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a <br /> DEPARTMENT OF FINANCIAL MANAGEMENT I <br /> RISK MANAGEMENT DNISION <br /> MEMORANDLTM NO. 2002-076 <br /> August 28, 2002 <br /> TO: The Honorable Mayor and City Council Members <br /> FROM: Steve Garm , ity Manager <br /> Beth Couter, ector of Financial Management f�j� <br /> J. Barry Leonar , Risk Manager� <br /> SUBJECT: Renewal of Sel insured Property And Casualty Program <br /> We solicited nine interested parties to submit qualifications to make a proposal on the <br /> renewal. We received five responses - the incumbent, one national broker, one local broker, and <br /> two public entity specialty markets. <br /> This year is the toughest insurance market since the mid-eighties. Starting about 1990, '' <br /> insurers began writing business below actual risk premium and depended on investment income <br /> to make up the difference. Several factors have impacted the current market. First, investment <br /> income has declined dramatically. Second, the under funded losses of previous years have <br /> caught up with the insurers. The third item is the industry-wide losses from 9/11 which are ' <br /> currently estimated at 60 to 70 billion dollars. The foregoing has translated into insurers <br /> unwilling or unable to write insurance at previous rates or with the same coverages of the past. <br /> All but the incumbent have since declined due to market conditions. Most of the <br /> proposers declined because of one or more of the following factors: fewer insurers are writing <br /> public entity risks, the indicated premiums were multiples of the probably expiring premium, <br /> insurers wanted higher self-insured retentions without appropriate premium reduction, and their <br /> treaties with reinsurers would not allow them to provide full excess property coverage. <br /> Therefore, we only have a quote from A. J. Gallagher(AJG) using our current insurers. AJG has <br /> included other insurer indications for comparison. <br /> A. J. GALLAGHER PER CENT OTHER <br /> COVERAGE EXPIRING RENEWAL INCREASE INSURERS <br /> Packa e 174,500 190,625 11.06 589,363 <br /> Crime Included 3,174 <br /> Excess Pro e 36,972 72,194 95.27 100,000 ' <br /> Excess W. G 21,669 31,605 45.85 ', <br /> Excess Liabili 17,000 32,400 384.71 100,000 �I <br /> Excess Liabili Included 50,000 !� <br /> Broker Fee 32,500 40,000 23.08 <br /> TOTAL 282,641 419,998 48.6 �� <br />