Memorandum
City of Lawrence
City Manager’s Office
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TO: |
David L. Corliss, City Manager
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FROM: |
Michael Bennett, Risk Manager
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CC: |
Cynthia Wagner, Assistant City Manager Diane Stoddard, Assistant City Manager Jonathan Douglass, City Clerk/Assistant to the City Manager
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Date: |
June 9, 2011
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RE: |
July 1, 2011 Insurance Policy Renewals Property/Casualty Insurance Fire and Medical Auto/Professional Liability Insurance |
Introduction
On July 1, 2011 at 12:01 a.m., the City’s property/casualty and – auto/professional liability/portable equipment liability coverage for the Lawrence/Douglas County Fire/Medical Department will expire. This memo contains staff’s recommended actions and requests your approval to bind coverage in advance of the expiration.
Brokerage Fee
The City worked with Arthur J. Gallagher in brokering these coverages. The brokerage fee paid to Gallagher will remain the same as the last three years; $16,510.
Property/Casualty
Property and Casualty insurance is the largest component of our insurance portfolio with insurable assets of more $274 million. The City’s assets, including replacement costs, increased over $5 million from 2010. This includes the large Carnegie Building remodeling project. The premium will rise from $109,924 to $110,809. The premium reflects an $885 increase over last year which equates to less than 1%.
In 2008, due to a soft market, the City received a 13% discount from the prior policy period. The carrier lowered the City’s rate from .0517 to .045 per $100 of insured value at that time. The soft market has continued into 2011. Our rate has actually dropped slightly this year which is why the premium rose such a small amount despite the $5 million increase in coverage. The fact the City has not submitted a property damage claim in several years allowed the broker to negotiate with multiple carriers including, but not limited to, Affiliated FM, The Hartford, Chubb, Great American and Beacon One. Numerous carriers refused to quote due to our low rate. The only two carriers submitting comparable bids were Affiliated FM and The Hartford.
The coverage deductible remains at $25,000.
Fire/Medical Auto/Professional Liability/Portable Equipment
Several years ago, the City sought out specialized insurers as opposed to commercial auto insurers and achieved significant premium savings as well as coverage enhancements. The City has repeatedly switched between VFIS and Emergency Services Insurance Program (ESIP) over the last few years. The policy provides coverage of Fire and Medical Department’s emergency vehicles, professional liability, and portable equipment. Bids were sought from both companies.
ESIP submitted a renewal bid of $61,570. The VFIS bid was not competitive. Renewing/binding coverage for auto/professional liability/portable equipment coverage for the Fire and Medical Department with ESIP- ARCH Insurance Company (A Division of McNeil and Company) for the insurance period of 7/1/11 to 7/1/12 is recommended. This policy will increase slightly, from $61,090 to $61,570 due to the fact we purchased two brand new vehicles in the last year with a combined value of over $2 million.
Total Cost
The total cost of the insurance policies will rise from $187,524 to $188,889 as follows:
Property/Casualty $110,809
Fire/Medical $ 61,570
Brokerage Fee $ 16,510
TOTAL $188,889
A small portion, $2,821 of the property/casualty premium, will be paid by the occupants of the West Lab Building.
Recommended Action
Staff recommends the following actions, if appropriate: