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HomeMy WebLinkAbout94.Item 5 PPP Admin Committee 06-12-19 - Insurance RenewalsPresented by Dennis Mulqueeney Senior Vice President Administration Committee June 12, 2019 2019-20 Operational Insurance Renewals Alliant: The specialty insurance leader State of the Insurance Market Commercial Insurance marketplace overall is hard 2016, 2017 and 2018 were poorly performing years for the industry: ▫2017: Highest year insurable loss year on record ▫2018: 3rd highest insurable loss year on record ▫2016, 2017, 2018 Market Posting a Loss in all three years Accordingly, shrinking market appetite for risk Largest carriers, Travelers, AIG, FM Global, Lloyds of London, Chubb retrenching/re-underwriting everything Wildfire risk is real pressure point in California, as are “runaway” jury awards in CA, and concerns over police brutality, road design and abuse *2018: Inflation-adjusted estimate, subject to change. 2010s is average of 2010 to 2018. Sources: Property Claims Service, a Verisk Analytics business; Insurance Information Institute. 40 37 79 104 50 1980s:$5 B 1990s: $15 B 2000s: $25 B 2010s: $35 B $0 $10 $20 $30 $40 $50 $60 $70 $80 $90 $100 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 * Bi l l i o n s , 2 0 1 8 $ Average for Decade Hurricane Andrew WTC Katrina, Rita, Wilma 2018 –Third worst year for U.S. Insured Catastrophe Losses. Average Insured Loss per Year for 1980-2018 is $19.3 B. Harvey, Irma, Maria 5 U.S. Inflation-Adjusted Cat Losses Insurance Marketing Activities Property & Liability Insurance programs for OCSD are marketed with a multi-year strategy in mind. Recognizing a significant hardening of the market, the Property and Liability programs were heavily marketed in 2018. Physical site inspections were conducted XL Catlin, Zurich and Travelers as well as AIG for Property, and 20 separate carriers were approached for Liability. The renewal quotes received are representative of a full canvassing of available public entity marketplace. Significant advantages in current program were seen in the area of Flood and cyber liability coverage. Excess Workers’ Compensation OCSD participates in the CSAC-EIA program with a retention that is lower than the open market. A competitive quotation was received this year in the open market, however, the quotation carries a significantly higher retention for the van pool operation, and further lacks the depth and breadth of services offered by the EIA which are valued by OCSD, so this proposal was rejected. OCSD Historic Rates Premium to Values/Payroll by Year Insurance Renewal Costs Excess Liability 2018 (Actual)2019 (Proposed)Dollar Change % Change Limit 40,000,000 40,000,000 -0% SIR 500k/500k 500k/500k - Premium 497,763 515,371 17,608 4% 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 2,174,174,381 38,203,881 2% Deductible 500,000 500,000 -0% Rate Per $100 0.03215 0.03851 .0064 20% Premium 686,622 837,230 150,608 21.9% Earthquake Values 104,773,728 105,392,597 618,869 1% Rate Per $100 0.0794 0.0822 0.00 -0.83% Deductibles 5% $5MM Min 5% $5MM Min -0% Premium 83,179 86,585 3,406 4.1% Total Premium 1,486,892 1,657,186 170,294 11.5% Questions? THANK YOU!