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6.2 Property Casualty Insurance AgreementCITY OF SALINA REQUEST FOR CITY COMMISSION ACTION DATE TIME 06/25/2012 4:00 P.M. AGENDA SECTION ORIGINATING DEPARTMENT: FISCAL APPROVAL: NO: 6 BY: ITEM CITY MANAGER'S OFFICE FINAL APPROVAL: NO: 2 Page 1 BY: Jason A. Gage BY: ITEM: Resolution No. 12 -6912 Authorizing the City Manager to enter into an agreement with Travelers for the renewal of the City's Comprehensive Property /Casualty Insurance. BACKGROUND: Staff has completed our review of the June 30, 2012 — June 30, 2013 Comprehensive Property /Casualty Insurance Program Proposal for the City of Salina. City staff worked with our broker (Assurance Partners) and insurance consultant (Bob Charlesworth) to evaluate the insurance market and available carrier options. There are a limited number of carriers in the marketplace able to provide competitive coverage for a city our size. On behalf of the City, Assurance Partners requested proposals from three possible carriers, with only two choosing to participate. Glatfelter Public Entity declined. A proposal was provided by Travelers and One Beacon. Provided below is a summary of the expiring year's premium by line of coverage and how it compares to the two proposals. One noticeable change is to Property and can be partially attributed to the City increasing multiple property values in an effort to meet the insurer's requirement of insuring to value. The other cause for a property increase has less to do with the City and more to do with the costly property losses experienced industry-wide. The various liability lines of coverage have also increased and are due to industry-wide loss activity more so than to the City of Salina's personal loss experience. Our research shows that the soft market may finally have reached its end. Record catastrophe losses and low investment yields appear to have pushed property /casualty rates to their breaking point. We are in transition as the market firms. The result is increased rates and harder underwriting standards across the insurance industry. We did explore alternative deductible increases and the possibility of establishing a SIR, self- insured retention limit, but in our best risk management opinion we recommend the program as proposed. As you will see from the summary below, Travelers provides for a less costly program and staff recommends continuation of the relationship with them. Line of Business Expiring Policy Travelers Proposal Travelers Premium Change One Beacon Proposal One Beacon Premium Change Property $107,235 $138,732 29% $168,586 57.21% Inland Marine $11,428 $11,442 0% $113 -99.01% General Liability $61,711 $63,646 3% $85,463 38.49% Public Entity Management Liability $9,098 $9,977 10% $71,910 -4.01% Employment Practices Liability $18,722 $21,413 14% Included w /PEML Included w /PEML Law Enforcement Liability $43,021 $44,540 4% Included w /PEML Included w /PEML Auto $79,323 $88,219 11% $92,473 16.58% Crime $4,073 $4,543 12% Included w /PEML Included w /PEML Totals $334,611 $382,512 14% $418,646 25% Additional Notes: One Beacon's proposal excluded coverage for Levee Collapse and the Greeley Bridge Overall, the opinion of Bob Charlesworth and Assurance Partners is that the City of Salina, when compared to other municipalities, continues to have very competitive rates. CONFORMANCE WITH STRATEGIC PLAN: GOAL #3: The City will provide the highest quality of services, consistent with Governing Body direction, available resources and staff commitment to quality. CITY OF SALINA REQUEST FOR CITY COMMISSION ACTION DATE TIME 06/25/2012 4:00 P.M. AGENDA SECTION ORIGINATING DEPARTMENT: FISCAL APPROVAL: NO: 6 BY: ITEM CITY MANAGER'S OFFICE FINAL APPROVAL: NO: 2 Page 2 BY: Jason A. Gage BY: FISCAL NOTE: Insurance premiums are funded through the Risk Management Fund which is an internal service fund. Premium costs are allocated by the enterprise funds and general fund department operations. The total premium for this renewal is $382,512, an increase of $47,901 (14 %) from the expiring premium and will be funded by increases in charges to the other operating funds. CONCLUSION: Our goal is to obtain both the best possible services and price for insurance coverage. While coverage, conditions and costs are important, so are the services provided. We are confident we have accomplished our end goal with Travelers. Not only did Travelers propose the most competitive rates, they remain one of the largest public entity insurance providers, have a Kansas presence and lead the nation in claims handling. Staff considers the renewal offering to be very competitive and in keeping with industry pricing trends. We wish to acknowledge the contributions of both Assurance Partners and Bob Charlesworth. The combination of their years of experience and assistance in negotiating competitive rates makes for a beneficial and cost effective relationship. Finally, the City's risk management philosophy states that "risk management is every employee's responsibility." We believe this philosophy has proven to be a very successful approach to reducing losses and the resulting insurance costs that would otherwise burden our community. RECOMMENDED ACTION: Due to the pending renewal date of June 30, 2012 and the reasonable cost of coverage as provided, staff recommends approval of Resolution No. 12 -6912 authorizing the City Manager to enter into an agreement with Travelers for renewal of the City's Comprehensive Property /Casualty Insurance in the total amount of $382,512. 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