Agenda 09/10/2024 Item #16E6 (Approve the purchase of liability, automobile, cyber, and other miscellaneous insurance coverage for FY2025 in the estimated premium of $1,116,001,99)16.E.6
09/ 10/2024
EXECUTIVE SUMMARY
Recommendation to approve the purchase of liability, automobile, cyber, and other miscellaneous insurance
coverage for FY 2025 in the estimated premium of $1,116,001.99.
OBJECTIVE: To protect the County against financial loss from casualty related claims and lawsuits and to
comply with contractual and statutory requirements through the implementation of a cost effective, best value
Casualty Insurance program.
CONSIDERATIONS: Pursuant to Florida Statutes Section 768.28, the Risk Management Division administers
Fund 5016 (Property & Casualty Insurance Fund) to finance its Property and Casualty Insurance Program. Claims
are administered by Davies North America. Brown & Brown is the County's contracted broker of record.
The County purchases excess coverage to protect against catastrophic losses; to cover a cause of action not limited
by a state statutory tort cap, such as employment practices liability; to comply with contractual requirements, such
as grants and leases; or if a claims bill is enacted pursuant to chapter 768.28, Fla. Statutes. The current program
expires on September 30, 2024.
For the FY 2025 renewal, a Coverage & Premium Comparison sheet is attached, which illustrates the pricing for
each carrier by line of coverage and the purpose/basis of each coverage. The significant highlights of the renewal
are as follows.
• Total premium for all coverage lines increased 6.85% or $71,523.70. This increase is due primarily to an
increase in ratable exposures as reported in the application to the underwriters. However, because the County
prepaid the pollution insurance policy in FY 2024 for a three-year term, the overall payment decrease by 8.08%
or $98,128.02 in FY 2025.
• The property insurance policy renews on April 1, 2025, and is not included in this recommendation.
Additionally, aviation, flood, and workers' compensation insurance are not included in this recommendation
and will be submitted separately.
• The County rejects the option to purchase uninsured motorist insurance.
All carriers hold a Best's financial rating of "A, Superior" or higher.
FISCAL IMPACT: The estimated annual premium excluding the pollution insurance coverage is $1,116,001.99
as outlined in the Coverage & Premium Comparison sheet. Sufficient funds have been budgeted within Fund 5016
(Property & Casualty Insurance Fund) for this purchase.
GROWTH MANAGEMENT IMPACT: There is no growth management impact associated with this action.
LEGAL CONSIDERATIONS: This item is approved as to form and legality and requires majority vote for
Board approval. -SRT
RECOMMENDATION: To approve the purchase of insurance coverage as outlined in the Coverage & Premium
Comparison sheet, effective October 1, 2024, and authorize the County Manager or designee to complete and
execute the applications, legal counsel engagement letter as required by the cyber insurance carrier, or other
documents necessary to bind coverage and services.
Prepared by: Michael K. Quigley, RMPE, Director, Risk Management Division
Packet Pg. 1453
16.E.6
09/ 10/2024
ATTACHMENT(S)
1. FY 2025 Renewal Summary and Premium Comparison (PDF)
2. Collier 10-1 Casualty Executive Summary 24-25(PDF)
Packet Pg. 1454
16.E.6
09/10/2024
COLLIER COUNTY
Board of County Commissioners
Item Number: 16.E.6
Doc ID: 29803
Item Summary: Recommendation to approve the purchase of liability, automobile, cyber, and other miscellaneous
insurance coverage for Fiscal Year 2025 in the estimated premium of $1,116,001.99.
Meeting Date: 09/10/2024
Prepared by:
Title: Manager, Risk Finance — Risk Management
Name: Greily Gonzalez
08/26/2024 1:52 PM
Submitted by:
Title: Risk Management Director — Risk Management
Name: Michael Quigley
08/26/2024 1:52 PM
Approved By:
Review:
Risk Management
Corporate Business Operations
County Attorney's Office
Office of Management and Budget
Office of Management and Budget
County Manager's Office
Board of County Commissioners
Michael Quigley Director Review
Kenneth Kovensky Corporate Business Operations Review
Jeffrey A. Klatzkow Level 3 County Attorney's Office Review
Debra Windsor Level 3 OMB Gatekeeper Review
Blanca Aquino Luque OMB Reviewer
Amy Patterson Level 4 County Manager Review
Geoffrey Willig Meeting Pending
Completed
08/26/2024 1:58 PM
Completed
09/03/2024 2:27 PM
Completed
09/03/2024 2:44 PM
Completed
09/04/2024 8:58 AM
Completed
09/04/2024 11:26 AM
Completed
09/04/2024 11:33 AM
09/10/2024 9:00 AM
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I 16.E.6.b I
Brown & Brown
Collier County Board of County Commissioners, et al
Executive Summary—10/1/24-25 Insurance Renewals
Excess Casualty, Cyber, Crime, Terrorism liability/Active Shooter,
Pollution, Maritime, AD&D
Insurance Renewal Program
Difference
LINE OF COVERAGE
ANNUAL PREMIUM*
RECOMMENDED**
$
PROGRAM PREMIUM
Excess Casualty Package
$728,974.00
$817,713.00
$88,739.00
I 12.17%
Cyber Liability:
$168,000.00
$187,000.00
$19,000.00
11.31%
Excess Crime:
$9,118.29*
$9,216.99*
$98.70
1.08%
Terrorism Liability &
Sabotage/Active
$75,056.00
$76,500.00
$1,444.00
1.92%
Shooter:
Maritime Employers
$19,250.00
Not Renewing
($19,250)
(100%)
Liability
AD&D First Responders
$19,080.00
$572.00
($18,508.00)
(97.00%)
Statutory
TOTAL PREMIUM*
$1,019,478.29
$1,091,001.99
1 $71,523.70
1 7.02%
Pollution Liability (3-Year
2023-2026
2023-2026
Term prepaid in 2023 )
$169,651.72
1 Pre -Paid on 10/1/2023
* 2023/2024 Premiums include any applicable fees and are per the approved board agenda summary
**2024-2025 Premiums include Recommended coverage options, which include program enhancements.
Financial Results
➢ Exposure Increase in Revenues: 6.53%
➢ Exposure Increase in Payroll: 3.60%
➢ Overall 7.02% increase, which includes enhanced deductible structure on Cyber Liability
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Insurance Marketing Summary
10/1/2024-2025
ExcessPackage
Quoted 9% rate increase due to claims activity, with 3%
Princeton Excess & Surplus Lines Ins. Co.*
payroll increase.
Will not consider underwriting without Excess Workers
Safety National
Compensation.
Submitted; indicated potentially favorable premium, but
Ambridge
declined due to coverage deficiencies compared to
incumbent program, including Crime, APD/Equipment, and
Raceway limitation.
Submitted; indicated favorable premium, but did not
Berkely
pursue to formal quote due to significant coverage
deficiencies compared to incumbent program, including
APD/Equipment, and special endorsements.
Allied Public Risk
Minimum SIR - $1M
Hudson
Minimum SIR - $1M
. -
Indian Harbor Ins. Co./ AXA XL*
Quoted retention options
Quote Received with deductible options; recommended
Starr Indemnity
option is to decrease retention. NOTE: Coverage details are
exempt from Public Record per HB7057. RECOMMENDED
AIG
Declined to offer terms
Allmerica Financial Benefits Ins. Co. /
Quoted —Incumbent
Hanover*
Full marketing in 2022 — no markets could compete with Hanover
Lloyds of London / Hiscox*
Lloyd's of London / Beazley/MacDuff
McGowan Programs
Quoted - Incumbent
Quoted — 2 separate policies - RECOMMENDED
Approached in 2023, quote not competitive
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*Denotes Incumbent
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Insurance Market Conditions
Casualty 12024
Liability Market
General liability insurance continues to face a challenging market. Premiums have increased
steadily, with 25 consecutive quarters of rate increases. Increased claims severity, higher litigation
costs and economic inflation drive this trend. Underwriting capacity has decreased, causing
carriers to become more selective in their underwriting criteria. In addition to traditional exclusions,
incorporating exclusions for PFA liability exposures (forever chemicals) is becoming standard.
Insureds are experiencing rate fatigue and frustration with the continual increase in premiums and
additional requirements from carriers. The market is expected to remain tight, with carriers
focusing on risk management, higher retentions and loss prevention strategies to mitigate rising
costs.
Directors and Officers (D&O) rates have decreased while employment practice liability (EPL)
claims have increased slightly. The errors and omissions (E&O) space is less soft than other lines,
with minimal increases or flat rates, primarily driven by service exposures.
EPL renewals depend on employment count changes and loss history. Premium and retention
increases are generally flat to low single -digit increases on accounts with stable exposures and
favorable loss history. Underwriters continue to focus on high wage earners and California
employees, which can impact quoted terms. Biometric privacy remains a prominent issue that is
influencing the market.
Commercial Aut<
The business auto insurance market is experiencing significant rate increases and reduced
capacity. Carriers are grappling with higher claims costs driven by increased accident severity,
medical cost inflation and rising repair costs of more sophisticated vehicle technologies. Nuclear
verdict concerns, driver shortages, novice drivers and distracted driving all add to difficulties in
the insurance industry's effort to maintain profitability and stability. This has led to a hardening
market with stricter underwriting standards and higher premiums.
Underwriting Scrutiny
There is increased underwriting scrutiny surrounding internal controls related to Fiduciary Liability,
Commercial Crime and Employment Practice Liability (EPL). Carriers are asking direct questions
regarding an organization's controls and may require supplemental applications.
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Commercial Crime
Social engineering continues to be a significant driver for claims in the commercial crime space.
Carriers are potentially willing to offer higher limits, including excess social engineering coverage
in crime policies. The market remains flat, with exposure increases managed through retention
adjustments.
Impacts of Artificial Intelligence
Rapidly evolving artificial intelligence (Al) technology continues to be uncharted territory, posing
potential financial impacts or unforeseen exposures. Colorado recently passed the first regulatory
bill for Al, which could lead to possible claims for those not responsibly and cautiously utilizing
the tool. Public companies will likely face the brunt of the impact, with Al disclosures increasingly
scrutinized.
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Insurance Market Conditions
CYBER RISK 12024
Rate Trends
The cyber insurance market continues to experience downward pressure on rates, averaging
flat to 10% reduction, with significant variations based on size, industry and controls. Increased
competition from new and returning carriers drives broader coverage, lower retentions and
higher limits. Traditional markets, facing competition from insure-techs, are adjusting pricing to
grow in small and middle markets and competition on layered programs is driving down excess
pricing. There is concern that the continued elevated claims activity may cause broad market -
wide rate increases and more challenging market conditions as we look to the second half of
2024 and the first half of 2025.
Carrier Appetite
Most carrier appetites remain broad, although specific industries face difficulties due to outside
political or economic factors. Newer environmental, social and governance (ESG) concerns,
such as coal or nonrenewable energy, affect utility companies and producers of vice products
like tobacco and alcohol. These pressures may extend to other industries in the future. On large
accounts with significant premiums, carriers are more willing to increase limits from $5M to
$10M. For small to middle -market businesses, carriers typically maintain $5M limits.
Nonetheless, underwriting standards are still high, causing greater competition for buyers with a
strong security posture.
Claims & Coverage Limitations
Carriers continue to raise questions about catastrophic losses, with many releasing new
language limiting war coverage. These changes are driven, in part, by reinsurance restrictions.
Many carriers will complete their reinsurance renewals on July 1, when we may see a renewed
emphasis on specific risk areas. Professional services, education and manufacturing sector
policies continue to be the most impacted by cyber events, with a high frequency of business
email compromise, ransomware and cybercrime claims. Carriers are concerned about privacy -
related incidents, particularly those resulting from violations of the Biometric Information Privacy
Act (BIPA) and tracking technology non-compliance. While the immediate effect of new SEC
cyber guidance appears limited to directors' and officers' liability policies, some predict the SEC
requirement to report cyber incidents publicly will increase the frequency of class action
lawsuits. The industry continues to monitor the implications of artificial intelligence and how to
protect sensitive data disclosed via chatbots.
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