Agenda 03/28/2017 Item #16E 103/28/2017
EXECUTIVE SUMMARY
Recommendation to approve the purchase of property insurance effective April 1, 2017 in the
estimated amount of $2,330,299, a reduction of $77,500.
OBJECTIVE: 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 purchases 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.
The current property insurance program expires on April 1, 2017 and contains the following provisions.
Insurable replacement values are $916,136,005. 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.
Both the property and flood insurance programs are purchased 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.” Staff submits the program to the Florida Department of Insurance for
approval on an annual basis to assure compliance with the Act.
Although total insured values are $916,136,005, 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 study is completed for the underwriters by Risk
Management Solutions, Inc. to determine the appropriate loss limit to purchase. For FY 17, the PML is
$66,596,998 for a 100-year wind event. Staff recommends that the County continue to purchase a
$75,000,000 loss limit.
The County’s Broker, Insurance and Risk Management Services, approached 38 (thirty eight) carriers for
proposals. 32 (thirty two) carriers declined to quote. 6 (six) submitted quotes. Of those that declined to
quote, the most common reasons were 1) they could not offer terms at the requested pricing, 2) they could
not support the broad scope of the current manuscript property policy form, and 3) they could not
participate in a program that included a Named Storm deductible cap.
In terms of financial stability, each of the carriers possesses a minimum Best’s rating of A- or higher.
Covered perils are written on an “All Risk of Loss” basis. Loss valuation is on a replacement cost basis.
Terrorism coverage is included in the proposal. There are no other substantial changes in the program.
Staff does not recommend an inflation adjustment to the current property schedule.
Based upon the responses received from the market, the cost to maintain the current program at the
current replacement values, current loss limit and at the existing terms and conditions is $2,330,299. Th is
represents a reduction in gross premium of $77,500.
03/28/2017
The renewal comparison is illustrated below:
Description Deductible Terms Annual
Premium
Composite
Rate per
$100
% Change
in Rate per
$100
$ Change % Change
in Gross
Premium
FY 15 Renewal 5% Named Storm
Deductible with
$5,000,000 Cap
$3,027,599 .331 -13.1% -$281,449 -8.50%
FY 16 Renewal 3% Named Storm
Deductible with
$5,000,000 Cap
$2,407,799 .263 -20.5% -$619,800 -20.5%
FY 17 Renewal 3% Named Storm
Deductible with
$5,000,000 Cap
$2,330,299 .254 -3.4% -$77,500 -3.3%
FISCAL IMPACT: The final premium is subject to the Statement of Values submitted to the carriers as
well as additions and deletions of property from the Statement of Values as they occur. Based upon the
current property schedule, the estimated annual cost is $2,330,299. Sufficient funds have been budgeted
within Fund 516, Property and Casualty Insurance for this purchase. The premium is net of commission.
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 purchase property 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, 2017.
Prepared by: Jeffrey A. Walker, CPCU, ARM, Division Director, Risk Management Division
ATTACHMENT(S)
1. 2017 Property Insurance Program Illustration (PDF)
2. 2017 Property Insurance Marketing Summary (PDF)
3. 2017 Risk Management Solutions Modeling Summary (PDF)
4. Property Insurance Pricing and Coverage History (PDF)
5. Property Insurance Renewal History (PDF)
03/28/2017
COLLIER COUNTY
Board of County Commissioners
Item Number: 16.E.1
Doc ID: 2802
Item Summary: Recommendation to approve the purchase of property insurance effective April
1, 2017 in the estimated amount of $2,330,299, a reduction of $77,500.
Meeting Date: 03/28/2017
Prepared by:
Title: Division Director - Risk Management – Risk Management
Name: Jeff Walker
02/24/2017 3:09 PM
Submitted by:
Title: Division Director - Risk Management – Risk Management
Name: Jeff Walker
02/24/2017 3:09 PM
Approved By:
Review:
Administrative Services Department Michael Cox Level 1 Division Reviewer Completed 02/24/2017 4:12 PM
Administrative Services Department Len Price Level 2 Division Administrator Review Completed 03/13/2017 3:07 PM
Office of Management and Budget Valerie Fleming Level 3 OMB Gatekeeper Review Completed 03/14/2017 4:36 PM
County Attorney's Office Jeffrey A. Klatzkow Level 3 County Attorney's Office Review Completed 03/15/2017 9:03 AM
Office of Management and Budget Laura Wells Additional Reviewer Completed 03/16/2017 5:14 PM
County Manager's Office Nick Casalanguida Level 4 County Manager Review Completed 03/20/2017 8:48 AM
Board of County Commissioners MaryJo Brock Meeting Pending 03/28/2017 9:00 AM
$75MM
$50MM
$75,000,000 Loss Limit
"All risks" per Program Sublimits
Excluding TRIA
$50,000,000 Primary
Landmark - 10%
Lloyd - 2.5%
Westchester - 6.67%
TOTAL - 19.17%"All Risks" per Program Sublmits
$25MM Excluding TRIA
Lloyds - 43%
TOTAL - 43%
Main Schedule
TIV (applicable per attached):$916,136,005
Total Property Loss Limit (AOP):$75,000,000
Named Storm Sublimit:$75,000,000
TRIA Limit:Not included
B&M Sublimit:Not included
Earthquake Sublimit:$75,000,000
Flood sublimit:$75,000,000
Property Premium:$2,275,000
Estimated Surplus Lines Taxes:Florida Municipality - tax exempt
Total Fees or Surcharges for admitted carriers on all of the above options:are not included above
The coverage and terms being offered may not be the same or as broad as requested in your application.
This document shall not be construed to Effect or Bind coverage in any way without the expressed authority of the Carrier(s).
Florida Hurriance Surcharges and admitted carrier surcharges are not included in the total
BRIT - 20%
Collier County
Proposed Property Program Illustration
April 1, 2017 to April 1, 2018
Property Program Excluding Terrorism with 5M max named storm deductible
$25,000,000 XS $50,000,000
"All Risks" per Program Sublmits
Excluding TRIA
Lloyds -12.83%$50,000,000 XS $25,000,000
Colony - 20%
Evanston - 20%"All Risks" per program sublimits
Excluding TRIA
TOTAL - 52.83%
Rockhill - 5%
Lloyds - 3%
$25,000,000 XS $25,000,000
TOTAL - 28%
"All Risks" per program sublimits
Excluding TRIA
"All Risks" per program sublimits
Liberty - 9.83%
TOTAL - 9.83%
$25,000,000 primary
TOTAL - 37.83%
DEDUCTIBLES
See quote for details
Excluding TRIA
Arch - 20%
Lloyds - 17.83%
2017 Property Insurance Marketing Summary
Ground Up Loss Deductible Loss Gross Loss
Return Period GU OEP GU AEP CL OEP CL AEP GR OEP GR AEP
10,000 392,345,060 396,476,387 5,000,000 10,367,097 387,740,494 391,214,318
5,000 329,114,765 333,084,074 5,000,000 9,999,976 323,500,093 327,177,290
1,000 192,240,472 195,950,733 5,000,000 8,509,151 186,596,894 190,190,022
500 150,366,412 153,232,439 5,000,000 7,004,791 145,004,140 147,379,695
250 113,036,746 115,285,723 5,000,000 5,839,038 107,892,587 109,702,494
100 66,596,998 68,097,231 5,000,000 5,001,102 61,683,893 62,799,454
50 38,158,973 39,017,283 5,000,000 5,000,000 33,663,455 34,254,258
25 15,996,417 16,370,612 3,985,203 4,149,647 12,425,648 12,605,722
10 1,555,024 1,599,490 1,356,950 1,387,527 0 0
5 43,883 45,872 44,211 45,224 0 0
AAL 2,689,113 2,689,113 388,861 388,861 2,300,252 2,300,252
SD 15,321,612 15,321,612 1,159,708 1,159,708 14,582,602 14,582,602
CV 6 6 3 3 6 6
Key Losses - US Windstorm and Surge Analysis (USD)
Collier County Property Insurance Renewal 2013-2014 2014-2015 2015-2016 2016-2017 2017-2018
Real and Personal Property
Per Occurrence Loss Limit $75,000,000 $75,000,000 $75,000,000 $75,000,000 $75,000,000
Total Insured Values $851,463,307 $869,915,531 $913,221,183 $916,412,717 $916,136,005
Real Property $756,549,832 $772,953,175 $818,768,197 $821,837,231 $820,706,573
Personal Property $43,131,803 $41,119,403 $41,686,303 $41,808,803 $41,795,603
Property In the Open $44,330,212 $48,058,643 $46,397,623 $46,397,623 $47,334,769
EDP Equipment, Software $5,500,860 $5,522,410 $4,117,260 $4,117,260 $4,047,260
Business Income $1,950,600 $2,261,900 $2,251,800 $2,251,800 $2,251,800
Builders Risk Not Included Included Included Included Included
Watercraft Included Included Included Included Included
Sings, Signals, Roadway Lighting Included Included Included Included Included
Well Head Equipment Included Included Included Included Included
Landfill Caps Included Included Included Included Included
Leased Locations Included Included Included Included Included
Fule Tanks and Contents Included Included Included Included Included
Foundations and Underground Piping Included Included Included Included Included
Retaining Walls Included Included Included Included Included
Property in the Care Custody and Control Included Included Included Included Included
Improvements and Betterments Included Included Included Included Included
Contingent Time Element Included Included Included Included Included
Leashold Interest Included Included Included Included Included
Voting Machines Included Included Included Included Included
Dock and Piers Included Included Included Included Included
Expiditing Expenses Included Included Included Included Included
Fences, Site Lighting, Pavers and Walkways Included Included Included Included Included
Boardwalks, Irrigation Systems Included Included Included Included Included
Sublimits
Flood $75,000,000 $75,000,000 $75,000,000 $75,000,000 $75,000,000
Earthquake $75,000,000 $75,000,000 $75,000,000 $75,000,000 $75,000,000
Extra Expense $25,000,000 $25,000,000 $25,000,000 $25,000,000 $25,000,000
Newly Acquired Property $50,000,000 $50,000,000 $50,000,000 $50,000,000 $50,000,000
Accounts Receivable $25,000,000 $25,000,000 $25,000,000 $25,000,000 $25,000,000
Service Interruption $25,000,000 $25,000,000 $25,000,000 $25,000,000 $25,000,000
Errors or Omissions in Reporting $10,000,000 $10,000,000 $10,000,000 $10,000,000 $10,000,000
Contingent Business Income $2,500,000 $2,500,000 $2,500,000 $2,500,000 $2,500,000
Ordinance or Law
Undamaged Portion Included Included Included Included Included
Demolition & Increased Cost $50,000,000 $50,000,000 $50,000,000 $50,000,000 $50,000,000
Miscellaneous Unnamed Locations $5,000,000 $5,000,000 $5,000,000 $5,000,000 $5,000,000
Automobile Physical Damage $7,500,000 $7,500,000 $7,500,000 $7,500,000 $7,500,000
Mobile Equipment $5,000,000 $5,000,000 $5,000,000 $5,000,000 $5,000,000
Transit $2,500,000 $2,500,000 $2,500,000 $2,500,000 $2,500,000
Pollutant Cleanup/Removal $500,000 $500,000 $500,000 $500,000 $500,000
Trees, Plants, Shrubs $2,500,000 $2,500,000 $2,500,000 $2,500,000 $2,500,000
Roadways, Pavements, Driveways $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000
Additional Debris Removal $10,000,000 $10,000,000 $10,000,000 $10,000,000 $10,000,000
Spoilage $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000
Mold/Fungus/Mildew $2,500,000 $2,500,000 $2,500,000 $2,500,000 $2,500,000
Valuable Papers and Records $25,000,000 $25,000,000 $25,000,000 $25,000,000 $25,000,000
Transporation $2,500,000 $2,500,000 $2,500,000 $2,500,000 $2,500,000
Fine Arts $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000
Automatic Coverage for 90 Days $50,000,000 $50,000,000 $50,000,000 $50,000,000 $50,000,000
Personal Property of Employees $500,000 $500,000 $500,000 $500,000 $500,000
Plants, Trees and Shrubs - 2,500 Max Per Item $2,500,000 $2,500,000 $2,500,000 $2,500,000 $2,500,000
Debris Removal 25% of Loss 25% of Loss 25% of Loss 25% of Loss 25% of Loss
Debris Removal Additional Limit $10,000,000 $10,000,000 $10,000,000 $10,000,000 $10,000,000
Civil Authority $5,000,000 $5,000,000 $5,000,000 $5,000,000 $5,000,000
Civil Authority Time Element 30 Days 30 Days 30 Days 30 Days 30 Days
Ingress / Egress $5,000,000 $5,000,000 $5,000,000 $5,000,000 $5,000,000
Ingress / Egress Time Element 30 Days 30 Days 30 Days 30 Days 30 Days
Professional Fees $250,000 $250,000 $250,000 $250,000 $250,000
Rents $500,000 $500,000 $500,000 $500,000 $500,000
Temporay Removal of Property $500,000 $500,000 $500,000 $500,000 $500,000
Extended Period of Indemnity 120 Days 120 Days 120 Days 120 Days 120 Days
Royalties $5,000,000 $5,000,000 $5,000,000 $5,000,000 $5,000,000
Mold, Mildew & Fungus and Microoragnism $2,500,000 $2,500,000 $2,500,000 $2,500,000 $2,500,000
Vehicle Physical Damage $7,500,000 $7,500,000 $7,500,000 $7,500,000 $7,500,000
Deductibles
All Other Perils $50,000 $50,000 $50,000 $50,000 $50,000
Named Storm 5%5%5%3%3%
Named Storm Minimum Per Occurrence $250,000 $250,000 $250,000 $250,000 $250,000
Named Storm Maximum Per Occurrence $5,000,000 $5,000,000 $5,000,000 $5,000,000 $5,000,000
Earthquake $50,000 $50,000 $50,000 $50,000 $50,000
Flood Other Than A or V Zones Per Occ $50,000 $50,000 $50,000 $50,000 $50,000
Flood Per Building A or V Zones $500,000 $500,000 $500,000 $500,000 $500,000
Flood Per Contents A or V Zones $500,000 $500,000 $500,000 $500,000 $500,000
Valuation
Real and Personal Property Replacement Cost Replacement Cost Replacement Cost Replacement Cost Replacement Cost
Automobile Physical Damage Actual Cash Value Actual Cash Value Actual Cash Value Actual Cash Value Actual Cash Value
Mobile Equipment Replacement Cost Replacement Cost Replacement Cost Replacement Cost Replacement Cost
Time Element Actual Loss Sustained Actual Loss Sustained Actual Loss Sustained Actual Loss Sustained Actual Loss Sustained
Other Conditions
Vacany Permit Included Included Included Included Included
Back-Up of Sewers and Drains Included Included Included Included Included
Mechanical Breakdown on EDP Included Included Included Included Included
5% Insurable Value Margin Clause Included Included Included Included Included
Property Premium $3,493,948.00 $3,253,192.00 $2,971,219.00 $2,350,302.00 $2,275,302.00
Property Rate $0.410 $0.374 $0.325 $0.257 $0.248
Property Rate Reduction -8.78%-13.10%-21.08%-3.31%
Estimated Premium Based on 2017 Schedule $2,275,302.00
Estimated Premium Savings Based on 2017 Schedule $75,000.00
Equipment Breakdown
Limit $50,000,000 $50,000,000 $50,000,000 $50,000,000 $50,000,000
Business Income $2,114,100 $2,114,100 $2,251,800 $2,251,800 $2,184,300
Extra Expense $500,000 $500,000 $500,000 $500,000 $500,000
Ordinance or Law $2,500,000 $2,500,000 $2,500,000 $2,500,000 $2,500,000
Perishable Goods $250,000 $250,000 $250,000 $250,000 $250,000
Deductible $25,000 $25,000 $25,000 $25,000 $25,000
Equipment Breakdown Premium $22,246.00 $20,284.00 $21,880.00 $26,497.00 $26,497.00
Terrorism
Limit Occurrence/Aggregate $50,000,000 $50,000,000 $50,000,000 $50,000,000 $50,000,000
Sublimits
Inland Marine $5,000,000 $5,000,000 $5,000,000 $5,000,000 $5,000,000
Automobile Physical Damage $7,500,000 $7,500,000 $7,500,000 $7,500,000 $7,500,000
Deductible $50,000 $50,000 $50,000 $50,000 $50,000
Terrorism Premium $36,468.00 $35,572.00 $34,500.00 $31,000.00 $28,500.00
Total Premium Based on Schedule On File At Binding $3,552,662.00 $3,309,048.00 $3,027,599.00 $2,407,799.00 $2,330,299.00
Estimated Premium Savings -$77,500.00
OPTIONS FOR CONSIDERATION
Estimated Additional Premium to Increase the Loss Limit from $75,000,000 to $100,000,000 $275,000.00
Additional Premium to Increase the Terrorism Limit from $50,000,000 to $156,578,000 $7,000.00
Property Insurance Renewal History
$4,153,900
$3,418,900
$3,145,000
$3,560,000 $3,552,662
$3,309,048
$3,027,599
$2,407,799 $2,330,299
$2,300,000
$2,800,000
$3,300,000
$3,800,000
$4,300,000
2009 2010 2011 2012 2013 2014 2015 2016 2017 Premium Property Insurance Renewals
Premium by Year
0.446
0.410
0.368
0.417 0.410
0.374
0.331
0.263 0.254
0.220
0.270
0.320
0.370
0.420
0.470
2009 2010 2011 2012 2013 2014 2015 2016 2017 Rate per $100 Property Insurance Renewals
Rate per $100