Agenda 03/12/2024 Item #11E (Purchase property-related insurance to protect County's real and personal assests)03/12/2024
EXECUTIVE SUMMARY
Recommendation to approve the purchase of Property, Terrorism, Watercraft Hull, and Boiler &
Machinery insurance effective April 1, 2024, in the estimated amount of $11,615,027.
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, 2024, and contains the following provisions:
• Total insured values are $1,198,417,210. The total limit of coverage purchased, also known as a Loss Limit, is
$75,000,000.
• The named windstorm deductible is 5% per building and contents with a minimum named storm deductible of
$250,000. For all other perils, the deductible is $100,000 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 over the NFIP coverage of $500,000 per building and $500,000 per content maximum.
• Covered perils are written on an “All Risk of Loss” basis. Loss valuation is on a replacement cost basis.
For FY 2024, to address the property underwriters’ concerns about property asset valuations, the following change
was implemented.
• A Value Increase of 17.47% was applied. This action increased total insured values to $1,407,748,220.
Although total insured values are $1,407,748,220, 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 2023, 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-five (25) 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, and concerns about 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. Fortunately, Quarter
1 2024 property rates and coverage have been more stable than in 2023. The projected increase for the FY 2024
renewal is 29.3%.
Potential changes in coverage terms and conditions, including but not limited to non-concurrency of coverage, the
blanket limit for standard lift stations, and the new sublimit for Property Damage and Extra Expense for updated
schedule limits for master lift stations, are also projected.
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 Board 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, 2024, renewal date.
11.E
Packet Pg. 154
03/12/2024
The projected renewal comparison for FY 2024 is illustrated below:
2023/2024 2024/2025 Difference
LINE OF
COVERAGE
ANNUAL
PREMIUM
ESTIMATED
ANNUAL PREMIUM
$ %
Property: $8,894,602 $11,500,000 $2,605,398 29.29%
Boiler & Machinery: $50,546 $65,000 $14,454 28.60%
Terrorism: $27,606 $40,000 $12,394 44.90%
Watercraft Hull: $10,313 $10,027 ($286) (2.77%)
TOTAL PREMIUM* $8,983,067 $11,615,027 $2,631,960 29.30%
» Total Insured Values Increased 17.47%.
» The Property Insurance rate per $100 is projected not to exceed 10%.
» The overall program cost increased 29.30%, or $2,631,960, due to increased insured values and market
conditions.
In terms of financial stability, each of the carriers possesses 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
$11,615,027. The broker and staff will continue to pursue options to lower the cost of the program prior to the
effective date of April 1, 2024. Funds are budgeted and available in Fund 5016 (Property and Casualty Insurance
Fund) 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 Property, Terrorism, Watercraft Hull, and Boiler &
Machinery 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, 2024.
Prepared by: Michael K. Quigley, RMPE, Division Director, Risk Management
ATTACHMENT(S)
1. Collier 4-1 BOCC Property Insurance Agenda Summary (PDF)
11.E
Packet Pg. 155
03/12/2024
COLLIER COUNTY
Board of County Commissioners
Item Number: 11.E
Doc ID: 28159
Item Summary: Recommendation to approve the purchase of Property, Terrorism, Watercraft Hull and Boiler &
Machinery Insurance effective April 1, 2024, in the estimated amount of $11,615,027. (Michael K. Quigley,
Division Director, Risk Management)
Meeting Date: 03/12/2024
Prepared by:
Title: Manager, Risk Finance – Risk Management
Name: Greily Gonzalez
02/23/2024 5:02 PM
Submitted by:
Title: Risk Management Director – Risk Management
Name: Michael Quigley
02/23/2024 5:02 PM
Approved By:
Review:
Risk Management Michael Quigley Director Review Completed 02/24/2024 7:36 AM
Corporate Business Operations Kenneth Kovensky Corporate Business Operations Review Completed 02/27/2024 11:51 AM
County Attorney's Office Jeffrey A. Klatzkow Level 2 Attorney Review Completed 02/28/2024 8:45 AM
Office of Management and Budget Debra Windsor Level 3 OMB Gatekeeper Review Completed 02/28/2024 8:55 AM
County Attorney's Office Jeffrey A. Klatzkow Level 3 County Attorney's Office Review Completed 02/28/2024 11:00 AM
Office of Management and Budget Blanca Aquino Luque OMB Reviewer Completed 03/05/2024 12:05 PM
County Manager's Office Amy Patterson Level 4 County Manager Review Completed 03/05/2024 1:22 PM
Board of County Commissioners Geoffrey Willig Meeting Pending 03/12/2024 9:00 AM
11.E
Packet Pg. 156
1 | Page
COLLIER COUNTY BOARD OF COUNTY COMMISSIONERS, ET AL
Property Insurance Program Renewal – To be Effective 4/1/2024-25
Executive Summary
The Property insurance marketplace has experienced 25 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. Due to worldwide terrorism and war
activity, Terrorism renewals are averaging double-digit rate increases. Fortunately, Q1 2024
Property rates and coverage have been more stable than in 2023. Exhibits illustrating market
conditions and further explanation are provided herein.
The County’s four (4) property related programs will renew effective April 1, 2024-25:
Master Layered Property Program, Terrorism and Sabotage, Boiler & Machinery, Watercraft
Hull.
Insured Asset Valuation Strategy
Property Asset Valuations continue to be of concern to Property underwriters in 2024 due to
supply chain lag cost implications, inflationary impacts to materials and labor costs, and recent
claim payments that exceed property values scheduled for underwriters. In 2023, the County
was able to continue “Blanket” Replacement Value by increasing overall values by 11.2% for
standard construction type structures to meet minimum cost per SF, plus a trend increase of 10%
for WWTP/WTP locations.
For 2024, the underwriters again requested updated valuations. The impact of the County’s
valuation increases is 17.47%. The increases are comprised of a general Building valuation trend
of 8%, plus revaluation of Lift Stations, which generated significant claims from Hurricane IAN. In
addition, the County is building new properties which are added to our Property program upon
completion.
Insured property valuation increase for 2024 is 17.47%.
11.E.a
Packet Pg. 157 Attachment: Collier 4-1 BOCC Property Insurance Agenda Summary (28159 : Approve Purchase of Property, Terrorism, Watercraft Hull, and
2 | Page
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 available early in the renewal process. Therefore,
we have provided premium estimates and coverage expectations herein. Coverage will be
negotiated up to the 4/1/24 renewal date.
Anticipated rate change of less than 10%
Changes in coverage terms and conditions include but are not limited to:
o Non-concurrency of coverage
o Blanket Limit for Standard Lift Stations for both property damage and extra
expense increased to $20,000,000 from $5,000,000.
o New sublimit for Property Damage and Extra Expense for updated scheduled
limits for Master Lift Stations of $114M
4/1/2024-25 Renewal Process Overview
Extreme challenges in negotiating stemming from the County’s continued Hurricane Ian loss
attrition.
Hurricane IAN
o Estimated $23M ground up loss at 2/20/2024
o Additional loss creep of approximately $6M+ since 4/1/2023 renewal
o Approximately $13M in losses resulting from Lift Stations
Valuation concerns by the market
o Insurance to value for scheduled locations is a priority to carriers as ‘cost to rebuild’
figures are realized from Hurricane Ian.
o 8% Building valuation trend applied to make the schedule more appealing to and
build confidence with the market.
o Additional $101,762,031 of Lift Station value was added per updated replacement
cost schedule.
2023-24 TIV- $1,198,418,210
2024-25 TIV- $1,407,748,220
2023/2024 2024/2025 Difference
LINE OF COVERAGE ANNUAL PREMIUM ESTIMATED
ANNUAL PREMIUM $ %
Property: $8,894,602 $11,500,000 $2,605,398 29%
Boiler & Machinery: $50,546 $65,000 $14,454 29%
Terrorism: $27,606 $40,000 $12,394 45%
Watercraft Hull: $10,313 $10,027 ($286) (2.7%)
TOTAL PREMIUM* $8,983,067 $11,615,027 $2,631,960 29%
11.E.a
Packet Pg. 158 Attachment: Collier 4-1 BOCC Property Insurance Agenda Summary (28159 : Approve Purchase of Property, Terrorism, Watercraft Hull, and
3 | Page
Property Marketing Summary-
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
11.E.a
Packet Pg. 159 Attachment: Collier 4-1 BOCC Property Insurance Agenda Summary (28159 : Approve Purchase of Property, Terrorism, Watercraft Hull, and
4 | Page
2024-2025 Property Participation Structure- TBD
2023-2024 Property Participation Structure
**NOT TO SCALE
$75M
$50M
$25M
EXCESS EXCESS EXCESS
EXCESS
PRIMARY PRIMARY
PRIMARY
PRIMARY
$75M
$50M
$25M
14.1110% or
$7,055,500
part of
$50,000,000
PRIMARY
Lloyds
(Sompo
4.7%, TAL
3%, APL 3%,
2% &
LECTIO
1.4111%)
38.5285% or $9,632,125 part of $25M Excess $50M
Lloyds (NOA 5%, HCC 17.6757%, MMX 10%, AUW
2%, & LECTIO 3.8528%)
39.72% or $19,860,000
part of
$50,000,000 PRIMARY
Lloyds (WBC 5%, MMX
5%, WRB 3.5%, & AML
2.5%, BRT 2%, Ki 3.75%,
AXA 3.5%, CIN 2.5%,
HAM 4%, QBE 4%, &
LECTIO 3.97%)
7.5% or
$1.875M
p/o $25M
Excess
$25M
Ironshore
5.175667%
or
$2,587,834
part of
$50,000,000
PRIMARY
Lloyds
(Convex
5%, &
LECTIO
0.55%)
10% or
$2,500,000
part of
$25M
Excess
$50M
Sompo/
Endurance
16.478167%
or
$4,119,552
part of $25M
Excess $50M
Lloyds(TAL
15% &
LECTIO
1.6666%)
10% or
$2,500,000
p/o
$25M Excess
$50M
Hallmark
10% or $2,500,000 part
of $25,000,000 Primary
Berkshire/ National Fire
4% or
$1,000,000
part of
$25M
Excess
$50M
Aspen
10% or $2.5M p/o $25M
Excess $25M
StarStone
10% or $2,500,000 part
of $25,000,000 Primary
Westchester
6% or
$4,500,000
part of
$75,000,000
PRIMARY
RSUI/
Landmark
5% or
$3,750,000
part of
$75,000,000
PRIMARY
Lloyds
(Argo)
2.5% or
$625,000
p/o $25M
Excess $25M
Lloyds (Axis
4% & LECTIO
0.44% )
3.333% or
$2,500,000
part of
$75,000,000
PRIMARY
Westfield
6.66% or
$4,995,000
part of
$75,000,000
PRIMARY
Lloyds (GIC)
11.E.a
Packet Pg. 160 Attachment: Collier 4-1 BOCC Property Insurance Agenda Summary (28159 : Approve Purchase of Property, Terrorism, Watercraft Hull, and
5 | Page
EXHIBIT: Property Insurance Market Trends
Market Influence Factors
Q1 2024 US Property Trends
• The property sector continues to face substantial rate increases and coverage
reductions as premiums attempt to catch up with claim costs.
• Claim cost drivers include inflation, economic growth
and accumulated insured assets in areas exposed to or
susceptible to natural perils. Significant insured losses
have directly affected reinsurance capacity, resulting in
weak results since 2017.
• Insureds with poor loss records and exposure to
catastrophe losses will continue to experience a rate
increase of single to double digits.
• Underwriters will continue to seek a combination of rate increases and “insured
to value” reporting of property values. Building replacement costs have increased
by 30-40% since 2020.
• There is more scrutiny via analysis of formal building replacement cost estimates
and onsite inspections to validate reported values. Underwriters equate under-
reported values with a shortfall in premiums collected to exposures assumed.
• While hurricane, earthquake and flood perils have had specific limits and
deductibles for decades, the increasing loss impact of severe convective storms
(high wind speeds, tornadoes and hail) is driving significant changes to
deductibles and limits.
11.E.a
Packet Pg. 161 Attachment: Collier 4-1 BOCC Property Insurance Agenda Summary (28159 : Approve Purchase of Property, Terrorism, Watercraft Hull, and
6 | Page
EXHIBIT: Property Insurance Market Trends
11.E.a
Packet Pg. 162 Attachment: Collier 4-1 BOCC Property Insurance Agenda Summary (28159 : Approve Purchase of Property, Terrorism, Watercraft Hull, and
7 | Page
EXHIBIT: Property Insurance Market Trends
Increased Frequency and Severity of Insured Losses
11.E.a
Packet Pg. 163 Attachment: Collier 4-1 BOCC Property Insurance Agenda Summary (28159 : Approve Purchase of Property, Terrorism, Watercraft Hull, and
8 | Page
EXHIBIT: RMS Model Results 2023
Named Storm/Hurricane/Storm Surge
2023-2024
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 2023-24)
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
11.E.a
Packet Pg. 164 Attachment: Collier 4-1 BOCC Property Insurance Agenda Summary (28159 : Approve Purchase of Property, Terrorism, Watercraft Hull, and
9 | Page
EXHIBIT: Risk Exposure Analysis
Number of Insured Units by location
Exposed Values by location
11.E.a
Packet Pg. 165 Attachment: Collier 4-1 BOCC Property Insurance Agenda Summary (28159 : Approve Purchase of Property, Terrorism, Watercraft Hull, and