Agenda 03/24/2015 Item #11A 3/24/2015 11 .A.
EXECUTIVE SUMMARY
Recommendation to approve the purchase of property insurance effective April 1, 2015 in the
estimated amount of$3,027,599, a reduction of $281,449.
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, 2015 and contains the following provisions.
Insurable replacement values are $851,463,307. 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.
To assure that the current Statement of Values is accurate, staff asked the Real Property Section to
perform an updated valuation of the county's scheduled real property. Based upon their findings, staff
recommends that replacement values be increased to $913,221,183 (+5%).
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 $79,386,050 for a 100-year wind event. Although the
Risk Management Solutions study indicates a probable maximum loss to County property of $79,386,050
for a 100-year wind event, staff is recommending a $75,000,000 loss limit.
The County's Broker, Insurance and Risk Management Services, approached 27 (twenty seven) carriers
for proposals. 19 (nineteen) carriers declined to quote. 8 (eight) 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
recommended replacement values, current loss limit and at the existing terms and conditions is
$3,027,599. This represents a reduction in gross premium of$281,449.
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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 are no other substantial changes in the program compared to the FY 14 renewal.
The renewal comparison is illustrated below:
Description Deductible Terms Annual Composite % Change $ Change % Change
Premium Rate per in Rate in Gross
$100 per$100 Premium
FY 14 Renewal 5% Wind Deductible $3,309,048 .380 -8.9% -$243,614 -6.86%
with $5,000,000 Cap
FY 15 Renewal 5% Wind Deductible $3,027,599 .331 -12.9% -$281,449 -8.50%
with $5,000,000 Cap
FISCAL IMPACT: The final premium is subject to the Statement of Values submitted to the carriers as
well as additions and deletions of property as they occur. Based upon the current property schedule, the
estimated annual cost is $3,027,599. 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, 2015.
PREPARED BY: Jeffrey A. Walker, CPCU, ARM, Division Director, Risk Management Division
Attachments:
Risk Management Solutions PML Study Summary
Letter from Dept of Insurance and Dept of Emergency Management- Reasonableness
2015 Property Insurance Program Layering
2015 Market Summary
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3/24/2015 11 .A.
COLLIER COUNTY
Board of County Commissioners
Item Number: 11.11.A.
Item Summary: Recommendation to approve the purchase of property insurance
effective April 1, 2015 in the estimated amount of$3,027,599, a reduction of$281,449. (Jeff
Walker, Risk Management Division Director)
Meeting Date: 3/24/2015
Prepared By
Name: WalkerJeff
Title: Division Director-Risk Management,Risk Management
3/2/2015 10:10:36 AM
Submitted by
Title: Division Director-Risk Management, Risk Management
Name: WalkerJeff
3/2/2015 10:10:38 AM
Approved By
Name: GreeneColleen
Title: Assistant County Attorney, CAO General Services
Date: 3/4/2015 10:52:37 AM
Name: PriceLen
Title: Department Head-Administrative Svc, Administrative Services Department
Date: 3/12/2015 9:17:57 AM
Name: KimbleSherry
Title: Management/Budget Analyst, Senior, Office of Management&Budget
Date: 3/12/2015 11:01:10 AM
Name: KlatzkowJeff
Title: County Attorney,
Date: 3/12/2015 2:44:35 PM
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3/24/2015 11 .A.
Name: OchsLeo
Title: County Manager, County Managers Office
Date: 3/12/2015 5:33:57 PM
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3/24/2015 11 .A.
Key Losses-US Windstorm and Surge Analysis (USD)
Ground Up Loss , : Deductible"Loss :.Gross Loss.
Return Period GU OEP== ;;. --"..GU AEP CL OEP , I CL AEP GR OEP I " GR AEP .
10,000 417,794,888 422,938,872 5,000,000 12,074,773 412,504,690 417,137,373
5,000 352,705,356 357,859,710 5,000,000 10,504,071 346,985,218 351,829,050
1,000 214,873,130 219,485,150 5,000,000 9,999,178 209,112,103 213,613,791
500 170,932,306 174,528,606 5,000,000 8,632,641 165,646,659 168,686,117
250 130,794,200 133,604,920 5,000,000 7,094,744 125,465,209 127,929,830
100 79,386,050 81,308,852 5,000,000 5,070,469 74,337,687 75,710,039
50 46,731,522 47,854,363 5,000,000 5,000,000 41,842,342 42,575,225
25 20,891,882 21,382,443 5,000,000 5,000,000 16,444,531 16,662,071
10 2,106,970 2,163,962 1,947,021 2,000,843 0 0
5 48,747 51,003 49,139 50,135 0 0
AAL 3,253,666 3,253,666 485,125 485,125 2,768,540 2,768,540
SD 17,520,478 17,520,478 1,368,324 1,368,324 16,689,296 16,689,296
CV 5 5 3 3 6 6
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STATE OF FLORIDA
DIVISION OF EMERGENCY MANAGEMENT
RICK SCOTT BRYAN W.KOON
Governor Director
September 5, 2014
Mr. William H. Kuhlman, CPCU, ARM
Executive Vice President
Insurance and Risk Management Services, Inc.
8950 Fontana Del Sol Way, Suite 200
Naples, Florida 341.09
Re: Collier County(Policy Year 2014-2015)
Insurance Reasonableness Determination Requested
Dear Mr. Kuhlman:
Please find attached the determination of the State Insurance Commissioner
regarding the "reasonableness" of the insurance coverage procured by Collier County.
Based upon the information reviewed by the Office of Insurance Regulation, the State
Insurance Commissioner has determined that Collier County has been successful in
procuring insurance that appears to be "reasonable."
Please understand that this determination applies only for the levels of coverage,
terms and coverage periods that were presented for review; should material terms of the
insurance package change, the applicant will need to resubmit for a new reasonableness
determination.
If you have any questions or require additional information, please contact Steven
Hyatt, State Public Assistance Officer, via email at Steven.Hvatt(cem.myfiorida.com or by
phone at (850) 487-1660.
Sincerely,
)1)fr"
Steven yatt
State Public Assistance Officer
SH/ms
Attachments: Determination of the State Insurance Commissioner
DIVISION HEADQUARTERS • • STATE LOGISTICS RESPONSE CENTER
2555 Shumard Oak Blvd Te1:850-413-9969'Fax:850-488-1016 2702 Directors Row
Tallahassee, FL 32399-2100 wwk Packet Page 118- Orlando, FL 32809-5631
3/24/2015 11 .A.
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FINANCIAL SERVICES
COMMISSION
.„,,,4,, ,,,.. „,t_
h Ir RICK SCOTT
�p •,_'[ GOVERNOR
OFFICOFFICE OF INSURANCE REGULATION
E ATWATER CHIEF FINANCIAL OFFICER
PAM BONDI
ATTORNEY GENERAL
KEVIN M. MCCARTY ADAM PVINAM
COMMISSIONER COMMISSIONER OF
AGRICULTURE
August 15, 2014
Steven Hyatt
State Pubic Ass'ictanrc Officer
Division of Emergency Management
2555 Shumard Oak Blvd
Tallahassee, Florida 32399-2100
Dear Mr. Hyatt
This letter is in response to your letter dated June 18, 2014, in which it was requested that the Office of
Insurance Regulation (Office) certify the "reasonableness" of the insurance coverage for Collier County,
Florida. Based on the information provided, it appears that the Collier County has been successful in
procuring insurance that appears to be "reasonable."Collier County may have already received an email
correspondence with recommendations for the coming policy year. Due to changes in the marketplace,
additional comments regarding their program may be provided.
The Office understands that the reason the program has been submitted is to meet the requirements of
the Federal Stafford Act, which appears to require the approval of a regulatory authority. Although
some of the products at issue may not be subject to Chapter 627 of the Florida Insurance Code, the
program that has been selected appears to be "reasonable" and competitive given the state of the
Florida insurance market in 2014.
If the Office can be of further assistance, please do not hesitate to contact us.
Sincer ,
/IF, Pir
Kevin M. McCarty e
KEVIN M.McCARTY•COMMISSIONER
200 EAST GAINES STREET • TALLAHASSEE,FLORIDA 32399-0305 • (850)413-5914 • FAx(850)488-3334
WEBSITE:WWW.FLOIR.COM • EMAIL:KEVIN.MCCARTY@FLOIR.COM
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3/24/2015 11 .A.
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3/24/2015 11 .A.
2015 Property Insurance Marketing Summary
MARKET RESPONSE
London Quoted
Ace Quoted
Arch Quoted
Brit Quoted
Colony Quoted
Not able to quote renewal-pricing for capacity on this account is much higher than targets`
Liberty due to aggregate issues in the area
Markel Quoted
RSUI Quoted
Quoted 6.66667%of the 75M stretch for layer price of 3,375,000 or option for 6.5%of 50m
Zurich for layer price of 2.9M
Amrisc Could Not Improve on Current Pricing and Terms
Lexington Declined-pricing
Aspen Declined-pricing
AWAC Declined-pricing
Axis Declined-pricing for the layers were more than double due to modeling results
Berkshire Declined-pricing too competative
Berkley Risk Solutions Declined-pricing
Arrowhead Declined-pricing
GEP Declined-pricing
James River Declined-modeling results, maximum named storm deductible
Kinsale Declined-pricing&form would be a problem for them
PartnerRe Declined-pricing is coming in double of current premiums in all layers
RLI Declined-can not provide the flood coverage and pricing
Scottsdale Declined-would need to attach excess of 75M due to the flood
Starr Declined-Can not do 100% FL accounts
Swiss Re Declined-pricing
Technical Risk Underwriters Declined-pricing
XL Declined-pricing
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