Memorandum

City of Lawrence

City Manager’s Office

TO:	David L. Corliss, City Manager
FROM:	Cynthia Wagner, Assistant City Manager
DATE:	June 10, 2014
RE:	Consent Agenda Item – July 1 Insurance Policy Renewals: Property and Casualty Insurance Fire and Medical Auto/Professional Liability Insurance

Background

The City’s Property and Casualty and Fire and Medical Auto and Professional Liability coverage will expire at 12:01 a.m. on July 1, 2014.  The City worked with our insurance broker Arthur J. Gallagher to renew our current policies with the results outlined in this memo. 

The property insurance market continues to be affected by catastrophic losses in the past five years, including severe tornados, the Japanese earthquake and Superstorm Sandy.  Factors that are affecting the City of Lawrence rate include exposure to wind/hail and a February 2012 fire loss at 941 E. 11^th Street totaling $382,387.  This loss will continue to be reflected in our rate renewal for five years, according to our brokers.

The property and casualty policy covers the city’s buildings, business personal property and equipment, and business interruption.  The city has been insured with the Hartford for four years.  We have experienced excellent customer service in relation to fire damage loss in 2012.  The Hartford offered the best renewal terms.  The policy blanket limit is $293,454,188.  The $50,000 deductible remains.  The cost of coverage is $140,000.  This is an 11% increase over the 2013-2014 policy.

A package program with the Emergency Services Insurance Program covers equipment and operations of the Lawrence-Douglas County Fire & Medical Department for general and professional liability with limits of $1 million per occurrence, $10 million aggregate and automobile liability limits of $500,000.  Coverage is also provided for damage to the department vehicles with a stated amount value and fire department portable equipment.  Annual renewal premium is $57,864, compared to $56,784 for the 2013-2014 policy year.

The brokerage fee for these services to Arthur J. Gallagher is $16,510, and has remained static for the past six years.  It is likely this is the last year this brokerage rate will remain flat.

Staff Recommendation

Staff recommends renewing property and casualty coverage with The Hartford for the insurance period of July 1, 2014, to July 1, 2015, for $140,000.  Staff further recommends binding coverage for Fire and Medical Auto/Portable Equipment/General, Management, and Professional Liability coverage with ESIP for the insurance period of July 1, 2014 to July 1, 2015 at a premium of $ 57,864      

Action

Authorize staff to bind coverage for property and casualty insurance ($140,000) and Fire and Medical Auto/Professional Liability insurance ($57,864) for the insurance period of July 1, 2014 through July 1, 2015.