On March 23, 2017, City Council approved Agreement No. LW7-953-3735 with Arthur J. Gallagher Risk Management Services, Inc., for insurance broker services. Arthur J. Gallagher Risk Management Services, Inc., acts as the Insurance Broker of Record for the City of Chandler’s workers’ compensation, casualty/liability, property, and automobile insurance coverage. They also advise and coordinate with the City’s Risk Services Coordinator and City Attorney to obtain bids from insurers and negotiate the best terms and coverage for the various exposure areas. The City self-insures and carries excess coverage in the areas and at the levels indicated below. The total premium cost of recommended coverage through commercial carriers for FY 2022-23 is estimated at $3,000,000, compared to FY 2021-22 which was $1,945,232. The estimated increase in rate premium is due to the instability in the marketplace which is explained further in this memorandum. Excess Workers’ Compensation: Excess Workers’ Compensation Insurance is carried through Safety National. In FY 21-22 the City was self-insured for the first $3,000,000 for Police and Fire, and $1,500,000 for the remainder of the City employees. For the 2022 renewal, the City’s insurance broker submitted the City’s account to Safety National due to the declinations we received the previous year. Safety National provided a renewal quote with a 24% increase in premium. This increase is being driven by three recent fatality claims and a continued frequency and severity of claims for the City’s police and fire as well as increasing medical costs. This quote does not include any increases to SIR for any category other than a $500,000 increase to the SIR for Wildland Firefighters. This SIR would cover firefighters who are injured fighting a Wildland fire. Property Insurance: Property Insurance is carried through The Travelers Indemnity Company which provides broad coverage for buildings, business personal property, fine arts, Electronic Data Processing (EDP), mobile equipment, as well as boilers and machinery. This policy has various deductibles including $50,000 per occurrence for most losses, $100,000 for earth movement, and $50,000 for flood. Premium for FY 2022-23 is $613,900. Premium for FY 2021-22 was $544,998. Due to the catastrophic losses that have continued to occur in the United States as well as internationally, the property insurance market has hardened. As a result of the hard market, Travelers Insurance Company, who had written the City's property and Auto Physical Damage (ADP) policy up to FY 2019/2020, will no longer write the City’s ADP and equipment. The City has been unable to find a carrier that will write over the road coverage for ADP and equipment that is licensed for road use. The City continues to self-insure all City owned autos and equipment until a carrier is willing to write over the road coverage. Excess Liability Coverage: Excess Liability Coverage is carried through Safety National, Gemini, Genesis, and Arch in $5 million increments*, and Great American in $10 million increment for a total of $30 million excess liability coverage for FY 2022-23. In FY 2021-22, the City had excess liability coverage through Safety National, and Gemini, in $5 million increments. Allied World, and Great American in $10 million increments. At the time of this memorandum, we are still waiting on confirmation for 2 premuims and those amounts are blank below. • $5 million excess of $1,750,000 Self-Insured Retention – Insurance is carried through Safety National Insurance Company. Premium for FY 2022-23 is $461,756. Premium for FY 2022-21 was $401,476. • $5 million excess of $6,750,000 – Insurance is through Gemini. Premium for FY 2022-23 is $246,132. Premium for FY 2022-21 was $206,400. • $5 million excess of $11,750,000 – Insurance is through Gemini. New insurance carrier replacing Allied World. Premium for FY 2022-23 is $216,720. • $5 million excess of $16,750,000 – Insurance is through Arch. New insurance carrier replacing Allied World. Premium for FY 2022-23 is $ . • $10 million excess of $21,750,000 – Insurance is through Great American Assurance Co. Premium for FY 2022-2023 is $ . Premium for FY 2021-22 was $289,000. *The broker had to restructure the City’s excess liability tower into four carriers each providing $5 million in coverage. Crime Insurance: Crime Insurance is carried through National Union Fire Insurance Co. of Pittsburgh, PA. Coverage includes state required bonds for the City’s Management Services Director and Accounting Manager. This policy also provides coverage for members of the City’s boards and commissions. Premium for FY 2022-23 is $16,988. Premium for FY 2021-22 was $15,462. Privacy/Security Liability Insurance (Cyber Insurance): Privacy/Security Liability Insurance also known as Cyber Insurance is carried through Cowbell Insurance Co. Privacy and Network Liability policy provides $3 million aggregate coverage for Privacy, Network Security, Internet Media, and $100,000 Network Extortion and Cyber Incident Response coverage. Premium for FY 2022-23 should not exceed $158,216. Premium for FY 2021-22 was $98,885. Storage Tank Liability Insurance: Storage Tank Liability Insurance is carried through Mid-Continent. Policy limits remain at $1,000,000 per tank, with a $25,000 per incident deductible. Coverage complies with the financial responsibility mandates of the Environmental Protection Agency. Premium for FY 2022--23 is $1,713. Premium for FY 2021-22 was $1,639. Airport Liability Insurance: Airport Liability Insurance is carried through ACE Property & Casualty. Airport Owners and Operators Liability policy provides $50 million in coverage per occurrence. Premium for FY 2022-23 is $16,030. Premium for FY 2021-22 was $11,485. Fine Arts Insurance: Fine Arts Insurance is carried through Axis Insurance Company. This is purchased to cover the City’s Museum collection and temporary loans. Deductible per occurrence is $1,000. Premium for FY 2022-23 is $8,996. Premium for FY 2021-22 was $8,820. |