R2011-151 AUTHORIZING BINDER COVERAGE WITH ARTHUR J. GALLAGHER RISK MANAGEMENT SERVICES, INC.

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DEPARTMENT OF FINANCIAL MANAGEMENT RISK MANAGEMENT DIVISION MEMORANDUM NO. 2011-015 DATE: September 14, 2011 TO: Honorable Mayor Michael T. McElroy and City Council FROM: Ryan McCrady, City Manager Ron Neufeld, Director of Financial Management Scott Clark, Risk Manager SUBJECT: PROPERTY & CASUALTY EXCESS INSURANCE SUMMARY RECOMMENDATION: Staff recommends that City Council approve the purchase of excess insurance from Munich RE, Liberty Mutual, Travelers Indemnity and Chubb Corporation and purchase independent professional claims administration, loss prevention services and loss reporting from Gallagher Bassett for the period of 10/01/2011 through September 30, 2012. BACKGROUND: On July 5, 2011 Council awarded a contract to A. J. Gallagher for the marketing of excess insurance, selection of professional claims administrations, loss prevention services and loss reporting for the period October 1, 2011 through September 30, 2014. The A. J. Gallagher team that included individuals from their Itasca, Illinois office as well as their Decatur office secured quotations from several insurance companies that are willing to provide excess insurance coverage for the City. This year's quotes are competitive and do represent the insurance market place for public entities. The attached Market Review provided by A. J. Gallagher outlines each company that was contacted and the quotation received. There were three (3) companies that declined to offer quotations and several companies provided alternative quotes. Quotations were received from: BRIT Insurance Travelers Indemnity Midlands Insurance Company Munich RE Alterious/Argonaut Argo Group Safety National Chartis— Lexington Chubb Corporation Liberty Mutual The City's current program of self insured retention (similar to deductible) and insurance includes liability to limits of $10,000,000 with a $150,000 self insured retention (SIR), property insurance for full replacement value for real property, high valued vehicles and equipment to limits of over $155,000,000 with a $150,000 SIR on real property and a $75,000 SIR on replacement value on high valued vehicles and equipment, and statutory workers compensation limits with a $200,000 SIR.