Agenda 03/23/2010 Item #16E 6
Agenda Item No. 16E6
March 23. 2010
Page 1 of 3
EXECUTIVE SUMMARY
Recommendation to approve the purchase of property insurance effective April 1,
2010 in the amount of $3,430,400, a reduction of $604,735 and authorize the County
Manager or designee to execute any applications or other documents necessary to
bind coverage and services.
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: Pursuant to Florida Statutes 9 768,28 and Chapter 440, the Risk
Management Department operates two risk management funds (Fund 516 and Fund 518)
to finance its Property, Casualty and Workers' Compensation insurance programs. The
purchase of property insurance is part of this program.
The current property insurance program expires on April 1, 2010. Insurable replacement
values are $833,209,704. The total limits of coverage purchased (a/kla the Loss Limit) is
$100,000,000. The wind deductible is 5% per building and contents per named storm with
a minimum named storm deductible of $250,000. There is a $5,000,000 named storm
deductible cap and a $50,000 deductible for all other perils. Primary flood coverage is
purchased through the National Flood Insurance Program (NFIP) on properties in special
flood hazard zones to comply with the provisions of the Stafford Act. The property
insurance program provides an additional $50,000,000 in flood coverage in excess of the
NFIP coverage. The cost of the current program is $4,035,135 per year.
The Risk Management staff, through the County's property casualty broker, IRMS,
submitted the program to the property insurance market for the April 1, 2010 renewal. Risk
Management staff also requested a maximum probable loss study through Risk
Management Solutions, Inc. to evaluate the appropriate loss limit to purchase.
The commercial property insurance market has softened since the 2009 renewal. This is
illustrated below:
Description Terms Annual Composite % $ Change %
Premium Rate per Change Change
$100 in Rate in Gross
Der100 Premium
Current 5% Wind $4,035,135 .4675 NA NA NA
Program Deductible with
$5,000,000 CaD
FY 10 5% Wind $3,430,400 .4117 -12% ($604,735) -15%
Renewal at Deductible with
Same Terms $5,000,000 Cap
Agenda Item No. 16E6
March 23, 2010
Page 2 of 3
Risk Management Solutions, Inc. prepared a probable maximum loss study which indicated
that the probable maximum loss to County property ranged from $48,343,356 for a 100-
year wind event to $84,767,142 for a 250-year wind event (equivalent to Hurricane Katrina).
Due to the inherent variation in wind modeling outcomes, staff recommends the purchase
of a $100,000,000 loss limit.
To address insured values, staff asked the Real Property Department to perform an
updated appraisal of the county's real property. This appraisal resulted in a reduction in
replacement values of 3.0%.
FISCAL IMPACT: Staff recommends the purchase of the program at the terms described
above. The final premium is subject to the property schedule and is subject to additions
and deletions of property from the schedule as they occur. Sufficient funds have been
budgeted within Fund 516 for this purchase.
GROWTH MANAGEMENT IMPACT: There is no growth management impact associated
with this item.
LEGAL CONSIDERATIONS: This item has been reviewed by the County Attorney's Office
and is legally sufficient for Board action. - CMG
RECOMMENDATION: That the Board approves the purchase of property insurance as
outlined in this Executive Summary and authorizes the County Manager or his designee to
complete any applications or other documents necessary to bind coverage and services
effective April 1, 2010.
PREPARED BY: Jeffrey A. Walker, CPCU, ARM, Director, Risk Management Department
Item Number:
Item Summary:
Meeting Date:
Agenda Item No. 16E6
March 23, 2010
Page 3 of 3
COLLIER COUNTY
BOARD OF COUNTY COMMISSIONERS
16E6
Recommendation to approve the purchase of property insurance effective April 1, 2010 in the
amount of $3,430,400, a reduction of $604,735 and authorize the County Manager or designee
to execute any applications or other documents necessary to bind coverage and service.
3/23/20109:00:00 AM
Prepared By
Jeffrey A. Walker, CPCU,
ARM
Administrative Services
Division
Director - Risk Management
Date
Risk Management
3/8/20103:51 :29 PM
Date
Approved By
Jeffrey A. Walker, CPCU,
ARM
Administrative Services
Division
Director - Risk Management
Risk Management
3/8/20103:51 PM
Date
Approved By
Colleen Greene
County Attorney
Assistant County Attorney
County Attorney
3/8/2010 4:08 PM
Date
Approved By
Steve Carnell
Administrative Services
Division
Director - Purchasing/General Services
Purchasing & General Services
3/9/2010 5:06 PM
Date
Approved By
OMS Coordinator
County Manager's Office
Office of Management & Budget
3/11/20108:19 AM
Date
Approved By
Therese Stanley
Office of Management &
Budget
Manager - Operations Support - Trans
Office of Management & Budget
3/11/201011 :04 PM
Approved By
Date
Jeff Klatzkow
County Attorney
3/12/20102:21 PM
Date
Approved By
Mark Isackson
Office of Management &
Budget
Management/Budget Analyst, Senior
Office of Management & Budget
3/13/201011:30 AM