5,986.024 Per Mil $40,000,000 $2,592.86 Per Mil
Quake/Flood Third Laver Excess $41,760.00 $18,000.00
Insurance Companies Westport Insurance Corp
Essex Insurance Cc Essexlnsurance
Westchester Fire Ins Westchester Fire Ins 56.90
Best's Rating A++XV,AIX,AXIII A IX,A XIII
Limit of Coverage $15,000,000 $2,784.00 Per Mil $ 15,000,000 $1,200 Per Mil
Quake/Flood Fourth Layer Excess $24,638.00 $18,000.00
Essex Insurance Cc
Insurance Companies Clarendon Insurance Cc Westchester Fire 51.29
Best's Rating A VIII A IX,A XIII
Limit of Coverage $ 10,000,000 $2,463.70 Per Mil $15,000,000 $1,200.00 Per Mil
Quake/Flood Excess Fifth Layer $10,081.00 $20,000.00
Insurance Companies Insurance Cc of the Wes 0.80
Best's Rating AVIII
Limit of Coverage $10,000,000 $1,008.10 Per Mil $20,000,000 $1,000.00 Per Mil
Quake/Flood Excess Sixth Layer $18,347.62
Insurance Companies Essex Insurance C
Westchester Fire Ins
Clarendon Insurance C
Best's Rating AIX,AXIII,AVIII
- Limit of Coverage $26,000,000 $705.678 Per Mil Per Mil
OTAL LIMIT OF DIC $76.000,000.00 $102,500,000.00
TOTAL ANNUAL PREMIUM DIC $190,147.681 $254,714.63 (PS 2002 Quake Rate)
RESOLUTION NO.
OF THE CITY COUNCIL OF THE CITY OF PALM
SPRINGS, CALIFORNIA, APPROVING THE CITY'S
EXCESS EARTHQUAKE/FLOOD (DIFFERENCE IN
CONDITION) INSURANCE RENEWALS.
WHEREAS the City's Excess Earthquake/Flood (Difference in Condition) Insurance
coverage expired at midnight on November 20, 2002; and
WHEREAS the City of Palm Springs contracted with Davis and Graeber Insurance
Services, Inc., a California corporation, on October 3, 2001, 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 1, 2002.
NOW THEREFORE BE IT RESOLVED by the City Council of the City of Palm
Springs, approve the following insurance coverage renewals:
Earthquake/Flood(Difference in Condition) Premium 11/21/02 through 11/20/03
Excess of$2,500,000 Primary Net of Commission
First Layer Excess of$2.5 Million $ 95,000.00
Insurance Company Great American Assurance
Best's Rating A XII
Limit of Coverage $10,000,000
Second Layer Excess of$12.5 Million $103,714.63
Insurance Company Clarendon American Ins,
Best's Rating A VIII
Limit of Coverage $40,000,000
Third Layer Excess of$52.5 Million $ 18,000.00
Insurance Companies Excess Insurance Company
Westchester Fire Insurance.
Best's Rating A IX,A XII
Limit of Coverage $ 15,000,000
Fourth Layer Excess of$67.5 Million $ 18,000.00
Insurance Companies Excess Insurance Company
Westchester Fire Insurance
Best's Rating A IX,A XII
Limit of Coverage $ 15,000,000
TOTAL $ 234,714.63
ADOPTED this 20th day of November, 2002.
AYES:
NOES:
ABSENT:
ATTEST: CITY OF PALM SPRINGS, CALIFORNIA
By
City Clerk City Manager
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