Agenda 03/28/2023 Item #11D (Protect the County's real and personal property assets and to comply with the Stafford Act)03/28/2023
EXECUTIVE SUMMARY
Recommendation to approve the purchase of Property, Boiler & Machinery, Terrorism, and Watercraft
Hull insurance 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, 2023. Additionally, approval to purchase a thirty (30) days coverage extension is requested
in the event it is required for the purposes of avoiding a gap in coverage and to better negotiate the terms
and conditions of the renewal.
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, 2023 and contains the following provisions:
xTotal insured values are $1,078,291,228. The total limit of coverage purchased (a/k/a the Loss Limit) is
$75,000,000.
xThe named windstorm 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.
xPrimary 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/ $500,000 per content maximum.
xCovered perils are written on an “All Risk of Loss” basis. Loss valuation is on a replacement cost basis.
For FY 23, to address the property underwriters concerns about property asset valuations, the following change was
implemented.
x As a marketing strategy to build confidence with underwriters, a Value Increase of 11.2% was applied.
This increased total insured values to $1,199,051,402
Although total insured values are $1,199,051,402 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 FY 23, the PML was $79,810,299.85 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 twenty (20) consecutive quarters of overall rate increases
resulting in hard market conditions, including rate increases and unfavorable changes in terms and conditions.
Recent catastrophic impacts from Hurricane Ian and Nicole, numerous Global crises, 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 have put further pressure on the hardening market conditions. An estimated rate increase of
95% is projected.
Potential changes in coverage terms and conditions including but not limited to non-concurrency of coverage,
named windstorm/flood deductibles, and other deductible and sublimit changes are also projected.
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To market the program, the County’s broker, Brown & Brown, approached forty-three (43) carriers for proposals.
As it is typical in this hard market, at the time of submitting this backup information for the Agenda, full terms and
conditions of the renewal are not available early in the renewal process. Coverage will be negotiated up to the April
1, 2023 renewal date. In addition, as a contingency plan an inquiry about a coverage extension from 4/1/23 to
5/1/2023 has been made. Such extension, if offered and pursued will have additional budgeting considerations.
The projected renewal comparison for FY 2023 is illustrated below:
LINE OF
COVERAGE
2022/2023 2023/2024 Difference
ANNUAL
PREMIUM
ANNUAL
PREMIUM
$ %
Property
$4,697,918.00
$9,749,181.00 $5,051,263.00 107.52%
Boiler & Machinery
$39,315.00
$50,546.00 $11,231.00 28.57%
Terrorism
$22,600.00
$27,606.00 $5,006.00 22.15%
Watercraft Hull
$8,506.00
$10,313.00 $1,807.00 21.24%
TOTAL PREMIUMS
$4,768,339.42
$9,837,646.00 $5,069,307.00 106.31%
» Total Insured Values Increased 11.2%
» The Property Insurance rate per $100 is projected not to exceed 95.0%.
» The overall program cost increased 106.31% or $5,069,307, due to the increase in insured values and
hard market conditions.
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 premium for all programs is
$9,837,646.00. Property reinsurance premiums were budgeted in the amount of $5,314,700. As a result, a budget
amendment is required to transfer funding, in the amount of $4,522,946.00 within the Property Insurance Fund
(516) from reserves for this expense. Sufficient funds remain in Reserves for Insurance to fund the outstanding
liabilities of the Fund. Nevertheless, the broker and staff will continue to pursue options to lower the cost of the
program prior to the April 1, 2023, effective date.
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 Property, Boiler & Machinery, Terrorism, and Watercraft
Hull insurance 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, 2023. Additionally, approval to purchase a thirty (30) days coverage extension is requested in the event it is
required for the purposes of avoiding a gap in coverage and to better negotiate the terms and conditions of the
renewal.
Prepared by: Michael K. Quigley, RMPE, Division Director, Risk Management
ATTACHMENT(S)
1. Collier 4-1 Insurance Agenda Summary 3-17-23 (PDF)
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03/28/2023
COLLIER COUNTY
Board of County Commissioners
Item Number: 11.D
Doc ID: 24935
Item Summary: Recommendation to approve the purchase of Property, Boiler & Machinery, Terrorism, and
Watercraft Hull insurance 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, 2023. Additionally, approval to purchase a thirty (30) days coverage extension is requested in the
event it is required for the purposes of avoiding a gap in coverage and to better negotiate the terms and conditions
of the renewal. (Michael K. Quigley, Division Director, Risk Management)
Meeting Date: 03/28/2023
Prepared by:
Title: Operations Coordinator – Risk Management
Name: Greily Gonzalez
03/10/2023 4:36 PM
Submitted by:
Title: Risk Management Director – Risk Management
Name: Michael Quigley
03/10/2023 4:36 PM
Approved By:
Review:
Risk Management Michael Quigley Director Review Completed 03/10/2023 4:43 PM
Office of Management and Budget Debra Windsor Level 3 OMB Gatekeeper Review Completed 03/14/2023 10:41 AM
County Attorney's Office Jeffrey A. Klatzkow Level 3 County Attorney's Office Review Completed 03/15/2023 3:12 PM
Corporate Compliance and Continuous Improvement Megan Gaillard Additional Reviewer Completed
03/18/2023 6:08 PM
Community & Human Services Maggie Lopez Additional Reviewer Completed 03/20/2023 8:36 AM
County Manager's Office Amy Patterson Level 4 County Manager Review Completed 03/21/2023 11:42 AM
Board of County Commissioners Geoffrey Willig Meeting Pending 03/28/2023 9:00 AM
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COLLIER COUNTY BOARD OF COUNTY COMMISSIONERS, ET AL
Property Insurance Program Renewal – To be Effective 4/1/2023-24
Executive Summary
The insurance marketplace has experienced 20 consecutive quarters of overall rate increases
providing hard market conditions, including rate increases and unfavorable changes in terms and
conditions. Recent catastrophic impacts from Hurricanes Ian and Nicole, numerous Global crises,
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 have put further
pressure on the hardening market conditions. Exhibits illustrating market conditions and further
explanation are provided herein.
The County’s 4 property related programs will renew effective April 1, 2023-24:
Master Layered Property Program, Terrorism and Sabotage, Boiler & Machinery, Watercraft
Hull.
Insured Asset Valuation Strategy
Property Asset Valuations are of great concern to Property underwriters this year due to impacts
of high inflation and increased costs of labor and material. In order to update the County's values,
we reviewed and made valuation increases totaling 11.2%. In order to keep our insurance values
and data as current as possible, we are also recommending a full property appraisal in the future.
In addition, the County is building new properties which need to be added to our Property
program upon completion.
¾As a marketing strategy to build confidence with underwriters, a Value Increase of
11.2% was implemented.
Financial Expectations
As is typical in this hard market, at the time of submitting this backup information for the Agenda,
full terms and conditions of the renewal are not availableearly in the renewal process. Therefore,
we have provided premium estimates and coverage expectations herein. Coverage will be
negotiated up to the 4/1/23 renewal date. In addition, we have inquired about the possibility of
a coverage extension from 4/1/2023 to 5/1/2023, but this has additional budgeting
considerations.
11.D.a
Packet Pg. 361 Attachment: Collier 4-1 Insurance Agenda Summary 3-17-23 (24935 : Approve Purchase of Property, Terrorism, Watercraft Hull, and Boiler &
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Our premium estimate includes the following:
¾Valuation increase of 11.2% + addition of new construction
¾Estimated 95% rate increase for Master Property due to:
o Coastal FL exposure
o IRMA and IAN losses
¾TBD – Potential changes in coverage terms and conditions including but not limited to:
o Non-concurrency of coverage
o Named Wind Storm/Flood Deductibles
o Other deductible and sublimit changes
4/1/2023-24 Renewal Process Overview
¾Extreme challenges in negotiating following our outstanding results achieved last year.
¾Hurricane IAN
o Estimated $17M ground up loss at 3/1/2023
o 21 NFIP Flood claims open
¾Valuation concerns by the market
o County’s Valuations had not been recently trended
o B&B performed deep dive/scrub into analyzing the County’s valuation to make the
schedule more appealing to and build confidence with the market.
o Result is TIV increase to be quoted is 11.2% ($120.7M)
o Budget for addition of new construction - TBD
¾Valuation Methodology
o ISO Construction Codes 4-6: applied minimum of $250/sq. ft
o ISO Construction Codes 1-3: applied minimum of $150/sq. ft
o +10% for WWTP/WTP locations
2022/2023 2023/2024 Difference
LINE OF COVERAGE ANNUAL PREMIUM ESTIMATED
ANNUAL PREMIUM $ %
Property: $4,697,918 $9,749,181 $5,051,263 107.52%
Boiler & Machinery: $39,315 $50,546 $11,231 28.57%
Terrorism: $22,600 $27,606 $5,006 22.15%
Watercraft Hull: $8,506 $10,313 $1,807 21.24%
TOTAL PREMIUM* $4,768,339 $9,837,646 $5,069,307 106.31%
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Packet Pg. 362 Attachment: Collier 4-1 Insurance Agenda Summary 3-17-23 (24935 : Approve Purchase of Property, Terrorism, Watercraft Hull, and Boiler &
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Property Marketing Summary- As of 3/6/2023
Insurance companies approached to provide quotes:
Provider Name
ACE WESTCHESTER SPECIALTY GROUP
ALLIED WORLD NATIONAL ASSURANCE CO
AMRISC
ARCH INSURANCE COMPANY
ARROWHEAD SPECIALTY UNDERWRITING, LLC
ASPEN SPECIALTY INSURANCE MANAGEMENT
Ategrity Specialty Insurance Company
AXIS SPECIALTY INSURANCE COMPANY
BEAZLEY USA SERVICES, INC
BERKSHIRE HATHAWAY GROUP
Catalytic Risk Managers & Insurance Agency LLC
CRUM & FORSTER
ENDURANCE SPECIALTY UNDERWRITERS
EVEREST INDEMNITY INSURANCE COMPANY
FIRST SPECIALTY INSURANCE CO
GENERAL STAR MANAGEMENT
Hallmark E&S
HUDSON SPECIALTY INSURANCE-COMMONWEALTH
Intact Insurance FKA OneBeacon
IRONSHORE INSURANCE SERVICES, LLC
JAMES RIVER INSURANCE COMPANY
Kemah Capital Holding LLC
KINSALE INSURANCE COMPANY
LEXINGTON INSURANCE COMPANY
LLOYD'S OF LONDON SYNDICATES / EUROPEAN MARKETS
MARKEL INSURANCE COMPANY
MITSUI SUMITOMO INSURANCE
MUNICH-AMERICAN RISK PARTNERS
NAVIGATORS MANAGEMENT CO INC
RLI INSURANCE COMPANY
RSUI Group Inc
SCOTTSDALE INSURANCE COMPANY
Skyward Specialty Insurance
STARR INDEMNITY & LIABILITY
StarStone Specialty Insurance
Validus Underwriters
Velocity Risk Underwriters
WKF&C AGENCY INC
XL INSURANCE
ZURICH NORTH AMERICA
PRICE FORBES LIMITED
HISCOX INSURANCE COMPANY LTD
HARTFORD STEAM BOILER INSPECTION & INSUR
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Packet Pg. 363 Attachment: Collier 4-1 Insurance Agenda Summary 3-17-23 (24935 : Approve Purchase of Property, Terrorism, Watercraft Hull, and Boiler &
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2023-2024 Property Participation Structure- TBD
2022-2023 Property Participation Structure
**NOT TO SCALE
$75M
$50M
$25M
EXCESS EXCESS EXCESS
EXCESS
PRIMARY PRIMARY
PRIMARY
PRIMARY
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Packet Pg. 364 Attachment: Collier 4-1 Insurance Agenda Summary 3-17-23 (24935 : Approve Purchase of Property, Terrorism, Watercraft Hull, and Boiler &
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EXHIBIT: Property Insurance Market Trends
Market Influence Factors
Q1 2023 US Property Trends
• Initially, markets projected stabilized rates and easing for well-protected, loss-free property
risks. However, losses from natural disasters in Q 4 2022 (Hurricanes Ian and Nicole,
Winter Storm) have accelerated rate increases again.
• Programs with unfavorable loss history and locations exposed to catastrophic
weather events should anticipate 25%-100%+ rate increases.
• The hardening of the facultative market impacts the
underwriting process – submissions must be newly
underwritten due to new standards and conditions,
which inherently causes the process to take longer.
•Failure to account for ongoing inflation and increased
costs due to the skilled labor shortage call certain values
into question.
Key Insurance Market Drivers
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Packet Pg. 365 Attachment: Collier 4-1 Insurance Agenda Summary 3-17-23 (24935 : Approve Purchase of Property, Terrorism, Watercraft Hull, and Boiler &
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EXHIBIT: Property Insurance Market Trends
Carrier Finances
P&C CARRIER FINANCIAL RESULTS
Combined Ratios (Incurred Losses + LAE/Earned Premium)
x A decade of break-even results even when including the more profitable personal auto, workers
compensation and small business lines
x Large account property, excess casualty, and D&O lines are under pressure and have underperformed
2023 FINANCIAL PROJECTIONS
x US P&C Combined Ratio – 100%+ (before Hurricanes Ian & Nicole)
x Hurricane Ian – $60B Estimated Insured Loss
x Hurricane Nicole - $2B Estimated Insured Loss
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Packet Pg. 366 Attachment: Collier 4-1 Insurance Agenda Summary 3-17-23 (24935 : Approve Purchase of Property, Terrorism, Watercraft Hull, and Boiler &
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EXHIBIT: Property Insurance Market Trends
Increased Frequency and Severity of Insured Losses
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Packet Pg. 367 Attachment: Collier 4-1 Insurance Agenda Summary 3-17-23 (24935 : Approve Purchase of Property, Terrorism, Watercraft Hull, and Boiler &
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EXHIBIT: RMS Model Results 2023
Named Storm/Hurricane/Storm Surge
Using Critical Probability of 100 Year Event, Limits are Reasonable:
RMS Gross Loss Probability: $79,810,300
Collier County Loss Limit: $75,000,000 (Expiring 2022-23)
Return Period
(Years)
Collier (USD)
Gross Loss AEP
Collier (USD)
Ground Up Loss AEP
10,000 484,061,195.25 563,363,685.95
5,000 391,753,459.17 443,840,675.03
1,000 228,197,617.11 240,596,118.08
500 180,058,841.86 186,657,989.80
250 136,394,071.39 140,093,472.74
200 122,583,026.47 125,966,622.67
100 79,810,299.85 83,770,107.16
50 41,044,909.81 45,972,523.07
25 13,189,304.34 18,089,813.57
10 102,256.49 1,070,984.23
5 8,834.81 15,484.78
2 0 0
Statistics
Collier (USD)
Gross Loss
Collier (USD)
Ground Up Loss
Average Annual Loss 2,721,706.08 3,137,140.29
Standard Deviation 17,689,238.59 19,273,255.98
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Packet Pg. 368 Attachment: Collier 4-1 Insurance Agenda Summary 3-17-23 (24935 : Approve Purchase of Property, Terrorism, Watercraft Hull, and Boiler &
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EXHIBIT: Risk Exposure Analysis
Number of Insured Units by location
Exposed Values by location
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Packet Pg. 369 Attachment: Collier 4-1 Insurance Agenda Summary 3-17-23 (24935 : Approve Purchase of Property, Terrorism, Watercraft Hull, and Boiler &