Agenda 03/22/2016 Item #11B3/22/2016 11.B.
EXECUTIVE SUMMARY
Recommendation to approve the purchase of property insurance effective April 1, 2016 in the estimated
amount of $2,407,799, a reduction of $619,800.
OBJECTIVE: To purchase property insurance to protect the County's real and personal property assets
against losses caused by natural and man-made perils and to comply with the Stafford Act.
CONSIDERATIONS: The Board of Commissioners purchases property insurance to protect the County's
real and personal property assets against losses caused by natural and man-made perils and to comply with the
Stafford Act.
The current property insurance program expires on April 1, 2016 and contains the following provisions.
Insurable replacement values are $916,412,717. The total limit of coverage purchased (a/k/a the Loss Limit) is
$75,000,000. The named storm wind deductible is 5% per building and contents with a minimum named
storm deductible of $250,000. Retained losses are capped at $5,000,000 per named storm. For all other perils
the deductible is $50,000 per occurrence. Primary flood coverage is purchased through the National Flood
Insurance Program (NFIP) on properties in special flood hazard zones. The property insurance program
provides an additional $75,000,000 of flood coverage in excess of the NFIP coverage of $500,000 per building
maximum.
Both the property and flood insurance programs are purchased in accordance with Section 311 (42 U.S.C.
5154) of the Stafford Act which requires that an applicant for FEMA assistance "shall comply with regulations
prescribed by the President to assure that, with respect to any property to be replaced, restored, repaired, or
�\ constructed with such assistance, such types and extent of insurance will be obtained and maintained as may
be reasonably available, adequate, and necessary, to protect against future loss to such property. " Staff
submits the program to the Florida Department of Insurance for approval on an annual basis to assure
compliance with the Act.
Staff requested that the underwriters commission a probable maximum loss study to determine the appropriate
loss limit to purchase. Risk Management Solutions, Inc. prepared the study. It indicates that the probable
maximum loss to County property is $66,718,675 for a 100 -year wind event. Staff recommends that the
County continue to purchase a $75,000,000 loss limit.
The County's Broker, Insurance and Risk Management Services, approached 37 (thirty seven) carriers for
proposals. 30 (thirty) carriers declined to quote. 7 (seven) submitted quotes. Of those that declined to quote, the
most common reasons were 1) they could not offer terms at the requested pricing, 2) they could not support the
broad scope of the current manuscript property policy form, and 3) they could not participate in a program that
included a Named Storm deductible cap.
Based upon the responses received from the market, the cost to maintain the current program at the current
replacement values, current loss limit and at the existing terms and conditions is $2,407,799. This represents a
reduction in gross premium of $619,800.
Each of the carriers possesses a minimum Best's rating of A- or higher. Covered perils are written on an "All
Risk of Loss" basis. Loss valuation is on a replacement cost basis. Terrorism coverage is included in the
proposal. There is one substantial coverage improvement over the FY 15 renewal. The named storm deductible
has been reduced from 5% to 3 %. There are no other substantial changes in the program.
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3/22/2016 11.B.
The renewal comparison is illustrated below:
W
Description
Deductible Terms
Annual
Composite
% Change
$ Change
% Change
Premium
Rate per
in Rate per
in Gross
$100
$100
Premium
FY 15 Renewal
5% Named Storm
$3,027,599
.331
-12.9%
- $281,449
-8.50%
Deductible with
$5,000,000 Ca
FY 16 Renewal
3% Named Storm
$2,407,799
- $619,800
-20.5%
Deductible with
1.263
1-20.5%
$5,000,000 Ca
FISCAL IWACT: The final premium is subject to the Statement of Values submitted to the carriers as well
as additions and deletions of property from the schedule as they occur. Based upon the current property
schedule, the estimated annual cost is $2,407,799. Sufficient funds have been budgeted within Fund 516,
Property and Casualty Insurance for this purchase. The premium is net of commission.
GROWTH MANAGEMENT IMPACT: There is no growth management impact associated with this item.
LEGAL CONSIDERATIONS: This item has been approved as to form and legality and requires majority
vote for approval. — CMG
RECOMMENDATION: That the Board approves the purchase of property insurance as outlined in the
Executive Summary and authorizes the County Manager or designee to complete any applications or other
documents necessary to bind coverage and services for a one year period effective April 1, 2016.
PREPARED BY: Jeffrey A. Walker, CPCU, ARM, Division Director, Risk Management Division
Attachments:
1) RMS Probable Maximum Loss Study Summary
2) 2016 Marketing Summary
3) 2016 Property Insurance Program Layering
4) Property Insurance Renewal History
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COLLIER COUNTY
Board of County Commissioners
Item Number: 11.11.6.
3/22/2016 11. B.
Item Summary: Recommendation to approve the purchase of property insurance
effective April 1, 2016 in the estimated amount of $2,407,799, a reduction of $619,800. (Jeff
Walker, Risk Management Division Director)
Meeting Date: 3/22/2016
Prepared By
Name: WalkerJeff
Title: Division Director - Risk Management, Risk Management
2/25/2016 1:59:57 PM
Submitted by
n Title: Division Director - Risk Management, Risk Management
Name: WalkerJeff
2/25/2016 1:59:59 PM
Approved By
Name: GreeneColleen
Title: Assistant County Attorney, CAO General Services
Date: 2/26/2016 4:56:03 PM
Name: PriceLen
Title: Department Head - Administrative Svc, Administrative Services Department
Date: 3/7/2016 9:51:25 AM
Name: GreeneColleen
Title: Assistant County Attorney, CAO General Services
Date: 3/7/2016 3:27:55 PM
Name: KlatzkowJeff
Title: County Attorney,
Date: 3/8/2016 8:33:16 AM
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Name: WellsLaura
3/22/2016 11. B.
Title: Management/Budget Analyst, Senior, Office of Management & Budget
Date: 3/8/2016 2:46:37 PM
Name: CasalanguidaNick
Title: Deputy County Manager, County Managers Office
Date: 3/13/2016 5:29:10 PM
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3/22/2016 11. B.
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3/22/2016 11. B.
MARKET SUMMARY
MARKET
RESPONSE
* *Ace
Quoted
Amrisc Program
Declined -pricing
AVVAC
Declined pricing
* *Arch
Quoted
Arrowhead
Declined pricing
Aspen
Declined - can not get to pricing due to aggregate issues in this area
Axis
Declined pricing
Beazle ,
Declined pricing
Berkley Risk
Declined pricing
Berkshire
Declined - pricing too competative
* *Brit
Quoted
Catalytic
Declined - unable to use the form and max on named storm deductible
* *Colony
Quoted
Diamond State
Declined - couldn't get to the pricing due to modeling results
Endurance
Declined due to the max on named storm
GEP
Decline due to 100% FL - tier 1 exposure
IFG
Declined pricing
Hallmark
Declined pricing
Hiscox
Declined pricing
James River
Declined - modeling results, maximum named storm deductible
Kinsale
Declined - pricing & form would be a problem for them
Lexington
Declined - prici n
LIU
Quoted bu dawn; can not get to pricing in other layers due to their aggregates in this area
* *Markel
Quoted
Maxum
Declined pricing
Mitsui
Declined - would need to be excess of 500 year event on modeling
Partner Re
Declined - coming in double pricing for all lavers
* *Price Forbes
Quoted
RLI
Declined - can not provide flood coverage and pricing
* *RSUI
Quoted
Scottsdale
Declined - would need to be excess of flood limit
Starr
Declined - 100% FL account
Swiss Re
Declined - pric n
TRU
Declined - can not compete with current pricing
Windward
Declined - pricing
XL
Declined - Pricing
Zurich E &S
Declined - Pricing
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3/22%2016 11.13.
Property Insurance Renewal History
FY 09 through FY 16
Property Insurance Total Premium
$4,300,000
$3,800,000
$3,560,000 $3,552,662
E $ 18,900
E j 309,048
a $3,300,000 3,145,0
027,599
$2,800,000
\$1 7,799
$2,300,000
2009 2010 2011 2012 2013 2014 2015 2016
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