Item 8CAGENDA ITEM # 8C
SEPTEMBER 14, 2009
CITY OF ATLANTIC BEACH
CITY COMMISSION MEETING
STAFF REPORT
AGENDA ITEM: Renewal of City Insurance.
SUBMITTED BY: George Foster, Human Resource Manager
DATE: September 8, 2009
BACKGROUND: We have received the renewal rates for our non-benefit insurance coverage for
October 1, 2009 thru September 30, 2010 as indicated within attachment 1. This renewal is $26,S6S
(4.63%) less than last year's total premiums and is the third consecutive year that our premiums have
been reduced with the reduction in 2007 being $106,683 (6.27%), and in 2008 being $38,383 (6.27%).
Both the bid process and the period of renewal for our general insurance are items that need to be
reviewed this year.
BID PROCESS: Although insurance is exempt from the formal bid process per Section 2-336 of the
City Code, we have periodically bid insurance. The last formal bid process was in June 2007 to be
effective October 1, 2007. Although eight bid packages were requested and sent out, only two
proposals were received for each major line of insurance. After evaluation of bid packages, the City
Commission approved the Public Risk Insurance Agency (PGIT) whose bid was lower by approximately
$54,000. This bid process takes approximately 6 months for documents and past history reports to be
prepared and sent out. The previous bid was in 2002 by use of a consultant at a cost of $9,800.
These bid processes have identified only two major insurance providers (brokers) within the
governmental market for our major insurance with these being the Public Risk Insurance Agency
(PGIT) and the Florida League of Cities (EMIT). Additionally, insurance has been grouped into major
categories with bidders not willing to split these categories. The primary categories aze: 1) Workers'
Compensation, 2) liability, and 3) property plus automobile.
There are both advantages and disadvantages to frequently bidding out our insurance. The primary
advantage would be to verify that we have the best possible premiums on a 2009/2010 budget item of
$546,7SS. The possible disadvantages aze 1) claim disputes (which company is responsible) could azise
when a claim that occurred during one policy period is not received by the City until the new policy
period, 2) having to deal with more than one provider, attorney, claims processor, etc., as each policy
will have different policies and procedures far claims processing, and 3) unless there are market
indications that the City is not receiving a good renewal rate, the work involved with frequent bids or
the cost to use a consultant is not justified.
Comparing one City's premiums against another's is not totally valid as each City has different
experience factors and/or "loss experience" history. Our current carrier has participated in several
competitive bids with the following summary: EMIT declined to bid on the City of Destin as the PGIT
AGENDA ITEM # 8C
SEPTEMBER 14, 2009
rates were to competitive; however, they did quote the WC insurance and their premiums was almost
exactly the PGIT premium; PGIT has been selected by Cooper City, PGIT's quote for Putnam County
was 15% lower that that from FMIT and other bids currently pending include Groveland, Haines City
and Williston where PGIT bids are lower than FMIT. The City of Milton is currently undecided.
Based upon the above, I believe that renewal with out current carrier is appropriate without a formal bid
process.
PERIOD OF RENEWAL: The City has also been offered, with certain conditions, the option to
"lock in" premiums for insurance coverage indicated by an "*" within attachment 1 for the 2010 to 2011
policy year under the conditions included within attachment 3. There are also both pros and cons to this
offer.
PRO: Unless the rates are reduced by more than 10% or increased by more than 20%, the City
would not have changes to its 2010-2011 premiums for insurance coverage indicated unless the
insured amount of "exposure" changes. Exposure includes payroll, number of vehicles, number of
police officers, total value of building and contents, etc. The 2010-2011 premiums would not be
affected by any adverse claims experience by the City.
CON: For the past several years, premiums have been slowly going down with a $14,002 or 2.5%
reduction this year over 2008/2009. This two year renewal option would result in no reductions to
the City unless the reduction was greater than 10%.
BUDGET: Sufficient funds are in the FY09/10 budget for these premiums; however, additional funds
may be required during the year for claim deductibles.
RECOMMENDATIONS:
1. Approve renewal of insurance, effective October 1, 2009 through September 2410, as indicated
above and within Attachment 1.
2. Authorize renewal for a one year period.
3. Authorize City Manager to sign related documents.
ATTACHMENTS: 1. Insurance renewal premiums
2. Public Risk Insurance Agency Summary
3. Two Year Rate Information
REVIEWED BY CITY MANAGER:
AGENDA ITEM # 8C
SEPTEMBER 14, 2009
INSURANCE RENEWAL PREMIUMS
T e 2005 2006 2007 2008 2009
Automobile Note 1 78,381 75,025 73 428 71,830 73 019*
Pro ert 134,761 230,369 211,173 164,525 158,460*
Liabilit -General 39,552 43,904 39,513 43,483 50,269*
Liabilit -Police 24,998 24 998 26,100 27,416 27,405
Liabilit -Pub Off & Em Prac 19,559 20,591 24,291 28,659 25,870*
Liabilit -Crime 1,223 1,211 1,211 1 211 1,211
Police Statuto Note 2 1,046 1,046 1,178 1,196 1,196
Fiduci Note 3 4,255 4,520 3,743 3,966 4,176
Environmental Note 4 30,377 30,377 17,386 17,386 17,386
Workers' Com ensation 269,496 286,345 213,680 213,648 187,763*
Totals 603,648 718,386 611,703 573,320 546,755
Difference +114,738 -106,683 -38,383 -26,565
+19.01% -14.$5% -6.27% -4.63%
Notes 1. Value of vehicles for 2009 increased by $180,310 to $1,351,193
2. Through L.B. Bryan and Company
3. To be paid by Pension Board.
4. Environmental insurance was renewed on 10/01/07 far a three year period with three
year premium paid of $52,158. This is the last year of this 3 year agreement.
AGENDA ITEM # 8C
SEPTEMBER 14, 2009
IPRIAI
PUBLIC RISK INSURANCE AGENCY
THE AGENCY
Public Risk Insurance Agency (PRIA) has established itself as one of the premier
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insuring local governments has afforded us significant experience and insight into the
unique challenges and constraints that our clients face. .
In March 2000, PRIA became part of the Brown & Brown, Inc. family of agencies.
Brown & Brown, Inc. is the seventh largest independent insurance agency in the United
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As a Brown & Brown company, PRIA has access to hundreds of insurance markets
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PRIA focuses on developing innovative approaches towards managing your risk. Cost
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our primary goals. Proof of account satisfaction is reflected by a 97% business retention
rate.
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AGENDA ITEM # SC
SEPTEMBER 14, 2009
PRIA
PUBLIC RISK INSURANCE AGENCY
CITY OF ATLANTIC BEACH
2-YEAR RATE INF4Rlr/IATION
This quote covers two (2) annual twelve montlls periods, from 10/01/2009 to 10/O1/2010 and from
10!01/2010 to 10/01/2011. The following conditions apply in addition to all other conditions of this
quote;
A. All Aggregate limits reset for the period 10/01/2010 to 10/01/2011. Losses applying to
the annual period from 10/01/2009 to 10/01/2010 will erode the Aggregate(s) for the first
annual period, but will not erode the Aggregate(s) for the period from 10<Ol/2010 to
10/01/2011.
B. The premium for the period 10/OU2010 to 10/01/2011 will be determined based an
updated exposure for 10/01/2010 to 10/01/2011.
C. Rates far the period 10/01/2010 to 10/Ol/2011 will be identical to those for the period.
commencing 10/01/2009, subject to the following:
1. If PG1T's cost of securing excess insurance decreases by more than 10% on any
line of coverage, PGIT will reduce rates on that line of coverage for the period of
10/O1/2010 to 10/01/2011
2. 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
of 10/Ol/2010 to 10/01/2011
3. NCCI Experience modification factors will be applied as promulgated.
D. In the event of cancellation of any line of business prior to 10/01/2011, a penalty equal to
60 days prenuum of such line(s) of business shall become earned, any provision of the
agreement to the contrary notwithstanding.
1. This penalty is earned and payable regardless of when notice of such cancellation
is given, or effective date of such cancellation
2. This penalty is waived on any line of coverage that is affected by C2 above if the
coverage is terminated at 10/O1/2010.
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