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HomeMy WebLinkAbout96.Item 7 PPP 04-10-19 Admin Committee Meeting - Insurance RenewalsPresented by Robert Lowe Vice President Administration Committee April 10, 2019 2019-20 Operational Insurance Renewals Alliant: The specialty insurance leader •2018 is likely to be a negative catastrophe year for the second year in a row for re/insurance industry as overall losses are expected to be above the 10-year average of $50 billion. •Weather extremes, wildfires, catastrophic losses and investment earnings remain areas of concern for insurers. Key Industry Metrics •The U.S. property & casualty industry is likely to post a significant loss in revenue for 2018 for a second year in a row. •2017 was the costliest year in history, in terms of global losses •In the first-half 2018, policyholders are still paying record amounts in premium, but carriers are losing more in claims payments than what is being collected. Highlights 2Source: A.M. Best, ISO, Property Casualty Insurers Association of America (PCI) and Peel Hunt U.S. Insured Catastrophe Losses 2017 –Worst Ever for U.S. Insured Catastrophe Losses. Average Insured Loss per Year for 1989-2017 is $22.4 B. Sources: *2017: Inflation-adjusted PCS estimate, subject to change. **2018: Peel Hunt expectation Sources: Property Claims Service, a Verisk Analytics business; Insurance Information Institute. .3 8 4 6 36 35 13 16 15 23 95 26 $0 $10 $20 $30 $40 $50 $60 $70 $80 $90 $100 89 91 93 95 97 99 01 03 05 07 09 11 13 15 17* Bi l l i o n s , 2 0 1 8 $ 5 yr. moving average Hurricane Andrew WTC Katrina, Rita, Wilma Harvey, Irma, Maria* Wildfires •Carr Fire, Redding, CA July 18, 2018 •Photo courtesy of Cal Fire 4 On average, more than 100,000 wildfires, also called wildland fires or forest fires, clear 4 million to 5 million acres (1.6 million to 2 million hectares) of land in the U.S. every year. In recent years, wildfires have burned up to 9 million acres (3.6 million hectares) of land. Earthquakes Rescue workers look at the Yun Tsui building, which is leaning at a precarious angle, in the Taiwanese city of Hualien. It was hit by a 7.1 magnitude earthquake on February 6, 2018 , which killed 17 people. 5 (Anthony Wallace / AFP/Getty Images) Taiwan sits on an earthquake “ring of fire” that also touches California. 6 The Alaska Earthquake of Nov 30, 2018 •A magnitude (M) 7.0 earthquake struck north of Anchorage, Alaska, on November 30, 2018. •Located along the Ring of Fire which sees 81% of the world’s largest earthquakes, Alaska is no stranger to earthquakes. Alaska has experienced several of these devastating earthquakes in the past including the M9.2 in 1964 –the largest U.S. earthquake in recorded history. Public Entity Liability Coverage for damages to third parties. Includes: ▫General Liability ▫Automobile Liability ▫Public Entity Errors and Omissions −Professional Liability −Directors and Officers Liability −Employment Practices Liability All coverage provided on an “Occurrence” Basis Public Entity Liability –Limits and Retentions Policy Limits –Per Occurrence/Annual Aggregate ▫General:$ 40MM/$40MM ▫Automobile:$ 40MM/$40MM ▫E&O/D&O/EPL: $ 40MM/$40MM Policy Retentions ▫General:$ 500,000 ▫Auto:$ 500,000 ▫E&O/D&O/EPL: $ 500,000 Expiring Premium: $ 497,763 Excess Workers’ Compensation Coverage for injuries to employees while in the course and scope of employment ▫Limits Statutory ▫Retention $1,000,000 ▫Payroll $69,779,430 ▫Expiring Premium $219,328 Property Insurance -Overview Coverage for damage to real and personal property. Total Insurable Value:$2,135,970,500 Policy Limit:$1,000,000,000 Key Sublimits ▫Boiler & Machinery:$100,000,000 ▫Business Interruption:$100,000,000 ▫Flood Zones A&V:$150,000,000 ▫Flood All Other Zones:$300,000,000 ▫Course of Construction:$50,000,000 ▫Terrorism $500,000,000 Expiring Premium $686,622 Deductible:$500,000 Earthquake Overview Current Coverage ▫Coverage for key buildings located at both Plants 1 and 2 ▫Coverage up to $25,000,000 ▫Expiring Premium: $83,179 ▫Deductible 5%/$5MM Minimum Historical Rates - 0.100 0.200 0.300 0.400 0.500 0.600 0.700 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 Property & Boiler Liability Excess WC Renewal Strategy Excess Liability 2018 (Actual)2019 (Projected)Dollar Change % Change Limit 40,000,000 40,000,000 -0% SIR 500k/500k 500k/500k - Premium 497,763 597,316 99,553 20% Excess Workers' Comp Payroll 69,779,430 69,871,030 91,600 0.1% Limit Statutory Statutory -- Rate Per $100 0.3143 0.3120 (0.002)-0.7% SIR 1,000,000 1,000,000 -0.0% Premium 219,328 218,000 -1,328 -0.6% Property (incl. B&M) Values 2,135,970,500 2,173,424,381 37,453,881 2% Deductible 500,000 500,000 -0% Rate Per $100 0.03215 0.03697 0 15% Premium 686,622 803,461 116,839 17.0% Earthquake Values 104,773,728 106,432,682 1,658,954 2% Rate Per $100 0.0794 0.0794 0.00 0% Deductibles 5% $5MM Min 5% $5MM Min -0% Premium 83,179 84,508 1,329 1.6% Total Premium 1,486,892 1,703,284 216,392 14.6% Questions? THANK YOU!