R2022-142 Resolution Authorizing Insurance Coverage for Property and Liability Insurance for the City of Decatur, Illinois for the Policy Period October 1, 2022 to October 1, 2023

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LETTER to the DECATUR CITY COUNCIL Finance Department DATE: September 14, 2022 TO: Honorable Mayor Moore Wolfe City Council FROM: Scot Wrighton, City Manager Gregg D. Zientara, City Treasurer&Director of Finance Jenifer McCoskey, Risk Management Coordinator SUBJECT: Risk Management Insurance Continued social unrest throughout the country, increased occurrence of law enforcement excessive force events, as well as the weather-related events from convective storms and fire hazards, continue to drive a significant shift in the risk management profiles and risk coverage assessments in the insurance marketplace. Inflation and lack of building supplies have caused property carriers to build in premium increases to reflect undervalued properties. Carriers are scrutinizing client's Statements of Values, and in some cases demanding that values be increased by double digits for the 2022-2023 renewals. In the Umbrella/Excess Casualty market, carriers are restricting the amount of coverage limit they are willing to insure, necessitating involvement of more carriers at more premium cost to maintain desired policy coverage limits. In the matter of the Commercial Package renewal (1St level property, casualty, and liability coverage), our current incumbent carrier, AIX Specialty, is exiting the public entity marketplace. We shopped coverage with five package carriers. All carriers are requiring a minimum SIR or deductible of$250,000 for all lines of coverage. In addition, the underwriters are scrutinizing the property values and if they are not in line with reputable services such as Marshall & Swift, the carriers will contemplate higher property rates to reflect what they believe are under-valued properties. In the matter of Excess Property coverage, we were able to negotiate competitive renewal terms with the incumbent carrier with a slight rate increase that is in line with current market conditions, also taking into account the inflationary increase in the Total Insurable Values. The Cyber market is very concerned about systemic cyber risk, cyber underwriting practices, and where hackers may hit next, as ever escalating ransomware and cyber security risks continue to plague the cyber insurance market. Growing geopolitical tensions have also increased cyber risks for organizations worldwide as the conflict between Russia and Ukraine has revived concerns for the potential for increased national cyber-attacks. The limited cyber carriers have responded to this hard market with higher rates, higher retentions, and larger coinsurance requirements. Many carriers impose sub-limits and coinsurance provisions specific to ransomware claims. With the ancillary lines of coverage such as Crime, Excess Crime, Auto Physical Damage, Boiler/Machinery and Gallagher Crisis Protect, each of those lines will see competitive renewal terms from a pricing and coverage standpoint.