Approval of 2023-2024 Non-Utility Property Insurance Renewal with MPR (Midwest Public Risk), which includes the Auto Physical Damage and Contractors Equipment programs under the MPR program.

For all programs, the annual premium would be $667,640 compared to the expiring combined premium of $511,779.  While this is reflective of updated replacement cost valuations in the City’s property schedule, the challenge in all property insurance is the reinsurance markets and how that ultimately impacts pricing to primary risk transfer programs and changes in deductibles being mandated by insurers.

For the 2021-2022 property insurance program, the City included Contractors Equipment and Auto Physical Damage under the one program with MPR that produced significant premium savings and consistency in having insured under one program.

The City continues to have a $25,000 deductible for  Non-Utility locations ($75,000 IEC) on most risk (higher for Earthquake and Flood) and is not subject to what the standard insurance market is calling for: 2% wind/hail deductibles, which is 2% of the Building Value at the time of loss.  This can add up dramatically for the various large locations insured by the City and a benefit to continue the flat deductible offered by MPR.  Also requested was a $100,000 property deductible from MPR, but the premium savings was only 4% which in Charlesworth’s opinion is not reflective of the transfer of risk return on investment. A summary of the renewal is attached.  It is hopeful that the property insurance market will stabilize next year to evaluate further options.

Lockton Companies, Inc., who has been the City’s insurance broker since 2005, and monitors possible insurers interest in the non-utility property, auto physical and contractor’s equipment.  All discussions are also reviewed by Charlesworth Consulting, LLC, the City’s risk management consultants.
Staff recommends approval as follows:
1. Non-Utility Property: Midwest Public Risk (MPR) – Missouri, a risk pool.  Because MPR is a risk pool, the City has already accepted the by-laws.
2. Buildings and Business Personal Property with a $25,000 each occurrence deductible.
3. Contractors Equipment coverage which has a $10,000 deductible currently.
4. Auto Physical Damage coverage with a $10,000 deductible (recognizing that losses are still adjusted on an Actual Cash Value – depreciated basis).

As with any risk pool or insurance carrier, coverage continues to be regularly reviewed for comprehensive coverage at a competitive price. MPR has been a good partner for the City.

Risk Management’s Property goals for the next 12 months are:

1.    Continue monitoring the valuation of the City’s properties to meet the underwriting requirements of MPR coverage.

2.    Watch the property insurance market for possible opportunities for the future, including the evaluation of deductible options when available.

The City, by utilizing the valuation services of Duff & Phelps and the evaluation services provided through MPR on select locations, is in a much better underwriting position in the future for insurer options should that be come necessary.