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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 (� Zj 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 / 4a 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 1�