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Home My WebLink About15 - Property Insurance RenewalJuly 10, 2001 Agenda Item 15 City of Newport Beach Human Resources Department Memorandum To: Mayor and Members of the City Council From: Lauren F. Farley, Risk Manager Subj: Property Insurance Renewal -------------------------------- -------------------------------- Background The city purchases property insurance for its all real and personal property assets consisting of All Risk, Boiler and Machinery, Earthquake, Flood and Watercraft coverage. Our broker, Mark Zahoryin of Cal Surance, selects the markets that have municipal property experience, depth of coverage and a competitive annual premium. Over the last several years the property insurance favorable market has allowed the city to expand the coverage of its real and personal property which now includes this coverage for all our parks and both the municipal piers. Last year's coverage had an annual premium of $ 328,604. However, the property insurance market has become less favorable for the same level of coverage for this year's renewal. This year's annual premium is $394,795. The schedule of insurance for the city's real and personal properties for All Risk, Boiler and Machinery, Difference in Conditions (Earthquake and Flood), Watercraft and Earthquake & Flood for the Newport and Balboa piers plus insurance companies, premiums, policy limits and deductibles are all listed in Attachment A. Recommendation The City Council approve the renewal of the entire property insurance coverage outlined in Attachment A for FY 01/02 for a total premium of $394,795. Appropriate funds exist in the budget (# 6020 -8721 & 8726) to cover this expenditure. M C U R C. t+K V. F" { GO-_ W O L ' V 0 z u� 0 Z ate^ Z U. 0 O 0 LL. H zoW V 3: LAJ ..1 a > cn U e ys� a o a� M c O V O O °O T °O m Ld N N LL N U E E U) TO co cD )CO L o n Ln o. r� + r� o a ° uZ o o 0 0 W o C fM 000 c00 t O L O O O O O L 0 0 y 000 0 0 0 ;o L O L L? 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T p LU p W p W N 1p e M 13 Q 9 p p CL w m � U J - U J C C U J w p ^ J mi .' � aN Q a ¢ a 0 Q a 0 Q a Q N Z G� o 4S 2 � J 2� `m- } \k \ \\ \ ;§ � {�0 _] ) �j§ ■ 0 § \/k - E a k - _- CD 2 u qk Jf / k/ - ) \\EE \ _ { CD0)0 CD cl ¥ g CD k¢LU2[ 2 Z£ $ ) /J m LL /\ § 2 (CD D £ \) \mm § § \ 2 Z+Z 3 £ E E J a 2 \ \ \ \ \ / a LU CD CD CD CD CD § (D CD CD _ k \ Ct » )) ) CD \\\ \\ } \\ }\ \\ C / ( /\ ■ \ j -� \\ )\ /a -/ ) . \_ \_ §« / � -5 0 & ( j �M § �§� 0 �& i ] )£ ) ) 7 3 \ ;§ � "RECEIVED AFTER AGENDA PRINTED:" # 14 avid IP 15 40q 10, tool MARKETING RESULTS FOR ALL RISK PROPERTY AND DIFFERENCE IN CONDITIONS POLICY INCLUDING EARTHQUAKE AND FLOOD ALL RISK PROPERTY COVERAGE EXCLUDING PIERS Zurich has been insuring the Cities property insurance excluding earthquake and flood for over 7 years and they have been consistently the most competitive in both pricing and coverage's. Discussion started in early April with Fireman's Fund, CGU and Royal on quoting the 2001/02 renewal. By May it was clear that Zurich had the best proposal with a modest increase especially since we did not receive any interest from the other markets at the premiums we were targeting. ALL RISK PROPERTY COVERAGE FOR NEWPORT AND BALBOA PIERS Zurich's renewal premium was excessive at $300,000 and at a $250,000 deductible. In April the marketing searched started on finding a replacement. The difficulty is that the piers Do Not Have Sprinklers And We Received Many Declinations. Westchester Fire Insurance Company who is covering some of the cities earthquake exposure was willing to offer a quote at $35,875 and did not require sprinklers to be installed. DIFFERENCE IN CONDITIONS COVERAGE INCLUDING EARTHQUAKE & FLOOD FOR ALL CITY PROPERTIES MARKETS THAT DECLINED: 1. General star indemnity Company -- declined because of average age of construction. 2. Associated – declined due to high liquefaction. 3. Essex — declined because of high liquefaction. 4. Insurance Company of the West — declined due to average age of buildings and because of the Newport/Inglewood fault exposure. 5. Scottsdale--declined due to average age of construction. 6. Westport- -- declined due to average age of construction. 7. Axa Re Property & Casualty— declined to due average age of construction. INDICATIONS THAT WERE TOO HIGH TO PROCEED WITH FORMAL QUOTES: 1. American Empire Fire & Marine— indicated $10,000,000 excess of $5,000,000 @ $60,000. (This is $20,000 higher then we obtained through Westchester). 2. Clarendon Insurance Company - -- indicated same as American Fire & Marine. 3. Lexington Insurance Company - -- indicated minimum premium of $50,000- $60,000 per million of limit. 4. Royal Insurance Company — declined earthquake due to Newport/Inglewood fault. v¢i� I (07M11 QUOTES RECIVED: 1. RLI -Quote d primary $2,500,000 at $96,000. (Pacific was lower at $85,000). Quoted $2,500,000 excess of $2,500,000 at $55,000. (Lowest quote). Quoted earthquake of piers at $2,500,000 primary at $18,682. (Lowest quote). 2. Pacific Insurance Company — quoted primary $2,500,000 at $85,000. (Lowest quote). Quoted piers $2,500,000 excess of $2,500,000 at $12,500. (Lowest quote) 3. Westchester Fire Insurance Company— quoted $10,000,000 excess of $5,000,000 at $40,000. (Lowest quote). 4. Great American - -- quoted $20,000,000 excess of $15,000,000 at $27,500. (Lowest quote). 5. Agricultural / Greenwich— quoted $15,000,000 excess of $15,000,000 at $37,500. (Great American's quote had higher limits for less). 6. Royal Insurance Company —quoted flood on piers for $28,200. (Lowest quote). Fiscal Year 01/02 Insurance Renewal Comparison by City Three -year rate guarantee with an SIR of $2 million. OCCRMA is a joint powers authority QPA) and consists of the following cities: Irvine, Laguna Beach, Tustin, Brea, Cypress, Westminster, Los Alamitos, Seal Beach, Orange, San Clemente, Yorba Linda and Stanton. General Liability I Property Insurance % Change i % Change Newport Beach j + 21.4% 1+20% j Costa Mesa * 1+10% 1 + 64% I i I Huntington Beach +30% + 60% Garden Grove + 10 %* '+35% I I Santa Ana + 70% +40% i * *Orange County Cities Risk Management Authority (OCCRMA) i No increase due j to super funding J status. + 60% Three -year rate guarantee with an SIR of $2 million. OCCRMA is a joint powers authority QPA) and consists of the following cities: Irvine, Laguna Beach, Tustin, Brea, Cypress, Westminster, Los Alamitos, Seal Beach, Orange, San Clemente, Yorba Linda and Stanton. CITY OF NEWPORT BEACH THREE YEAR PROPERTY COMPARISON COVERAGES 1998 —1999 1999 —2000 2000 —2001 I. All Risk Property (All Locations) Carrier Zurich- American Zurich - American Zurich - American Policy Number ERP833917002 ERP833917003 ERP833917004 Policy Term 04/01/98- 04/01/99 04/01/99 - 07/01/00 07/01/00 - 07/01/01 Policy Limit $35,624,567 $75,604,567 $79,989,567 Deductible $5,000 $5,000 $5,000 Policy Premium $58,092 $73,858' $63,992 II. All Risk Property 2 Piers N/A Carrier Zurich- American Zurich - American Policy Number ERP9297880 -00 ERP9297880 -01 Policy Term 04/01/99- 07/01/00 07/01/00 - 07/01/01 Policy Limit $10,250,000 $10,250,000 Deductible $5,000 $5,000 Policy Premium $22,796 $23,575 III. Earthquake & Flood (All Locations 15 Layer RLI Insurance RLI Insurance RLI Insurance Policy Number IMF0029432 IMF0032099 I1VIF0035263 Policy Term 04/01/98- 04/01/99 04/01/99 - 07/01/00 07/01/00 - 07/01/01 Policy Limit $2,500,00 $5,000,000 $5,000,000 Deductible $100,000 All Perils 10% Earthquake $100,000 Flood $50,000 All Perils 7.5% Earthquake $100,000 Flood $50,000 All Perils 7.5% Earthquake $100,000 Flood Policy Premium $54,000 $88,000 2" Layer Westchester Fire Westchester Fire Westchester Fire Policy Number IML457471 IXL492265 IXL4928870 Policy Term 04/01/98- 04/01/99 04/01/99 - 07/01/00 07/01/00 - 07/01/01 Policy Limit $2,500,000 $10,000,000 $10,000,000 Policy Premium $21,000 $25,000 $38,577 3rd Layer Associated Int'I Amer. Nat'l. Fire Amer. Nat'l. Fire Policy Number IM319677 IMP9880630 -02 IMP9880630 -04 Policy Term 04/01/98-09/01/99 04/01/99-07/01/00 07/01/00-07/01/01 Policy Limit $10,000,000 $20,000,000 $20,000,000 Policy Premium $21,000 $17,000 $25,000 g191"V 1 (07,01) CITY OF NEWPORT BEACH THREE YEAR PROPERTY COMPARISON COVERAGES 1998 –1999 1999 –2000 2000 –2001 4th Layer Amer. Nat'l. Fire N/A N/A Policy Number IMP9880630 -01 Policy Term 04/01/98- 04/01/99 Policy Limit $20,000,000 Premium $25,000 —Policy IV. Earthquake 2 Piers N/A Carrier RLllnsurance RLllnsurance Policy Number IMF0032327 IMF0035265 Policy Term 06/01/99- 07/01/00 07/01/00- 07/01/01 Limit $5,000,000 $5,000,000 —Policy Deductible 7.5% 7.5% Policy Premium $18,500 Extension $1,570 $20,500 V. Flood 2 Piers N/A Carrier Royal Indemnity Royal Indemnity Policy Number RHQ403796 RHQ403796 Policy Term 04/01/99- 07/01/00 07/01/00- 07/01/01 Policy Limit $5,000,000 $5,000,00 Deductible $10,000 $10,000 Policy Premium $23,000 Extension $1,886 $25,600 VI. Watercraft Carrier Fireman's Fund Fireman's Fund Fireman's Fund Policy Number OV1487831 OV1487831 OV1487831 Policy Term 04/01/98- 04/01/99 04/01/99- 07/01/00 07/01/00- 07/01/01 Policy Limit – P & I Crystaliners & Whaler Clean Sweep & Litter Gitter $10,000,000 $1,000,000 $10,000,000 $1,000,000 $10,000,000 $1,000,000 Deductible $1,000 $1,000 $1,000 Policy Premium $20,970 $20,970 Extension Waived $20,970 1, Effetive 02/03/99, the 883 West 15th Street was added to the policies. 2. Effective 07/01/99, the Pump Stations were added to the property and DIC policies. Also, a Sculpture valued at $36,000 is also added. 1191",.o 3 107MV