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Type:
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Consent Agenda
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Status:
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Passed
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On agenda:
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7/20/2021
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Final action:
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7/20/2021
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Title:
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Renewal of Property and Casualty Coverages
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Attachments:
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1. Approver Report
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TO: Mayor and City Council
FROM: James V. Capparelli, City Manager
SUBJECT:
title
Renewal of Property and Casualty Coverages
end
BACKGROUND:
The City utilizes the services of Arthur J. Gallagher Risk Management Services, Inc. (AJG) to represent the City in obtaining Property and Casualty Insurance Coverage. Each year, AJG and the City meet to update records, discuss coverages, and review trends in the marketplace. Then AJG solicits quotations from the City’s current carriers as well as various independent carriers from which the most competitive quotes are selected and recommended for approval by the City. The City works primarily with Rich Stokluska, Area Executive Vice President, AJG, who has vast experience in municipal insurance as well as the City’s account.
CONCLUSION:
Specifically, this year our biggest increase is seen in the area of Excess Liability** due to the current carrier’s decision not to renew or add new business within municipal government. This left us with the option of spreading out the excess coverage to three different carriers, each of whom provided separately tiered rates to insure vs. a singular rate as the City had enjoyed previously. Options to reduce the currently proposed increase would be to reduce the amount of excess liability coverage, if desired.
The total projected cost of the renewal proposal submitted by Arthur J. Gallagher is $1,291,676. All coverages meet the City’s specifications. Funding is currently available in the General Corporate Fund/Public Liability & Property Damage (Org Code 01014000; Object Code 525200) and the General Corporate Fund/Workers Compensation (Org Code 01014000; Object Code 502600); however, the increase was not planned for in the current budget and an amendment may be needed later in the year depending upon future worker’s compensation costs.
The following is a comparison of the historical coverage costs compared with the proposed quote:
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Coverage |
2016/2017 |
2017/2018 |
2018/2019 |
2019/2020 |
2020/2021 |
2021/2022 Proposed Renewal |
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General Liability (GL) * |
$204,958 |
$173,667 |
$174,016 |
$175,764 |
$196,553 |
$264,959 |
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Excess Liability** |
53,700 |
48,504 |
48,351 |
59,649 |
66,826 |
505,890 |
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Property *** |
115,000 |
90,601 |
98,509 |
111,504 |
160,113 |
209,315 |
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Crime Package |
3,193 |
2,554 |
7,457 |
7,457 |
7,547 |
8,513 |
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Underground Storage Tank |
10,460 |
9,601 |
10,937 |
12,379 |
12,962 |
11,825 |
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Worker’s Compensation |
185,462 |
161,550 |
168,309 |
201,101 |
232,524 |
211,244 |
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Cyber |
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33,624 |
25,461 |
33,683 |
41,180 |
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Broker Fee |
116,838 |
94,934 |
36,500 |
36,500 |
37,600 |
38,750 |
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Total |
$689,611 |
$581,411 |
$577,703 |
$629,815 |
$746,808 |
$1,291,676 |
* Includes Auto Liability, Law Enforcement Liability, Public Officials, Employee Benefits and Employment Practices Liability. Premium subject to Surplus Lines Tax/variances are typically less than 10%.
** Includes three (3) separate excess liability carriers with costs of coverage at: $219,746, $156,675 & $129,469 ($5M/each).
*** Includes Boiler & Machinery, Excess Flood, Earthquake, Business Interruption, Contingent Tax Interruption, Accts Receivable, Electronic Data Processing, Auto Damage, Contractors Equipment, Paved Surfaces, Valuable Papers, Builders Risk, Errors & Omissions, Fine Arts, Fungus, Personal Property in Transit, Houbolt Bridge.
RECOMMENDATION:
recommendation
Based on the Administration’s evaluation of the attached proposal, it is recommended that the City Council authorize executing a contract with Arthur J. Gallagher Risk Management Services, Inc. for the renewal of coverages and services for the City’s Consolidated Property and Casualty Insurance Program for the policy year beginning August 1, 2021, in the amount of $1,291,676 for the 2021/2022 plan year.
end
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