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itemTo: From: Date: The Honorable Mayor & Members of the City Commission Hector Mirabile PhD, City Manager! /J// September 24, 2010 Agenda Item: Subject: A Resolution of the Mayor and City Commission of the City of South Miami, Florida, relating to Property, General Liability, Auto, and Workers Compensation Insurance for FY 2010 -2011, authorizing the City Manager to execute the renewed policy with the Florida League of Cities (through the Florida Municipal Insurance Trust); providing an effective date. BACKGROUND & ANALYSIS We received proposals from our current insurer, Florida League of Cities (through Florida Municipal Insurance Trust - FMIT) and the Preferred Government Insurance Trust (PGIT). These are the largest two insurance providers that offer comprehensive coverage (including property, liability, and workers' compensation insurance) to Florida local governments. Please see below the obtained proposals. COVERAGE General/Professional Liability Automobile Liability Property Workers' Compensation Return of Premium TOTAL EXPIRING PROPOSED FMIT PGIT $129,958 $76,263 $71,622 $64,164 $179,725 $88,945 $312,289 $299,904 '! 906 $529,276 Recommendation It is the recommendation of the City Administration to continue coverage with the Florida League of Cities, FMIT, for the 2010-2011 Fiscal Year. The Recommendation is currently based on the Renewal Proposal & Return of Premium, which is provided to members that had property coverage in the 2008 -2009 fund year. All members, who renew in 2010-2011, receive a return of premium, which represents $65,804 for this fiscal year. The return of premium is only offered to members, which renew and contributed for a period of two consecutive years. Furthermore, the FMIT will be reimbursing the City for a full appraisal of all assets (i.e. City owned Buildings, City Infrastructure, City Fleet, City owned Land, etc.), using the FMIT approved vendor list, attached. The reimbursement of this expenditure has a conservative cost of $15,000. This detailed appraisal is important to the City so that the City may obtain an accurate asset list of all items and comply with Government Accounting Standards Board pronouncement 34. Lastly, as part of the normal course of business, the City Administration is committed to complete an annual RFP for Property, General Liability, Auto, and Workers Compensation Insurance every year forward in an effort to obtain the most competitive and cost beneficial Insurance for the City of South Miami. 1 2 3 4 5 6 7 8 9 10 Il 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 RESOLUTION NO. A Resolution of the Mayor and City Commission of the City of South Miami, Florida, relating to Property, General Liability, Auto, and Workers Compensation Insurance for FY 2010 -2011, authorizing the City Manager to execute the renewed policy with the Florida League of Cities, through the Florida Municipal Insurance Trust (FMIT); providing an effective date. WHEREAS, it is the recommendation of the City Administration to continue coverage with the Florida League of Cities, through the FMIT, for the 2010 -2011 Fiscal Year. The recommendation is currently based on the Renewal Proposal and return of premium, which is provided to members that had property coverage in the 2008 -2009 fund year; and, WHEREAS, the City Administration recommends the renewal of Property, General Liability, Auto, and Workers Compensation Insurance for FY 2010 -2011. NOW THEREFORE BE IT RESOLVED BY THE MAYOR AND CITY COMMISSION OF THE CITY OF SOUTH MIAMI, FLORIDA: Section 1. That the City Commission hereby approves the continuing coverage with the Florida League of Cities, through the FMIT, relating to Properly, General Liability, Auto, and workers Compensation Insurance for the 2010 -2011 Fiscal Year. Section 2. This resolution shall take effect immediately upon adoption. PASSED AND ADOPTED this _ day of , 2010. ATTEST: CITY CLERK READ AND APPROVED AS TO FORM AND SUFFICIANCY CITY ATTORNEY APPROVED: MAYOR COMMISSION VOTE: Mayor Stoddard: Vice Mayor Newman: Commissioner Palmer: Commissioner Beasley: Commissioner Harris: Additions shown by underlining and deletions shown by evef g. Department of Insurance and Financial Services P. O. Box 530065 Orlando, FI 32853 -0065 RENEWAL QUOTE FOR 2010 -2011 City of South Miami FMIT 0563 Revised Coveraoe Deductible Limit Premium General /Professional Liability $1,000 $1,000,000 $113,693 Automobile Liability $0 $1,000,000 $66,037 Property $1,000 $17,668,486 $124,313 Workers' Compensation $0 Total Payroll Experience Modification 1.55 10/1/10 $8,962,034 $280,174 GRAND TOTAL PREMIUM $584,217 RETURN OF PREM!UF,1 ($65,804) REDUCED GRAND TOTAL PREMIUM $518,413 The FMIT Board of Trustees has approved a $10,000,000 return of premium for members that had property coverage in the 2008 -2009 Fund Year. The directive of the Board was to return property premium on the renewing members for 2010 -2011 that participated in the Trust's property program in 2008 -2009. At the member's choice, either a check will be issued in mid - November 2010 or a credit can be taken on the 2010 -2011 second installment payment which will be billed in early December and due on January 1, 2011. A preliminary calculation has been made to establish a minimum amount the member can expect to be used for budget purposes. Based on the property premiums paid in 2008 -2009 the City of South Miami can expect at least $65,804 in return premium should they elect to renew coverages for the 2010 -2011 policy year. Includes: Drug Free Credit: Yes Safety Credit: Yes 9/24/2010 Riverol, Alfredo From: Jim McGinn [JMcGihn @flcities.com] Sent: Friday, September 24, 2010 8:39 AM To: Riverol, Alfredo Subject: 0563 FMIT Full Property Appraisal Cost Reimbursement 2 Appraiser's 9- 10'.doc (28 KB) A].fredo, The FMIT will absorb the full cost of a professional property appraisal for the City as an additional incentive for the City to renew coverage with the FMIT. Here is the procedure. The City selects an appraiser of your choice, completely independent of the Trust. In other words, the contractual relationship as it relates to the appraisal is between the City and the appraiser, not the Trust and the appraiser. This leaves any valuation issues or work product dissatisfaction of any kind between the City and the appraiser of their choice and not the Trust. Once the appraiser has been selected and a fee negotiated the City needs to provide me with a copy of the proposal along with a formal request for reimbursement consideration. Once the Trust receives a formal request for reimbursement and a copy of the appraiser's estimated fees, the Trust will review the request, and approve the designated dollar amount to be reimbursed on completion of the process. In order to receive reimbursement, the City must provide me with a. copy of the appraiser's final work product and an endorsement request to adjust the values to those recommended by the appraisal. Once the Trust receives the completed appraisal and the endorsement request, we will issue reimbursement for the full amount as agreed upon above. I attached the contact information for 3 appraisers that I have worked with in the past. You may want to have them all offer a quote and then determine which group is best for the City. Sincerely, Jim McGinn, CPCU, RMPE Florida League of Cities, Inc. Account Executive, South Florida 954.610.5153 1 Industrial Appraisal Company Keith A. Lalley Regional Sales Manager 800 - 245 -2718 klailey @indappr.com Assetworks Appraisal Shaun M. Callahan Vice President 877 - 809 -0600 x 1321 Shaun.callahan @assetworks.com American Appraisals Lori C. Flemming Managing Director 704 - 439 -2515 Iflemming @american - appraisal.com Property Crime Coverage General Liability Public Officials Liability Employment Practices Liability Law Enforcement Liability Automobile Liability Workers' Compensation (Not Rated by A.M. Best) Same as above Same as above Same as above Same as above Same as above Same as above Same as above Same as above TOTAL SEPTEMBERIST,2010 $88,945.00 517.00 33,246.00 10,000.00 5,000.00 27,500.00 64,164.00 299,904.00✓ $529,276.00 *This Coverage Agreement shall be 25% minimum earned as of the first day of the "Coverage Period" PAYMENT TERMS: COMMERCIAL PACKAGE First Payment of $114,686.00 is due 10/01/10 Second Payment of $57,343.00 is due 12/15/10 Final Payment of $57,343.00 is due 3/16/11 PAYMENT TERMS: WORKER'S COMBUSTIBLE Deposit due on 10/1/10: $75,126.00 Nine (9) Equal Installments of $24,975.33.00 Beginning 11/1/10 AUDITS: The General Liability and Automobile coverages are not subject to year -end audit or adjustment. Therefore, there would not be any additional premiums for increased liability exposures or additional vehicles purchased during the policy year. 27 1. All coverages requested may not be offered in this quote. 2. Quote subject to review and acceptance by PGIT Board of Trustees 3. The Coverage Agreement premium shall be pro -rated as of the first day of coverage from them minimum policy premium. 4. Down payment is due at inception 5. Deletion of any coverage presented, Package and/or Workers' Compensation, will result in re- pricing of account. 6. Request to bind must be received in writing via email prior to the effective date of coverage. If request is not received prior to that date there is no coverage and the file is closed. 7. Coverage is not bound until confirmation is received from a licensed representative of Public Risk Underwriters. 8. The Trust requires that the Member maintains valid and current certificates of workers' compensation insurance on all work performed by persons other than its employees. 9. If NCCI re- promulgates a mod, we will honor the mod as promulgated. If the mod changes during the fund year, we reserve the right to apply a correct mod back to the inception date of the Coverage Agreement. 10. Safety and Drug Free program credits (if applicable) are subject to program requirements. 11. Payrolls are subject to final audit. ADDITIONAL TERMS AND CONDITIONS INCLUDING BUT NOT LIMITED TO: 1. Quote is subject to receipt of the following information: a. Signed first page of the PGIT Application (Florida Fraud Statement) b. Initialed and Signed POUEPLI application c. Signed UM Form d. Signed Signature Page e. Latest Audited Financials f. Signed PGIT WC Application g. Signed Drug Free & Safety Program Applications h. Signed Participation Agreement. 0 NOTICE AND ACKNOWLEDGEMENT OF FINANCIAL CONDITION Brown & Brown of Florida Inc Miami Lakes Division, and its parent company, Brown & Brown, Inc. (collectively "Brown & Brown') do not certify, warrant or guarantee the financial soundness or stability of any insurance carrier or alternative risk transfer entity. We endeavored to place your coverage with an insurance carrier with an A.M. Best Company financial rating of "A" or better.* While Brown & Brown cannot certify, warrant or guarantee the financial soundness or stability of a company or otherwise predict whether the financial condition of a company might improve or deteriorate, we are hereby providing you with notice and disclosure of financial condition so that you can make an informed decision regarding the placement of insurance coverage. Accordingly, with receipt of this notice you acknowledge the following with regard to the placement of the insurance indicated below and with regard to any subsequent renewal of such insurance: • Brown & Brown attempted to present other options for your insurance placement, including quotations with insurance carriers holding an "A-" or better rating from A.M. Best Company, but we were unable to secure such a quotes. • Coverage is being placed through Preferred Governmental Insurance Trust ("PGIT'), which is as a Florida local government self - insurance fund established pursuant to Section 624.4622, Florida Statutes, as such PGIT is not rated by the A.M. Best Company. • The financial condition of insurance companies and other coverage providers including local government self - insurance funds like PGIT may change rapidly and that such changes are beyond the control of Brown & Brown. • You should review the financial and membership information from PGIT and agree to abide by the conditions of membership established by PGIT. • You should consider the information provided, including the PGIT coverage quote and insurance placement and review it with your accountants, legal counsel and advisors. • You fully understand the risks associated with insurance coverage with PGIT and release Brown & Brown, its agents, employees, parent, subsidiaries, successors, assignees and related companies from any and all liability, claims, demands, judgments, decrees or orders in the event of carrier insolvency, liquidation or rehabilitation. By: [NAME OF AUTHORIZED REPRESENTATIVE OF INSURED] Named Insured: City of South Miami Policy Number: TBD Policy Period: 10 /1/10 - I I Date of Notice: * A.M. Best Rating Guide: Rating for Stability: A+F to D = Highest to lowest rating Rating for Assets/ Surplus: 15 to I - Largest to smallest rating 0 THIS BRIEF DESCRIPTION OF INSURANCE COVERAGE IS BEING PROVIDED AS AN ACCOMMODATION ONLY AND IS NOT INTENDED TO COVER OR DESCRIBE ALL POLICY TERMS. FOR MORE COMPLETE INFORMATION ON THE SCOPE AND LIMITS OF COVERAGE, PLEASE REFER TO THE POLICY DOCUMENT. We appreciate the opportunity to assist with your insurance needs. Information concerning additional compensation paid to other entities for this placement and related services appears below. Please do not hesitate to contact us if any additional information is required. Our office is owned by Brown & Brown, Inc. Brown & Brown entities operate independently and are not required to utilize other companies owned by Brown & Brown, Inc., but routinely do so. For the 20010 -2011 policy years your insurance was placed with Preferred Governmental Insurance Trust (PGIT). PGIT is an insurance trust formed by Florida public entities through an Interlocal Agreement for the purpose of providing its members with an array of insurance coverages and services. PGIT has contracted with entities owned by Brown & Brown, Inc. to perform various services. As explained below, those Brown & Brown entities are compensated for their services. PGIT has contracted with Public Risk Underwriters (PRU), a company owned by Brown & Brown, Inc., to administer PGirs operations. The administrative services provided by PRU to PGIT include: • Underwriting • Coverage review • Marketing • Policy Review • Accounting • Issuance of PGIT Coverage Agreements • PGIT Member Liaison • Risk Assessment and Control Pursuant to its contract with PGIT, PRU receives an administration fee, based on the size and complexity of the account, of up to 12.5% of the premium you pay to PGIT. PRU may also receive commissions from insurance companies with whom it places your coverage, which commissions are derived from the premium you pay to PGIT. Multiple underwriters may be involved in the placement of your coverage. if so, they also may be compensated for their services from the premium you pay to PGIT. PGIT has also contracted with Preferred Governmental Claims Solutions (PGCS), a company owned by Brown & Brown, Inc., for purposes of administering the claims of PGIT members. The services provided by PGCS to PGIT may include: • Claims Liaison with Insurance Company 30 • Claims Liaison with PGIT Members • Claims Adjustment Pursuant to its contract with PGIT, PGCS receives a claims administration fee for those accounts which PGCS services of up to 5% of the nonproperty portion of the premiums you pay to PGIT. PGIT also utilizes wholesale insurance brokers, some of which (such as Peachtree Special Risk Brokers and MacDuff Underwriters) are owned by Brown & Brown, Inc., for the placement of PGIT's insurance policies, and for individual risk placements for some PGIT members (excess and surplus lines, professional liability coverage, etc.) The wholesale insurance broker may provide the following services: • Risk Placement • Coverage review • Claims Liaison with Insurance Company • Policy Review • Current Market Intelligence The wholesale insurance broker's compensation is derived from your premium, and is largely dictated by the insurance company. It typically ranges between 10% and 17% of the premiums you pay to PGIT for your coverage. Some wholesale brokers used by Brown to place your coverage may also act as Managing General Agents for various insurance companies, and may be compensated directly by those insurance companies for their services in placing and maintaining coverage with those particular companies. The wholesale insurance brokerage utilized in the placement of your property insurance was Peachtree Special Risk Brokers, which is a company owned by Brown & Brown, Inc. Furthermore, any professional liability coverage afforded by the package of insurance you purchased was acquired through Apex Insurance Services, which is also a company owned by Brown & Brown, Inc. 31 Preferred Governmental Insurance Trust Selected Financial Information At and for the year ending September 30, 2009 Assets Total Assets Liabilities & Surplus Unpaid Losses and Loss Adjustment Expenses Total Liabilities Net Assets (Surplus) Premiums Earned Premiums Excess Premiums Expenses Losses and Loss Adjustment Expenses Net Income (Loss) Net Income $ 140,444,508 $ 75,914,907 $ 88,068,401 $ 52,376,107 $ 90,269,750 $ (36,926,617) $ 24,226,474 $ 15,103,530 Preferred Governmental Insurance Trust Earned Premium By Fund Year 2000-2009 120 100 -- 0 60 40 - - -- 20 - -- 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Preferred Governmental Insurance Trust Net Assets (Surplus) 2000-2009 60 50 40 N G 2 30 20 -- — 10 -- 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Page 1 of 1 Riverol, Alfredo From: Robert Hollander [rhollander @bbmia.com] Sent: Friday, September 24, 2010 10:22 AM To: Riverol, Alfredo Cc: bbeckham @hbains.com Subject: City of South Miami - 2 Year Offer Dear Alfredo, In accordance with our conversation and your request, please see the attached 2 Year Rate Offer from the Preferred Governmental Insurance Trust (PGIT). This offer is for all lines of insurance, including Workers' Compensation, for which a rate increase is expected on 1/1/11. Please call me if you have any questions or concerns. It is important to note that the PGIT /Brown & Brown program does not require a year end audit for General Liability payrolls or the possible addition of vehicles to the Business Automobile policy. In addition, we are in a position to offer the City an appraisal of all of the real property. Finally, please again consider that our program includes the preferred "blanket " /no co- insurance format for property insurance and unique $100,000 limit for Non - Monetary expenses. We are very anxious to offer the exceptional loss prevention /safety services of PGIT and the local risk management expertise of Brown & Brown Insurance to further reduce the insurance costs of the City. Thank you for the opportunity to provide our insurance program and services to the City of South Miami Bob Hollander Robert P. Hollander Executive Vice President -Miami Division Brown & Brown of Florida, Inc. 8000 Governors Square Boulevard, Suite 400 Miami Lakes, FL 33016 tel: (305) 364 -7818 fax: (305) 913 -2518 cell: (786) 586 -3668 Please remember that insurance coverage cannot be bound or changed by leaving an electronic message or voice mail message. CONFIDENTIALITY NOTICE: The information contained in this communication, including attachments is privileged and confidential. It is intended only for the exclusive use of the addressee. If the reader of this message is not the intended recipient, or the employee or agent responsible for delivering it to the intended recipient, you are hereby notified that any dissemination, distribution or copying of this communication is strictly prohibited. If you have received this communication in error, please notify us by telephone immediately. Thank you. 9/24/2010 t a City of South Miami This confirms PGIT's ability to offer a two year coverage agreement from 10/1/2010 12:00:00 AM to 10/01 /2011 AM and from 10/01/2011 12:00:00 AM to 10/01/2012 12:01:00 AM. The estimated premium for each annual coverage period is: $229,372 Package coverage and $299,904 Workers' Compensation coverage. The following conditions apply in addition to all other conditions of this quote: a. All Aggregate limits reset for the period 10/01/2011 12:00:00 AM to 10/01/2012 12:01:00 AM. Losses applying to the annual period from 10/1/2010 12:00:00 AM to 10/01/2011 12:01:00 AM will erode the Aggregate(s) for the first annual period, but will not erode the Aggregate(s) for the period from 10 /1/2011 12:00:00 AM to 10/01/2012 12:01:11 AM. b. The premium for the period 10/01/2011 12:00:00 AM to 10/01/2012 12:01:00 AM will be determined based on updated exposure values for this period. c. Rates for the period 10/1/2011 12:00:00 AM to 10/01/2012 12:01:11 AM will be identical to those for the period commencing 10/01/2010 12:00:00 AM, subject to the following: i. If PGrrs cost of securing excess insurance decreases by more than 10% on any line of coverage, PG1T will reduce rates on that line of coverage for the period 10/1/2011 12:00:00 AM to 10/01/2012 12:01:11 AM. ii. If PGIT's cost of securing excess insurance increases by more than 20% on any line of coverage, PGIT will increase rates on that line of coverage for the period 10/1/2011 12:00:00 AM to 10/01/2012 12:01:11 AM. iii. NCCI Experience Modification factors will be applied as promulgated. d. In the event of cancellation of any line of business prior to 10/01/2012 12:01:00 AM, a penalty equal to 60 days premium of such lines(s) of business shall become earned, any provision of the agreement to the contrary notwithstanding. L This penalty is earned and payable regardless of when notice of such cancellation is given, or effective date of such cancellation. H. This penalty is waived on any line of coverage that is affected by C2 if the coverage is terminated at 10/01/2011 12:01:00 AM.