HomeMy WebLinkAboutR-2006-148 PRIA Bid Award Property-Casualty Insurance RESOLUTION NO. 2006-148
A RESOLUTION OF THE CITY OF DANIA BEACH, FLORIDA,
AWARDING THE BID TO PUBLIC RISK INSURANCE AGENCY IN THE
AMOUNT OF $1,044.422.00 FOR THE PURCHASE OF PACKAGE
INSURANCE (TO INCLUDE COVERAGES FOR PROPERTY AND
CASUALTY, CRIME AND EMPLOYEE DISHONESTY, GENERAL
LIABILITY, AUTOMOTIVE LIABILITY AND PHYSICAL DAMAGE,
PUBLIC OFFICIALS LIABILITY, EMPLOYMENT PRACTICES LIABILITY,
STATUTORY ACCIDENTAL DEATH AND DISMEMBERMENT AND
WORKERS' COMPENSATION) FOR THE PERIOD OCTOBER 1, 2006
THROUGH SEPTEMBER 30, 2007; PROVIDING FOR CONFLICTS;
FURTHER, PROVIDING FOR AN EFFECTIVE DATE.
WHEREAS, the Charter of the City of Dania Beach, Part 1I1, Article 3, Section 4,
Subsection 0), provides that contracts for the purchase of supplies, services, equipment and
materials for the city government in excess of fifteen thousand dollars ($15,000.00) shall not be
entered into or let except by authorization and approval of the City Commission, after
advertisement for bids in a newspaper published in Broward County, Florida, with such
publication to be published weekly for two (2) consecutive weeks with the first publication to be
not less than fifteen(15) days prior the reception of bids; and
WHEREAS, bids and specifications for Comprehensive Package Insurance for the City
were advertised and received on August 18, 2006, and;
WHEREAS, the City Manager has determined, after review of the bids received, that such
insurance can be purchased at the least cost to the City by awarding the bid to Public Risk
Insurance Agency, Inc., in the amount of$1,044,422.00;
NOW THEREFORE, BE IT RESOLVED BY THE CITY COMMISSION OF THE
CITY OF DANIA BEACH, FLORIDA:
Section 1. That the Dania Beach City Commission awards the bid to Public Risk
Insurance Agency in the amount of$1,044,422.00 for the purchase of a Comprehensive Package
• of Insurance for the City of Dania Beach, such package to include coverages for property and
casualty, crime and employee dishonesty, general liability, public officials liability, employment
practices liability, Workers' Compensation, and statutory accidental death and dismemberment,
for the period from October 1, 2006 to September 30, 2007, based upon competitive bids
obtained by the City.
Section 2. That all resolutions or parts of resolutions in conflict with this Resolution are
repealed to the extent of such conflict.
Section 3. That this Resolution shall be in force and take effect immediately upon its
passage and adoption.
PASSED and ADOPTED on September 26, 2006.
• PATRICIA FLURY
MAYOR-COMMISSIONER
ATTEST:
._ �j1 o
'LOUISE STILSON, CMC
CITY CLERK
APPROVED AS TO FORM AND CORRECTNESS
BY:
THOMAS . AN�bkO
CITY ATTORNEY
•
2 RESOLUTION#2006-148
CITY OF DANIA BEACH
Agenda Item # o
Agenda Request Item
Date of Commission Meeting: 9/26/2006
Adopt Resolution ❑X Adopt Ordinance (1st Reading) ❑ Adopt Ordinance (2nd Reading) ❑
Award Bid /RFP ❑X Presentation ❑ Continued from: 9/12/2006
RegUeSted Action (Idenfity appropriate'Action or Motion)''
Award of bid to Public Risk Insurance Agency
............... .. ..
Why'Action is Necessary r
.:� .
Contract expires 9/30/2006 for City's package insurance
hat,Action Accomplishes
Renews polices for package insurance
. .................
Purchasing,Requests ONLY
r
Dept: Acct#: Amt: $1,044,422.00
Fund: General: ® Water: ❑ Sewer: ❑ Stormwater: ❑ Grants: ❑ Capital:P� ❑
Summary,Explanation/Background
w n
RFP issued, 2 responses received. See attachments for analysis and rationale for bid award
Fiscal Impact/Cost.Summary
Exhibits Attached;
Exhibit 1 Exhibit 2 Exhibit 3 Exhibit 4 Exhibit 5 Exhibit 6 Exhibit 7 Exhibit 8
--= Pria.tif
Authorized,.Signatures
.. .•
Submitted by
Mary McDonald Date 09/01/06
Department Director
Date
HR Director
Date
Finance Director
Patricia Varney Date 09/05/06
City Attorney
Thomas J. Ansbro Date 09/05/06
City Manager
Ivan Pato Date 09/05/06
City Clerk Use e
;.
Commission Action:
Approved: 7 Denied: ❑ Continued to: ❑
• RESOLUTION NO. 2006-148
A RESOLUTION OF THE CITY OF DANIA BEACH, FLORIDA,
AWARDING THE BID TO PUBLIC RISK INSURANCE AGENCY IN THE
AMOUNT OF $1,044.422.00 FOR THE PURCHASE OF PACKAGE
INSURANCE (TO INCLUDE COVERAGES FOR PROPERTY AND
CASUALTY, CRIME AND EMPLOYEE DISHONESTY, GENERAL
LIABILITY, AUTOMOTIVE LIABILITY AND PHYSICAL DAMAGE,
PUBLIC OFFICIALS LIABILITY, EMPLOYMENT PRACTICES LIABILITY,
STATUTORY ACCIDENTAL DEATH AND DISMEMBERMENT AND
WORKERS' COMPENSATION) FOR THE PERIOD OCTOBER 1, 2006
THROUGH SEPTEMBER 30, 2007; PROVIDING FOR CONFLICTS;
FURTHER, PROVIDING FOR AN EFFECTIVE DATE.
WHEREAS, the Charter of the City of Dania Beach, Part III, Article 3, Section 4,
Subsection 0), provides that contracts for the purchase of supplies, services, equipment and
materials for the city government in excess of fifteen thousand dollars ($15,000.00) shall not be
entered into or let except by authorization and approval of the City Commission, after
advertisement for bids in a newspaper published in Broward County, Florida, with such
publication to be published weekly for two (2) consecutive weeks with the first publication to be
not less than fifteen (15) days prior the reception of bids; and
WHEREAS, bids and specifications for Comprehensive Package Insurance for the City
were advertised and received on August 18, 2006, and;
WHEREAS, the City Manager has determined, after review of the bids received, that such
insurance can be purchased at the least cost to the City by awarding the bid to Public Risk
Insurance Agency, Inc., in the amount of$1,044,422.00;
NOW THEREFORE, BE IT RESOLVED BY THE CITY COMMISSION OF THE
CITY OF DANIA BEACH, FLORIDA:
Section 1. That the Dania Beach City Commission awards the bid to Public Risk
Insurance Agency in the amount of$1,044,422.00 for the purchase of a Comprehensive Package
of Insurance for the City of Dania Beach, such package to include coverages for property and •
casualty, crime and employee dishonesty, general liability, public officials liability, employment
practices liability, Workers' Compensation, and statutory accidental death and dismemberment,
for the period from October 1, 2006 to September 30, 2007, based upon competitive bids
obtained by the City.
Section 2. That all resolutions or parts of resolutions in conflict with this Resolution are
repealed to the extent of such conflict.
Section 3. That this Resolution shall be in force and take effect immediately upon its
passage and adoption.
PASSED and ADOPTED on September 26, 2006.
PATRICIA FLURY •
MAYOR-COMMISSIONER
ATTEST:
LOUISE STILSON, CMC
CITY CLERK
APPROVED AS TO FORM AND CORRECTNESS
BY:
THOMAS J. ANSBRO
CITY ATTORNEY
•
2 RESOLUTION#2006-148
• = CITY OF DANIA BEACH
DEPARTMENT OF HUMAN RESOURCES AND RISK
MANAGEMENT
TO: Mayor Flury
Vice Mayor Anton
Commissioner Bertino
Commissioner Castro
Commissioner McElyea
Cc: Ivan Pato, City Manager
Tom Ansbro, City Attorney
Patricia Varney, Director Finance h
FROM: Mary McDonald, Director Human Resoup 1 s'
DATE: September 13, 2006
SUBJECT: SUMMARY OF PACKAGE INSURANCE RFP PROCESS
Attached is the bid analysis and tally sheet that should have been provided in your
September 12`h meeting backup, but were inadvertently left out. I thank you for the
opportunity to clear any confusion regarding the process.
Our existing policies will expire at midnight September 301h, 2006. An RFP was issued
in June 2006. Sealed responses were received by the City Clerk's office August 18`h.
2006. An analysis of the responses (attached) was completed by insurance consultant
Todd Higley of Hefferman and Associates. On August 24`h, the bid review committee
comprised of Mr. Higley, Finance Director Patricia Varney, and I met to discuss Mr.
Higley's analysis.
In the original bids delivered to the City, the FMIT was $38,466 less than PRIA/PGIT.
However, FMIT used the old experience modifier when quoting the Workers
Compensation premium. We gave them the new experience modifier and had them
requote the WC using the correct experience modifier. This increased FMIT's premium
by approximately $28,000 dollars essentially leaving the true "original" bid difference
with FMIT being about $9,000 less than PRIA/PGIT. While total quoted premium was
a consideration in the committee's decision, it was not the only factor.
The RFP document clearly states that the City reserves the right to accept, reject any/atl
proposals, and negotiate with any/all/none of the proposers solely at its discretion.
IAPerDir\GENERAL CORRESPONDENCE MEMOS\COMMISSION MEMOS\property bid 2006.dot 1
The FMIT proposal, although coming in at a slightly lower premium presented the •
following coverage obstacles requiring negotiation:
1) Liability audit provisions that result in added premium later
2) Specific exclusions for buildings under construction
3) Did not distinguish between a "'windstorm" and a "named windstorm" for locations
near/on the beach. The effect is that any windstorm would be subject to the higher
deductible associated with a named windstorm. This is a significant liability difference
(5%of damage vs. a flat $2500).
4) The FMIT proposal allowed for property replacement cost based on the value listed in
the property schedule + 10%, with a contingency requiring an appraisal on each property
listed. PRIA allowed for replacement + 10% with no need for appraisal.
In summary, the committee was not comfortable with the FMIT package design. Our
consultants knowledge of the industry suggested that it was highly unlikely FMIT could
meet the majority of our requests without significant premium increases. We were
pleased with the overall PRIA coverage proposal, with the exception of an increase in
certain deductibles. We went back to PRIA and requested to maintain our current
deductibles on property and public official liability. We did not negotiate for lower.
premiums. PRIA agreed to lower property liability deductibles, but could not change the
public official deductible; as a compromise they offered$15,000 workers comp premium
reduction.
At the commission's request September 12, 2006, FMIT has been approached to
negotiate items 1-4 listed above. Their response is as follows:
1) Cannot waive the audit provision
2) They are willing to add the Pier Restaurant and additional buildings under
construction, but there would be an additional premium
3) They cannot amend the straight wind hail deductible to read "named windstorm only"
for locations within '/z mile of the beach
4) They cannot waive the appraisal requirement, but they are willing to split the cost.
Based on FMITS responses above, our familiarity with PRIA, PRIA's knowledge of our
account, and our satisfaction with PRIA's service, the committee determined it in the
best interest of the City to accept the PRIA bid and respectfully request the
Commission's approval.
•
I:\PerDir\GENERAL CORRESPONDENCE\MEMOS\COMMISSION MEMOS\properry bid 2006.dot 2
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HEFFERNAN INSURANCE BROKERS
n Melba,of ine Gro"p
Septembcr 14,2006
Mary McDonald
Director of Human Resources
City of Dania Beach
100 W.Dania Beach Blvd
Dania Beach, FL 33004
Dear Ms.McDonald:
Per the City's request, I have gone back to the FMIT and attempted to negotiate the 4 main
differentiators between their bid and that of PGIT. I received the following verbal responses from
Don Lund and Byron Beard, FMIT representatives via teleconference today and I will forward
their written responses upon receipt.
1. Can you add the Pier Restaurant to the property quotation that you provided to the City
and that specifically excluded this building until construction is complete? Response;
Possibly,we will advise,but it will result in additional property premium and we will give
you that amount when we determine that we can add this building.
2. Can you waive the liability audit provision of your liability policies? Response; No. It is
® part of our program and if the payrolls provided by the City are inaccurate thus generating
additional workers'compensation premium via audit,we feel that our liability exposure
has therefore also increased and we need to be able to charge for this increase in
exposure. They did note that generally,the payroll figures provided by their clients at the
beginning or the year are usually within 5%of the end of year actual figures and therefore
a typical audit bill would be 5%or less of upfront premium. In this case,for liability,that
figure at 5%would result in a potential liability audit of$11,241,but that is only a rough
estimate. Could be more,could be less. They also did confirm that the function of
payroll used as rating basis for their liability premiums is the same as workers'
compensation i.e. per 100 dollars of payroll.
3. Can you waive the appraisal requirement in order to add the 10%margin clause to your
property quotation? Response;No,we cannot waive the appraisal. An appraisal would
cost between$75.00-$80.00 per building/per location as listed on the City's property
schedule. However,we would agree to split that cost with the City so the City's actual
cost would be between$35.00-$40.00 per building/per location. As best as I can
calculate,that cost to the City would be at least be$2,765 dollars,based upon$35.00 X
79 scheduled locations. That figure could well be more, as the schedule does not
necessarily note the number of buildings at each location,and there could be more
than 1 building at each location.
4. Can you amend the windstorm deductible provision of your property quotation to a 5%
per location"named windstorm"ALL locations,rather than have a pure wind/hail
deductible for those City locations within 0-1/2 mile of the coast, as quoted? Response,
No,we cannot amend it to a"named windstorm"deductible for ALL locations.
12012 5owh Shore Blvd •Svire 105-v'ellinglon,FL 33414•Phone 561.784.1188•For 5o 1.734 51.11 •v—hehgro.,p.c.om
•
•
HEFFERNAN INSURANCE BROKERS
A Member of the t+etre,r—G—v
Pursuant to these responses,there would be no known reason to change the our or the City's
recommendation to move from PGIT to the FMIT at this time,as doing so would result in
additional costs to the City as outlined.above,as well as some unquantifiable potential exposures
related to the straight windihaii deductible on those locations between 0-1/2 mile of the coast that
would result in a potential deductible difference between$2,500 dollars with PGIT as compared
to 5%of the value of those locations with the FMIT. Please let me know how I may be of further
assistance,and as always we appreciate the opportunity to be of service to the City.
Best regards,
u L'
Todd Higley
Vice President
12012 South Shore Blvd. Suite 105 'vvelhnyton.FL 33414•Phone 561.784.1168•Fo.561.784 5141 •—.nelfnroup.co•n
Page 1 of 2
McDonald, Mary
From:... Todd Higley [Tod ... ...... .. ........ _.._._ .. ___. .. __M__._. _. ... ,.. ._.,_...._. ._._.
dH@heffgroup.com]
Sent: Thursday, September 14, 2006 3:10 PM
To: McDonald, Mary
Cc: Ivon Jenovese
Subject: FW: Dania Beach
Mary,
FYI, please see written response from FMIT below. You can attach to my letter I sent you as backup. You will
note that it matdhes what they told me verbally, except they clarified the Pier Restaurant. Yes, they can add it at
an additional premium of$59,000. Therefore, even based upon original bids before negotiations with PRIA
they would've been $50,000 HIGH, rather than $9,000 low. Thanks.
Todd Higley
Vice President
Heffernan Insurance Brokers
12012 South Shore Blvd.
Suite 105
Wellington, FL 33414
561-784-1188 Ext. 102
561-784-5141 (Fax)
toddh@heffgroup.com
• "Voted Agency Of The Year-2004 Rough Notes Magazine"
----Original Message-----
From: Byron Beard [mai Ito:BBeard@flcities.com]
Sent: Thursday, September 14, 2006 2:31 PM
To: Todd Higley
Subject: Dania Beach
Thank you for your telephone call. As we discussed, here is our response to the City's questions
1. The FMIT does not have a Margin Clause.
2. Dale Greene can provide a Marshall&Swift building evaluation for$75-$80 per building. After the
inspections are completed and any adjustments are made, the FMIT will reimburse one half of the cost of
the inspections.
3. Properties within this one half mile area are insured in a Lloyds lineslip and we are unable to alter this.
4. As we discussed, we feel that we have improved our solicitation of the member's renewal payrolls. As
such, we rarely see an audit with a premium increase of more than 5%. Other than that, we are unable to
eliminate the audit provision.
5. Here is our best shot on the BR: annual premium-$59,000. Same wind deductible as the other properties
within one half mile of the Atlantic Ocean
Please let me know if you have any questions.
Heffernan Insurance Brokers - License # 0564249
This communication including attachments is for the exclusive use of addressee and may contain
� Y
proprietary or confidential information. If you are not the intended recipient, any use, copying,
9/14/2006
_s
HEFFERNAN INSURANCE BROKERS
A Member of the Heffernan Group •
CITY OF DANIA BEACH
INSURANCE BID/PROPOSAL ANALYSIS
We have reviewed the proposals for various property, liability and workers'
compensation insurance coverages on your behalf. There are two responsive proposers,
Public Risk Insurance Agency, Inc/PGIT, and the Florida League of Cities/FMIT. The
City is currently with PGIT via PRIA, and has been since 2002. Prior to that, the City
was with Coregis Insurance Company and PGIT, via PRIA, and prior to that the City was
with the League of Cities/FMIT. In reviewing the proposals, it is good to note that both
proposers on a year over year basis have proposed total premiums that represent ONLY
between a 3% and 7% increase in premiums! While the property insurance portion of the
total premium has increased approximately 200%, the liability and worker's
compensation premiums have been reduced substantially in order to offset the increase in
property premium, so the City should be well within or below budget for insurance!
The proposed programs are very, very similar in structure and policy form. Both
programs are through member-owned and operated Intergovernmental Insurance Trusts,
backed by traditional insurance companies. PGIT is primarily backed by "specific
excess" policies that provide coverage not only to the Trust as a whole, but to it's •
individual members i.e. the City. The FMIT is primarily backed by "reinsurance" that
provide coverage to the Trust and the Trust in turn provides coverage to the City. Both
programs, and the carriers that back them are fiscally sound. The balance of this
summary and analysis will focus specifically on the major differences between the two
proposals by line of coverage.
PLEASE NOTE: BOTH PROPOSERS HAVE CLEARLY STATED THAT TITER
RESPECTIVE PROPOSALS CANNOT BE SEPERATED BY COVERAGE LINE.
DUE TO THE VERY UNIQUE AND DIFFICULT NATURE OF THE CURRENT
PROPERTY MARKET IN FLORIDA, THIS IS NOT UNUSUAL. HOWEVER, THE
CITY THEREFORE WILL NOT BE PERMITTED TO PURCHASE CERTAIN LINES
FROM ONE PROPOSER, AND CERTAIN LINES FROM THE OTHER AND MUST
PURCHASE ALL COVERAGES FROM THE SAME SELECTED PROPOSER.
PROPERTY/INLAND MARINE/BOILER & MACHINERY
PGIT has proposed property coverage on a replacement cost basis subject to a 110%
margin close. What this means, is the City has replacement cost, but NOT to exceed 10%
of any scheduled amount. So, if the buildings/contents are properly valued there should
be adequate coverage. Further, there is no coinsurance clause meaning if the buildings
12012 South Shore Blvd. • Suite 105 . Wellington, FL 33414 • Phone 561.784.1 188 • Fax 561.784.5141 •www.heffgroup.com
HEFFERNAN INSURANCE BROKERS
• A Member of the Heffernan Group
are undervalued there is no penalty to the City i.e. the City is still entitled to the value of
the scheduled amount plus 10%. PGIT has proposed a$5,000 all perils deductible except
for a 5% named windstorm deductible subject to a $50,000 minimum. In short, if there is
a windstorm loss from a "named storm" there is a 5% per damaged location. For any
other windstorm loss i.e. a tornado, etc that is not related to a named storm, the deductible
would simply be $5,000. There is NO blanket coverage meaning any unscheduled
locations are limited to a maximum coverage amount of$15,000.
FMIT has proposed coverage on an agreed amount/blanket basis. HOWEVER, their
proposal stipulates that a current appraisal within the past 12 months is required for that
coverage. Otherwise, it is agreed amount subject to 100% coinsurance. A simple
example would be if you had a building scheduled at $1 million dollars and you had a
total loss, and the true replacement cost was$1.3 million dollars, all you would get
(without having an appraisal done) is $I million. With PGIT, in that same example and
without an appraisal you'd get $1.1 million. That being said, if an appraisal were done,
the FMIT would pay you $1.3 million in that example as you would have true blanket
coverage meaning you'd get true replacement cost on any/all locations subject to total
policy limits. In conclusion, the FMIT also does not cover "buildings under
construction" i.e. the Pier Restaurant whereas PGIT currently does provide this coverage.
• If a change were made to the FMIT, coverage would cease on 10/1/2006 and a separate
builder's risk policy would need to be purchased if the restaurant was not completed by
that time. The FMIT has proposed a $2,500 all perils deductible, as well as a 5%
windstorm deductible (meaning ANY windstorm, not just named storm) for ALL
locations between 0 and ''/2 mile of the coast as well as a 5% "named" windstorm
deductible for all locations greater than % mile from the coast. The City does have at least
7 locations that we believe are within '/z mile of the coast so this needs to be considered.
RECOMMENDATION: PGIT has a slightly better program UNLESS an appraisal were
ordered, and then the FMIT would have the better program via replacement cost, but
PGIT still has a more favorable windstorm deductible structure. I've also asked the
FMIT to clarify if their"standard" property reinsurers are covering locations within '/2
mile of the coast or if they are using some other carrier as there seems to be some
question in the marketplace regarding that coverage. (Also, with regard to an appraisal,
please remember, any increase in property values generated by an appraisal would result
in additional property premiums being paid by the City. Of course, if properties are
overvalued any decrease in values would result in a reduction in premium paid by the
City.)
12012 South Shore Blvd. Suite 105 • Wellington, FL 33414 • Phone 561.784.1 188 • Fox 561.784.5141 •www.heffgroup.corn
HEFFERNAN INSURANCE BROKERS
A Member of the Heffernan Group •
CRIME
Both programs have proposed identical limits with identical $1,000 deductibles. The
FMIT, however, did also provide a position bond for the Finance Director. As discussed
in years past, the City may or may not require an individual bond for this position and
should advise the selected proposer accordingly.
RECOMMENDATION: None, or either/or whichever terminology you prefer.
GENERAL LIABILTY
Both programs have proposed a $1 million dollar limit which is what the City currently
carries, except PGIT has proposed a$2 million dollar aggregate and FMIT has a$1
million dollar aggregate. Both programs have $0 deductible. PGIT has a slight
advantage with the $2 million dollar aggregate. The FMIT has also proposed a $2
million dollar limit option for an additional $3,000 or so in premium. PGIT did not quote
a $2 million dollar limit option, but could do so if requested. FMIT policy IS subject to
audit, the PGIT policy IS NOT subject to audit. •
RECOMMENDATION: PGIT has a slight advantage via the $2 million dollar aggregate,
but it should be pointed out that the City has never come close to exhausting the primary
$1 million dollar limit thus triggering the need for a higher aggregate, in any policy year.
Also, FMIT audit may result in additional year end premium.
AUTOMOBILE LIABILITY/AUTO PHYSICAL DAMAGE
Both programs have quoted a $1 million dollar limit, with a $0 liability deductible as
well as $1,000 comprehensive and collision deductibles, which is what the City carries
now. Coverage is written on an ACV basis for physical damage with both programs,
although the FMIT does offer limited RCV for owned private passenger vehicles.
RECOMMENDATION:. None, or either/or whichever terminology you prefer.
12012 South Shore Blvd. Suite 105 •Wellington, FL 33414 • Phone 561.784.1188 Fax 561.784.5141 www.hel4group.com
An
AMR
H E F F E R N A N INSURANCE BROKERS
• A Member of the Heffernan Group
PUBLIC OFFICIAL'S/EMPLOYMENT PRACTICES LIABILTY
Both programs have proposed $1 million dollar limits, EACH with a $1 million dollar
annual aggregate which is what the City carries now. The FMIT has also proposed a$2
million dollar/$2 million dollar option, which is included as part of the additional $3,000
dollar general liability premium previously noted in the general liability section. PGIT
could quote $2mm/$2mm if requested to do so. However, there is a SUBSTANTIAL
difference in the two programs via deductibles and coverage form type. The FMIT has
proposed a $0 deductible, whereas PGIT has proposed (and the City currently has) a
$15,000 deductible per public official's liability claim, and a $10,000 deductible per
employment practices claim. Further, the FMIT's policy form is "occurrence" based.and
PGIT's policy form is "claims made". Generally speaking, `occurrence" forms are
preferred as there is no time limitation for reporting claims, whereas a "claims made"
form requires claims to be reported within the policy period or a prescribed period after
the policy period, usually 30, 60, or 90 days. Failure to give notice or report a claim
could result in coverage being denied.
RECOMMENDATION:
The FMIT has an advantage via an occurrence policy form and $0 deductible. That being
said, again, the FMIT policy IS subject to audit which potentially could result in
additional premium being paid at year end, whereas the PGIT policy IS NOT auditable.
Further, with regard to deductible differences it should be noted that the City has paid
out/could potentially pay out a total of$60,000 of public official's deductibles over the
current/past 5 years that they would not pay out under the FMIT. That being said, the
City HAS NOT had a public official's claim in the past 2 years and in that scenario the
deductible difference makes no difference.
WORKERS' COMPENSATION
Both programs have quoted statutory coverage Part A., and $1 million employer's
liability Part B., which is what the City currently carries. Both programs have quoted $0
deductible. HOWEVER, the FMIT has quoted using a .85 experience modifier, and
PGIT has quoted using a .93 experience modifier. .85 is the current year's modifier and
was the figure used in the RFP. PGIT, by virtue of being the incumbent, has used THE
NEW modifier which is .93. The FMIT would have to use the new modifier when they
became in receipt of that information. Accordingly, the FMIT WC premium would
increase by approximately 8% (unless they applied additional discretionary credits to the
12012 South Shore Blvd. • Suite 105 • Wellington, FL 33414 • Phone 561.784.1 188 • Fox 561.784.5141 • www.h0group.com
-MA A
HEFFERNAN INSURANCE BROKERS •
A Member of the Heffernan Group
premium). When using the correct new modifier, the FMIT premium would INCREASE
by approximately $25,000. I have asked the FMIT to revise their workers' compensation
quote using the new and correct .93 modifier and will advise accordingly. Both programs
ARE subject to audit, which is standard with regard to workers' compensation coverage.
RECOMMENDATION: None or either/or whichever terminology you prefer based upon
coverages, limits and deductibles. Further, while the FMIT might still have a lower
premium when using the correct modifier, remember that either program will not allow
the City to split coverages amongst proposers.
SUMMARY
This information will be discussed by the selection committee on Thursday, August 24`n
Based upon the analysis done, it is my recommendation that the City negotiate with
PRIA/PGIT on a slight premium reduction as exclusive of the Heffernan fee, the FMIT is
$38,466 less premium than PRIA/PGIT. That is only a 3.8% difference. If the FMIT
uses the correct experience modifier for WC, that could add as much as $25,000 in
additional premium, thus making the total premium difference between the two carriers
to be $13,000 dollars or only 1.3%. If the City is satisfied or very satisfied with
PRIA/PGIT, a 1.3% premium savings does not justify switching to the FMIT when
taking into consideration coverage advantages, continuity in claims handling, familiarity
with the account, etc. Further, as noted previously the FMIT premiums are not "flat"
with regard to general liability, public official's/employment practices liability and
therefore could result in additional premiums being paid via year end audit that. when
added together with proposed premiums, could exceed the PGIT proposed premiums. It
would be in the City's best interest to either accept as is, or negotiate with PRIA/PGIT
for a reduction in premium if need be, (amount TBD based upon receiving the FMIT's
revised WC quote). That way, the City has locked in premiums as much as possible for
the year, and has procured the most favorable overall package of insurance based upon
the proposals. Further, the City has essentially received a flat overall renewal, even with
the big increase in property premium by virtue of the other premiums being reduced via
this process.
Sincerely,
Todd Higley
Vice President
12012 South Shore Blvd. • Suite 105• Wellington, FL 33414 • Phone 561.784.1188 - Fox 561.784.5141 •www.heffgroup.com