Agenda 03/22/2022 Item #11D (Purchase of Property Insurance for 1-year)03/22/2022
EXECUTIVE SUMMARY
Recommendation to approve the purchase of insurance for property, boiler & machinery,
terrorism, and watercraft hull for a one-year period effective April 1, 2022, in the estimated
amount of $4,768,339.42.
OBJECTIVE: To purchase property and property-related 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 maintains a property insurance program 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.”
The current property insurance program expires on April 1, 2022 and contains the following provisions.
• Total insured values are $1,050,395,268. The total limit of coverage purchased (a/k/a the Loss Limit)
is $75,000,000.
• The named storm wind deductible is 3% 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.
• Covered perils are written on an “All Risk of Loss” basis. Loss valuation is on a replacement cost
basis.
For FY22, these major coverage provisions remain unchanged except for the following.
• The Real Property Division identified additional properties to be added to the Schedule of Values in
the amount of $27,895,960 (2.66%). This increases total insured values to $1,078,291,228.
Although total insured values are $1,078,291,228 it is unlikely that the county will suffer a total loss.
Therefore, the county purchases what is known as a “loss limit” that is commensurate with the probable
maximum loss (PML) for a 100-year wind event. A PML study is completed for the underwriters by Risk
Management Solutions, Inc. to determine the appropriate loss limit to purchase. For FY22, the PML is
$83,000,832 for a 100-year wind event. Staff recommends that the County continues to purchase a
$75,000,000 loss limit.
The property insurance marketplace has experienced sixteen (16) consecutive quarters of overall rate
increases reflecting hard market conditions, including rate increases and unfavorable changes in terms and
conditions. With increased frequency and severity of insured losses over the past decade, in addition to
concerns of changes in risk exposures such as climate change, global economic impact, and inflation
applicable to goods and services required to repair property assets, insurance companies are not turning an
underwriting profit on average. Rate increases for FY22 were predicted to range from 5% to 15%.
To market the program, the County’s broker, Brown & Brown Insurance, approached forty-two (42)
carriers for proposals. Eight (8) carriers declined to quote. Twenty (20) are pending response. Fourteen
(14) carriers submitted quotes. Of those that declined to quote, the most common reasons were 1) they
were unable to compete on price; 2) they were unable to offer current policy terms; and 3) the Total
Insured Value is too large. Based upon the responses received from the market, the cost to renew the
property insurance program at the updated replacement values, current loss limit and at the existing terms
and conditions is $4,697,918. This represents an increase of 0.81% in the rate and a gross premium
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03/22/2022
increase of 3.48% or $157,981 compared to the FY21 renewal. Of this figure, $36,438.30 is due to an
increase in the rate and $121,543.69 is due to the increase in insured values on the Schedule of Values.
Finally, renewal proposals for additional coverage for boiler & machinery, terrorism, and watercraft hull
were sought as part of the overall marketing of the program. The renewal comparison for FY22 is
illustrated below:
LINE OF COVERAGE 2021/2022 2022/2022 Difference
ANNUAL
PREMIUM
ANNUAL
PREMIUM
$ %
Property
$4,539,937.00
$4,697,918.00
$157,981.00
3.48%
Property Rate per $100
0.4322
0.4357
0.81%
Boiler & Machinery
$37,090.00
$39,315.29
$2,225.29 6.00%
Terrorism
$27,500.00
$22,600.00
($4,900) -17.81%
Watercraft Hull
$7,956.00
$8,506.13
$550.13 6.91%
TOTAL PREMIUMS
$4,612,483.00
$4,768,339.42
$155,856.42 3.38%
» Total Insured Values Increased 2.66%
» The Property Insurance rate per $100 increased 0.81%, which is quite favorable
» The overall program cost increased 3.38% or $155,856.42, almost entirely due to the increase
in insured values
There are no other substantial changes to the program. In terms of financial stability, each of the carriers
possess a minimum Best’s rating of A- or higher.
FISCAL IMPACT: Based upon the current Schedule of Values, the estimated annual cost for all
programs in the Executive Summary is $4,768,339.42. The rate per $100 and annual premium are
guaranteed not to exceed pricing. The broker and staff will continue to pursue options to lower the cost of
the program prior to the April 1, 2022, effective date. Sufficient funds have been budgeted within Fund
516, Property and Casualty Insurance 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, is approved as to
form and legality and requires majority vote for approval. -JAK
RECOMMENDATION: To approve the purchase of insurance for property, boiler & machinery,
terrorism, and watercraft hull as outlined in the Executive Summary and authorize 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, 2022.
Prepared by: Jeffrey A. Walker, CPCU, ARM, Division Director, Risk Management
ATTACHMENT(S)
1. Brown & Brown Marketing Summary (PDF)
2. Collier County Premium Comparison 2-23-2022 (PDF)
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03/22/2022
COLLIER COUNTY
Board of County Commissioners
Item Number: 11.D
Doc ID: 21478
Item Summary: Recommendation to approve the purchase of insurance for property, boiler &
machinery, terrorism, and watercraft hull for a one-year period effective April 1, 2022, in the estimated
amount of $4,768,339.42. (Jeff Walker, Risk Management Division Director)
Meeting Date: 03/22/2022
Prepared by:
Title: Operations Coordinator – Risk Management
Name: Greily Gonzalez
02/24/2022 3:11 PM
Submitted by:
Title: Division Director - Risk Management – Risk Management
Name: Jeff Walker
02/24/2022 3:11 PM
Approved By:
Review:
Risk Management Jeff Walker Director Review Completed 02/24/2022 4:37 PM
Agenda Clerk Preview Michael Cox Agenda Clerk Preview Completed 02/25/2022 9:46 AM
Office of Management and Budget Debra Windsor Level 3 OMB Gatekeeper Review Completed 02/25/2022 9:52 AM
Office of Management and Budget Laura Wells Additional Reviewer Completed 02/25/2022 12:24 PM
County Attorney's Office Jeffrey A. Klatzkow Level 3 County Attorney's Office Review Completed 02/25/2022 1:48 PM
County Manager's Office Dan Rodriguez Level 4 County Manager Review Completed 03/02/2022 4:56 PM
Board of County Commissioners Geoffrey Willig Meeting Pending 03/22/2022 9:00 AM
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COLLIER COUNTY BOARD OF COUNTY COMMISSIONERS, ET AL
Property Insurance Program Renewal – To be Effective 4/1/2022-23
Executive Summary
Risk Management Associates, Inc., a wholly owned subsidiary of Brown & Brown, was
contracted with the County for the first time effective 1/1/2022 for the purpose of delivering
Property and Casualty Brokerage Services.
Despite a challenging insurance marketplace, we are pleased to present a favorable property
renewal as outlined herein.
The insurance marketplace has experienced 16 consecutive quarters of overall rate increases
providing hard market conditions, including rate increases and unfavorable changes in terms
and conditions. With increased frequency and severity of insured losses over the past decade,
insurance companies are not turning an underwriting profit on average. In addition, concerns
of changes in risk exposure such as climate change, global economic impact, and inflation
applicable to goods and services required to repair property assets.
Exhibits illustrating market conditions are provided.
Process Overview
• 42 markets approached – see responses below. Proposed Property insurance Program
effective 4/1/2022-2023 is provided via Lloyds of London syndicates, and 4 domestic
insurers.
• Program restructured with expanded participation from Lloyds of London within both
primary and excess layers.
• Maintained all incumbent relationships except Markel/Evanston and CORE/StarStone due to
restrictive terms.
• Utilized predictive modeling analytics for the 100-Year Probable Maximum Loss event to
verify appropriate loss limit of $75,000,000 (see exhibit).
• Flood coverage provided by this Property program will apply excess of limits provided by NFIP. This
presentation does not include premiums for policies provided by the National Flood Insurance
Program (NFIP), which will be presented at a future meeting due to varying effective dates.
• Utilizing coverage form per expiring, virtually no changes from expiring, including:
» $75,000,000 Loss Limit
» Replacement Cost Coverage
» All insurers are rated A- or better by AM Best
» Maintained 3%/$5,000,000 Named Storm deductible cap.
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Packet Pg. 168 Attachment: Brown & Brown Marketing Summary (21478 : Approve Purchase of Property, Terrorism, Watercraft Hull, and Boiler & Mahicnery
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Property Marketing Summary
AS OF 2/22/22:
Provider Name Status Carrier Response
ACE WESTCHESTER SPECIALTY GROUP Submitted Pending response
ALLIED WORLD NATIONAL ASSURANCE CO Cleared Pending response
AMRISC Declined Unable to compete on price due to modelling and lack of roof
updates
ARCH INSURANCE COMPANY Quoted 10% of 50xs25 - $141k LP
ARROWHEAD SPECIALTY UNDERWRITING, LLC Declined Unable to provide current $75M Flood Limit
ASPEN SPECIALTY INSURANCE MANAGEMENT Cleared Pending response
Ategrity Specialty Insurance Company Submitted Pending response
AXIS SPECIALTY INSURANCE COMPANY Cleared Pending response
BEAZLEY USA SERVICES, INC Submitted Pending response
BERKSHIRE HATHAWAY GROUP Quoted 10% po $25M Primary - $2.94M LP
Catalytic Risk Managers & Insurance Agency LLC Cleared Pending response
CRUM & FORSTER Submitted Pending response
ENDURANCE SPECIALTY UNDERWRITERS Quoted 10% of 25xs50 - $682k LP
EVEREST INDEMNITY INSURANCE COMPANY Modeling Pending response
FIRST SPECIALTY INSURANCE CO Cleared Pending response
GENERAL STAR MANAGEMENT Submitted Pending response
Hallmark E&S Cleared Pending response
HUDSON SPECIALTY INSURANCE-COMMONWEALTH Submitted Would need to attach above the $75M loss limit purchased
Intact Insurance FKA OneBeacon Cleared Would need to attach above the $75M loss limit purchased
IRONSHORE INSURANCE SERVICES, LLC Declined Unable to compete on price
JAMES RIVER INSURANCE COMPANY Declined Unable to offer terms because of the concentration of values,
blanket limits, maximum NWS deductible, and low attachment.
Kemah Capital Holding LLC Submitted Pending response
KINSALE INSURANCE COMPANY Submitted Pending response
LEXINGTON INSURANCE COMPANY Submitted Pending response
MARKEL INSURANCE COMPANY Not Competitive Quoted 12% of 25x50 at $900k LP
MITSUI SUMITOMO INSURANCE Cleared Would need to attach above the $75M loss limit purchased
MUNICH-AMERICAN RISK PARTNERS Modeling Pending response
NAVIGATORS MANAGEMENT CO INC Declined TIV is too large
RLI INSURANCE COMPANY Submitted Pending response
RSUI Group Inc Quoted 8.5% po $75M Primary - $4.26M LP
SCOTTSDALE INSURANCE COMPANY Cleared Would need to attach above the $75M loss limit purchased
Skyward Specialty Insurance Declined TIV is too large
STARR INDEMNITY & LIABILITY Declined Cannot support the 3% or cap on the wind deductible
StarStone Specialty Insurance Not Competitive Quoted 5% of $50M Primary at $4.7M LP
Validus Underwriters Declined TIV is too large
Velocity Risk Underwriters Modeling Pending response
WKF&C AGENCY INC Submitted Pending response
XL INSURANCE Cleared We would be limited to $2.5m in capacity. The primary won’t
work for us due to loss history and rate.
ZURICH NORTH AMERICA Cleared Pending response
PRICE FORBES LIMITED Quoted 76.5% $50M Primary, 5% $75M Primary, 66.5% of 25x51
HISCOX INSURANCE COMPANY LTD Quoted Terrorism $75M Limit
HARTFORD STEAM BOILER INSPECTION & INSUR Quoted Equipment Breakdown $75M Limit
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Packet Pg. 169 Attachment: Brown & Brown Marketing Summary (21478 : Approve Purchase of Property, Terrorism, Watercraft Hull, and Boiler & Mahicnery
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Financial Results
» TIV Increase is 2.66%
» Property Rate increase is 0.81%
» Overall cost increase is 3.38%
*Includes fees for 2022 premiums. 2021/2022 premiums are per the approved board agenda summary.
2021/2022 2022/2023 Difference
LINE OF COVERAGE ANNUAL PREMIUM ANNUAL PREMIUM* $ %
Property: $4,539,937.00 $4,697,918.00 $157,981.00 3.48%
Property Rate 0.4322 0.4357 0.81%
Boiler & Machinery: $37,090.00 $39,315.29 $2,225.29 6.00%
Terrorism: $27,500.00 $22,600.00 ($4,900.00) -17.81%
Watercraft Hull: $7,956.00 $8,506.13 $550.13 6.91%
TOTAL PREMIUM* $4,612,483.00 $4,768,339.42 $155,856.42 3.38%
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Packet Pg. 170 Attachment: Brown & Brown Marketing Summary (21478 : Approve Purchase of Property, Terrorism, Watercraft Hull, and Boiler & Mahicnery
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EXHIBIT: Property Insurance Market Trends
Market Influence Factors
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Packet Pg. 171 Attachment: Brown & Brown Marketing Summary (21478 : Approve Purchase of Property, Terrorism, Watercraft Hull, and Boiler & Mahicnery
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EXHIBIT: Property Insurance Market Trends
Increased Frequency and Severity of Insured Losses
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Packet Pg. 172 Attachment: Brown & Brown Marketing Summary (21478 : Approve Purchase of Property, Terrorism, Watercraft Hull, and Boiler & Mahicnery
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EXHIBIT: Property Insurance Market Trends
General Property Market Overview
Summary
The challenges in the property marketplace continue. While the majority of insureds are
seeing renewal rate increases, they are not at previous years’ intensity.
Most insureds are currently experiencing high-single to mid-level double digit increases.
Individual customer results can vary greatly from these general results.
Occupancy class, loss history and the level of competition amongst insurers for a spot on
an insurance program can lead to renewal results outside of this range.
Despite increased deductibles and restricted terms imposed by insurers over the past
several renewal cycles, most insurers have yet to realize profitability. Interestingly, this is
leading to a competitive energy as underwriters look to achieve both renewal rate
increases and new business growth goals.
However, underwriting’s attention to appropriate valuation, attachment points, and risk
control continues to drive rating and capacity deployment. As the market evolves, many
insureds are able to find program alternatives and coverage options that did not exist in
2020.
To maximize underwriter focus and response, insureds must continue to refresh their
loss control and risk improvement profile and be prepared to provide deeper levels of
data and exposure detail.
Source: Brown & Brown, Market Trends, Quarter 3, 2021
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Packet Pg. 173 Attachment: Brown & Brown Marketing Summary (21478 : Approve Purchase of Property, Terrorism, Watercraft Hull, and Boiler & Mahicnery
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EXHIBIT: RMS Model Results 2022
Named Storm/Hurricane/Storm Surge
Using Critical Probability of 100 Year Event, Limits are Reasonable:
RMS Gross Loss Probability: $76,448,905
Collier County Loss Limit: $75,000,000
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Packet Pg. 174 Attachment: Brown & Brown Marketing Summary (21478 : Approve Purchase of Property, Terrorism, Watercraft Hull, and Boiler & Mahicnery
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EXHIBIT: Risk Exposure Analysis
60% of insured County Property is Masonry Non-Combustible or Fire Resistive
(superior) construction.
76% of insured County Property was built post-1990 (“newer” construction).
65% of insured County Property is in Special Flood Hazard Area
SFHA TIV
100-Year $708,979,722
500-Year $183,455,199
Outside $185,851,652
Grand Total $1,078,291,235
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Packet Pg. 175 Attachment: Brown & Brown Marketing Summary (21478 : Approve Purchase of Property, Terrorism, Watercraft Hull, and Boiler & Mahicnery
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EXHIBIT: Risk Exposure Analysis
Number of Insurred Units by location
Exposed Values by location
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Packet Pg. 176 Attachment: Brown & Brown Marketing Summary (21478 : Approve Purchase of Property, Terrorism, Watercraft Hull, and Boiler & Mahicnery
Insured: Effective Date:Version Date: LIMIT ANNUAL PREMIUM LIMIT ANNUAL PREMIUM 2021/2022 2022/2023$1,050,395,268 $1,078,291,22827,895,960$ 75,000,000$ 4,539,937.00$ 75,000,000$ 4,697,086.00$ 2.66%75,000,000$ 75,000,000$ 75,000,000$ 75,000,000$ 75,000,000$ 75,000,000$ 25,000,000$ 25,000,000$ 2,500,000$ 2,500,000$ 10,000,000$ 10,000,000$ 50,000,000$ 50,000,000$ 7,500,000$ 7,500,000$ Not CoveredNot Covered21/22 Rate0.4322$ 10,000,000$ 10,000,000$ 22/23 Rate0.4357$ Contractors Equipment 5,000,000$ 5,000,000$ 250,000$ 250,000$ 0.0035$ 1,000,000$ 1,000,000$ 0.81%Annually Annually Incl832.00$ 157,981.00$ * Premium approved by Board4,539,937.00$ 4,697,918.00$ 3.48%$1,050,395,268 $1,078,291,22875,000,000$ 27,500.00$ 75,000,000$ 22,500.00$ 27,895,960$ 25,000,000$ 25,000,000$ 2.66%25,000,000$ 25,000,000$ 50,000,000$ 50,000,000$ 21/22 Rate0.0026$ 10,000,000$ 10,000,000$ 22/23 Rate0.0021$ 50,000,000$ 50,000,000$ 100.00$ (4,900.00)$ 27,500.00$ 22,600.00$ -17.81%$1,050,395,268 $1,078,291,22875,000,000$ 37,090.00$ 75,000,000$ 39,042.00$ 27,895,960$ IncludedIncluded2.66%3,700,000$ 3,700,000$ Newly Acquired Locations (90 Days) 1,000,000$ 1,000,000$ 21/22 Rate0.00353$ 5,000,000$ 5,000,000$ 22/23 Rate0.00365$ 273.29$ 2,225.29$ 37,090.00$ 39,315.29$ 6.00%$375,290 $359,447375,290$ 7,956.00$ 359,447$ 8,447.00$ (15,843)$ -4.22%21/22 Rate2.1200$ 22/23 Rate2.3664$ 59.13$ 550.13$ 7,956.00$ 8,506.13$ 6.91%4,612,483.00$ 4,768,339.42$ $ 155,856.42 3.38%* Rates include anticipated fees/assessments79,204.00$ 1,874.32$ Annual(County will take delivery in 5-6 months)TOTAL PREMIUM 21-22 (per 3/23/21 Board Memo) ESTIMATED NTE TOTAL PREMIUM 22-23Coverage for new boat - Ski Nautique (Value/Premium)FIGA AssessmentPremium DifferenceSub-TotalSub-TotalPer Vessel$1,000 / $10,000 Wind$1,000 / $10,000 WindExposure DifferenceNavigatable Waters Intercoastal Waters of Collier & Lee Counties not to exceed 100 miles offshore Intercoastal Waters of Collier & Lee Counties not to exceed 100 miles offshoreWatercraft Hull:Coverage Applies Per ScheduleCoverage Applies Per ScheduleTIVACE American Ins. Co.Service InterruptionFIGA AssessmentPremium DifferenceSub-TotalSub-TotalEquipment Breakdown $25,000 Except: $40/KW $50,000 Min for ICE/Gen Units $25,000 Except: $40/KW $50,000 Min for ICE/Gen Units Exposure DifferenceProperty DamageBusiness Income 24 Hours24 HoursBoiler & Machinery:TIVHartford Steam Boiler (Munich Re)Policy FeePremium DifferenceSub-TotalSub-TotalErrors & Omissions10,000$ 10,000$ Newly Acquired Locations (90 Days)10,000$ 10,000$ Debris Removal Expense10,000$ 10,000$ Demolition & Increased Cost of Construction10,000$ 10,000$ Terrorism Property Per Occurrence/Aggregate10,000$ 10,000$ Exposure DifferenceBusiness Interruption10,000$ 10,000$ Terrorism & Sabotage:TIVLloyds of London (Hiscox)FeesFeesPremium DifferenceSub-Total *5% Insurable Margin Clause No premium adjustment unless 5% difference No premium adjustment unless 5% differenceContingent Busines IncomeDebris Removal for Scheduled LocationsLeased or Rented Contractor's EquipmentRate DifferenceRoadways, pavements and drivewaysVehicle Physical DamageErrors & OmissionsDemolition & Increased Cost of ConstructionExtra ExpenseBusiness IncomeEarth Movement - Annual Aggregate50,000$ 50,000$ Named Windstorm 3% Named Storm Per Unit, $250,000 Minimum$5,000,000 Max Named Windstorm 3% Named Storm Per Unit, $250,000 Minimum$5,000,000 Max Named Windstorm Sublimits:Flood - Annual Aggregate Excess NFIP - Flood in 100 Year Hazard; $50,000 - Other Flood, Per Occurrence Excess NFIP - Flood in 100 Year Hazard; $50,000 - Other Flood, Per Occurrence Layered Property ProgramExposure DifferenceAll Other Perils Limit50,000$ 50,000$ LINE OF COVERAGE DEDUCTIBLE/SIRDEDUCTIBLE/SIRMaster Property:Lloyds, Landmark, Starstone, National Fire & Marine, Arch, Endurance, Evanston Lloyds, National Fire & Marine, Landmark, Arch, EnduranceCollier County Board of County Commissioners, et al*4/1/20222/23/2022Coverage & Premium Comparison4/1/2021-2022 (Per Board Approval) 4/1/2022-2023Changes in ExposuresTIV (at binding)This proposal is intended to give a brief overview. Higher limits may be available. Please refer to coverage forms for complete details regarding definition of terms, exclusions and limitations.Page 1of 111.D.2Packet Pg. 177Attachment: Collier County Premium Comparison 2-23-2022 (21478 : Approve Purchase of Property,