|City of Independence|
|AGENDA ITEM COVER SHEET|
Approval of 2021-2022 Property Insurance Renewal for City Utility Property
Staff recommends approval. Lockton Companies, Inc., who has been the City’s insurance broker since 2005, submitted the renewal proposal. The proposal was reviewed and recommended for approval by Charlesworth Consulting, LLC, the City’s risk management consultants.
Staff recommends approval of utilizing AEGIS as the lead insurance form, the allocation of risk is: 68.75% AEGIS; 16.25% London and 15% Swiss Re.
Lockton approached numerous carriers to try and find coverage for the City, and a summary of their recommended efforts is attached. The property insurance market continues to pose challenges, with coverage limitations, increased deductibles and higher premiums. This is true for the City’s renewal, as the City’s insurance rate increased as well.
The renewal is an estimated annual premium of $702,114 for utility property (an increase of 17.5%). This includes the estimated annual engineering services estimated at $17,000 from AEGIS. This increase is also reflective of insurable value increases based on an updated property valuation the City contracted for by Duff & Phelps.
The City has historically had a quota share program, where several carriers provide coverage, and each take a portion of the risk. Each carrier has slightly different terms, limits, and deductibles. This year, the quotas, carriers and terms changed as shown on the attached Utility Property Renewal Summary, and most variations are due to market conditions. The continued challenge is that the Blue Valley Power Plant is covered at actual cash value, not replacement cost, because the City will not rebuild the plant in the event of a total loss. The City also adjusted the scheduled values for the combustion turbines to reflect anticipated replacement cost as well as different deductible applications for these specific units (thus not impacting the balance of the Utility program).
Property insurance premiums are paid from the Risk Management Fund 093, account number 4293-5207. The premium is then allocated to each department based on their actuarial impact to the premium. The 2021-2022 costs will be billed back to departments as follows:
|Department: Finance and Administration||Contact Person: Bryan Kidney|
|City Managers Office||Approved|
|City Clerk Department||Approved|
|Council Action: ||Council Action: |