SUBJECT/RECOMMENDATION:
Title
Approve the purchase of excess Property Insurance, including Bridges, Boiler and Machinery, Terrorism, UAV/Drone, and Docks and Pier coverages, from April 1, 2026 through April 1, 2027, at the level of insurance provided for in this agenda item in a not-to-exceed amount of $5,901,000 and authorize the appropriate officials to execute same. (consent)
Body
SUMMARY:
Risk Management requested Arthur J. Gallagher and Co. to obtain quotes for the property insurance program expiring April 1, 2026. After a review of quotes received, we request the renewal of our property coverage with a layer of coverage limits provided by various carriers.
The current property coverage with Great American, Berkshire Hathaway, Lloyds of London, and additional sub-carriers expires on April 1, 2026. This renewal will continue to maintain Named Windstorm and Flood coverage at $50 million on an aggregate basis. The self-insured retention (SIR) will remain at 5% for named storms and floods subject to $100,000 minimum per occurrence, and no maximum deductible. The removal of the Dock and Pier locations from this coverage results in estimated savings of $150,000 - $200,000 and an improvement in the loss ratio affecting the premium. The annual renewals will continue to be subject to a loss ratio provision of 100% for Named Windstorm and 40% for all other perils. The renewal premium for property is $4,001,000 reflecting a 18.35% premium decrease.
The property renewal includes a new standalone property policy for Docks and Piers coverage to provide a significant increase in coverage for these vulnerable assets. The city has increased its total insured values by $36 million to a total of $50+ million but would be subject to a $2.5 million sublimit on the Master Property Policy. The standalone policy for Docks and Piers coverage with Lloyds of London and affiliate carriers provides $10 million in Named Windstorm including storm surge coverage and $50 million in AOP/Flood/Earthquake coverage. The self-insured retention (SIR) will remain at 5% for named storms and flood subject to $100,000 minimum per occurrence with a maximum of $2 million. The renewal premium for Docks and Piers is $1,575,000.
The renewal of Boiler and Machinery Coverage limit will remain at $200 million with $25k deductible at a premium of $71,800 reflecting a 22.80% premium decrease.
The City’s bridge program is a stand-alone policy and includes Sand Key Bridge, Mandalay Channel pedestrian bridge and the McMullen Booth pedestrian overpass. This renewal includes a change to Chubb as the primary carrier with a reduction to $25 million Named Windstorm and Flood policy limits because of a hardening market due to bridge losses such as the Maryland Harbor bridge collapse. The renewal bridge policy has a deductible of $100,000 per occurrence for all other perils and earthquakes for the Mandalay Channel and McMullen Booth bridges, and $1 million for the Sand Key bridge. The Self-Insured Retention (SIR) for Flood and Named Windstorm is 5% of the total covered value of a loss, subject to a $500,000 minimum deductible. The annual aggregate limit for the perils of Earthquake/Flood/Named Storm is $25 million each and for All Other Perils it is $85,426,150 million. The Bridge program renewal premium is $191,600 reflecting a 16.70% premium decrease.
The City purchases a separate policy which provides Nuclear, Biological, Chemical & Radioactive Terrorism coverage with limits of $3 million, for a premium of $25,000 reflecting a 1.96% premium decrease.
The renewal for Terrorism - Property & Liability coverage will continue at limits of $25 million for property damage and $10 million for liability for a premium of $27,000 reflecting a 1.89% premium increase.
The renewal also includes a policy for UAV/Drones utilized by police and fire departments which was previously included in the October 1 renewal proposal. The Property & Liability coverage limits include a $65,000 blanket & $1 million, respectively for a premium of $9,600 reflecting a 100% premium increase from the prior year’s property renewal. (Note: Asset values and equipment increased by 116% & 27%, respectively.)
Total premiums for these renewals are estimated to be $5,901,000. This represents a total 11.87% increase in premiums from the prior year’s approved not-to-exceed total of $5,275,000; and a 16.39% increase in premiums from last year’s actual renewals.
Risk Management agrees that these recommended coverages will continue to cover the City's property risks at levels and rates which represent a reasonable insurance program for the City.
This item is exempt from competitive bidding pursuant to Clearwater Code of Ordinances Section 2.563(1)(o).
APPROPRIATION CODE AND AMOUNT:
5907590-545100 $5,901,000
Funds for this purchase are available in Central Insurance cost code 5907590-545100 (Property & Liability Insurance). The Central Insurance Fund is an Internal Service Fund of the City established to account for all insurance related expenditures.
USE OF RESERVE FUNDS:
N/A
STRATEGIC PRIORITY:
1.2 Maintain public infrastructure, mobility systems, natural lands, environmental resources, and historic features through systematic management efforts.
