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Home My WebLink About07.b EDB Insurance Renewal 2024-2025 EXECUTIVE SUMMARY AGENDA ITEM: Insurance Renewal Alternatives for 2024 Date: May 30,2024 BACKGROUND: The total premiums for CCUA's General Liability, Auto, Employment Practices, Property, and Workers' Compensation policies have almost doubled since 2021. Much of this increase has been due to a very hard property insurance market in Florida. For the 2023/2024 renewal CCUA's property values were substantially raised due to large increases in construction costs over the last couple of years. CCUA has used the same broker,Brown and Brown(B&B),since the 1990's. B&B has continuously provided responsive and high-quality ancillary insurance services. Preferred Governmental Insurance Trust (PGIT) is CCUA's current insurer for this line. Last year B&B also marketed CCUA's insurance program to Starr Tech, but it was determined that PGIT provided better value for CCUA's renewal. A review of publicly available forecasts for the general insurance industry indicates minimal increases for general and employment practices liability lines, and moderate, possibly high, increases for commercial auto insurance. Commercial property insurance projections indicate 5%to 25%premium increases. BUDGET: There is no impact on the current budget. RECOMMENDATION: Create competition and ensure a thorough vetting of the market by engaging a second broker. To properly shop CCUA's property insurance, the second broker should have national reach and experience with commercial property insurance in Florida. Arthur J. Gallagher's Orlando office(AJG)has the wherewithal and is prepared to provide this service.B&B,the incumbent broker, will be assigned two markets—PGIT and Starr Tech.AJG will be permitted to seek quotes from the entire market except PGIT and Starr Tech. ATTACHMENTS: Insurance Renewal for Plan Year 2024-2025 //SJ(Author) //KR(Review) //KR(Final) Insurance Renewal for Plan Year 10/1/24 to 10/1/25 Background Renewal Premiums $2,000,000 $1,800,000 - $1,600,000 $1,400,000 - - $1,200,000 $1,000,000 $800,000 $600,000 $400,000 $200,0$00 1■.'1 1■. 1 l■. �. 1i.i� 1■.♦1 . 1 I6■ 1 IIM 1 14 15 16 17 18 19 20 21 22 23 •General ■Auto •Employer Practices(&PO) •Property(&I M) •Workers Compensation •Total Plan Year 14 ' 15 16 18 19 20 21 22 23 General $140,854 $145,776 $154,614 $165,148 $179,845 $182,534 $201,330 $226,248 $270,070 $337,359 Auto $93,649 $100,186 $102,924 $122,969 $102,446 $114,438 $122,763 $138,646 $156,112 $143,242 Employer Practices(&PO) $39,308 $40,256 $42,408 $44,702 $47,939 $48,254 $51,799 $59,543 $73,820 $89,299 Property(&IM) $275,522 $274,265 $262,258 $288,546 $290,925 $303,262 $361,582 $406,017 $485,511 $1,178,073 Workers Compensation $166,505 $189,162 $197,205 $210,883 $172,462 $152,818 $170,876 $143,239 $175,646 $179,960 Total $715,838 $749,645 $759,409 $832,248 $793,617 $801,306 $908,350 $973,693 $1,161,159 $1,927,933 Insurer Contribution to Claims Calendar Year 14 15 16 17 18 19 20 21 22 23 General $9,009 $0 $5,042 $24,549 $0 $111,370 $0 $61,041 $4,499 $57,968 Auto $93,740 $11,952 $3,047 $79,635 $33,272 $118,539 $48,675 $117,574 $166,954 $80,934 Employer Practices/PO $0 $0 $0 $0 $20,904 $0 $0 $0 $37,500 $1,169 Property $9,372 $0 $2,167 $61,045 $12,064 $5,177 $0 $0 $0 $0 Workers Compensation $2,271 $66,038 $20,726 $31,468 $64,963 $49,108 $68,484 $59,406 $1,001 $28,512 Total $114,392 $77,989 $30,982 $196,698 $131,204 $284,193 $117,158 $238,021 $209,954 $168,583 • Brown & Brown (B&B) has been broker since the 1990's. They provide high quality ancillary support. • Preferred Governmental Insurance Trust (PGIT) has been the insurer. Last year, B&B also received a quote from Starr Tech. • Huge increase in property insurance last year was due to difficult property insurance market and adjustment of CCUA's TIV. • According to CBIZ, "Experts predict a 5%to 25%increase in commercial property insurance premiums in 2024." Insurance Renewal for Plan Year 10/1/24 to 10/1/25 Recommendation Create competition and ensure a thorough vetting of the market by engaging a second broker. To properly shop CCUA's property insurance,the second broker should have a national reach and experience with commercial property insurance in Florida. Arthur J. Gallagher's Orlando office (AJG) has the wherewithal and is prepared to provide this service. B&B, the incumbent broker, will be assigned two markets—PGIT and Starr Tech. Arthur J. Gallagher will be permitted to seek quotes from the entire market except PGIT and Starr Tech. While the property market is still difficult, competition will help ensure CCUA is getting the best financial value for its ratepayers. The above proposed process is most likely to ensure the best price and at least provides the due diligence we should exercise as public officials. Alternatives Advantages Disadvantages Allow B&B to •Same process that has always been used. Easy and reliable. • Cannot be confident that CCUA received the Negotiate with PGIT Willingness of CCUA to seek alternatives may incentivize best value. better results from PGIT. Self-Fund Property • 10-year loss history shows property claims have been •Colorado State University outlook for the 2024 Losses minimal. hurricane season is that it could be one of the • Dispersed facilities and inland locations mitigate the risk most active on record. somewhat. • FEMA process is difficult,requirements are •Current policy has high named storm deductibles and exact,and funds may take time. Alternative shared total limit. sources of funding may be temporarily needed to Parametric insurance may be available. begin reconstruction. • FEMA is available to cover. Federal share is typically 75%. •After a facility is damaged,insurance must be •Amount of premiums can be set aside to create risk fund. purchased,or FEMA will not make future funds •Current policy is good until 10/1/24. available. • May still carry"fire"insurance for admin building and warehouses. Self-Insure General • 10-year loss history shows general liability claims have • Legal expenses can get high quickly. Liability been minimal. •Claims bill. •Tort cap limits individual incident to$300,000. •Additional staff time for managing claims, •CCUA retains decision authority on claims. attending settlement negotiations,etc. •Amount of premiums can be set aside for a risk fund. Self-Insure Auto •Tort cap limits individual incident to$300,000. • Legal expenses can get high quickly. •Amount of premiums can be set aside to create a risk fund. •Claims bill. •Opportunities to invest in new technology to reduce risk. •Additional staff time for managing claims, attending settlement negotiations,etc. • Number and severity can be volatile. Self-Insure Workers • 10-year loss history shows workers compensation claims •Size of workforce makes administrative costs Compensation have been minimal. too high;TPA unlikely to take account. •CCUA retains decision authority on claims. • Upside of claim is potentially unlimited. Drop Sewer Backup • Will result in some premium savings. • Liability questions can be complex;will need to Coverage • CCUA retains decision authority;currently,insurer identify qualified attorneys and pay them threshold is sometimes tighter than CCUA would like for directly. customer services reasons. • Lose buffer between customer and CCUA. • Bid and preapprove general contractors and remediation • Premium savings will be less than limits. company to control costs.