ORDINANCE accepting the individual proposals from ARCH SPECIALTY INSURNACE COMPANY; ENDURANCE AMERICAN SPECIALTY INSURANCE COMPANY; EVANSTON INSURANCE COMPANY; INDEPENDENT SPECIALTY INSURANCE COMPANY; INTERSTATE FIRE & CASUALTY COMPANY; IRONSHORE SPECIALTY INSURANCE COMPANY; LEXINGTON INSURANCE COMPANY; NATIONAL FIRE & MARINE INSURANCE CO.; RSUI INDEMNITY COMPANY; STARR SURPLUS LINES INSURANCE COMPANY; TOKIO MARINE AMERICA INSURANCE COMPANY; UNDERWRITERS AT LLOYDS; FIRST SPECIALTY INSURANCE CORPORATION; COLONY INSURANCE COMPANY; WESTCHESTER FIRE INSURANCE COMPANY; AND EVEREST INDEMNITY INSURANCE COMPANY, which are participating in the layered property insurance program, and approving and authorizing the purchase of a General City Property Insurance Policy - $14,251,054.00 - Property & Casualty Fund - TAGGED BY COUNCIL MEMBER BOYKINS

This was Item 10 on Agenda of March 20, 2019

The Administration & Regulatory Affairs Department recommends that Council: (1) approve the proposed general property insurance policies recommended by the City’s Insurance Broker of Record, McGriff, Seibels & Williams of Texas, Inc. (McGriff) for City of Houston-owned properties – excluding those City of Houston properties leased and managed by the Houston First Corporation (“HFC”); and (2) accept the individual proposals from the insurance carriers listed below that are participating in the layered Property Insurance program recommended by McGriff.

The details regarding the solicitation, the City’s Property Insurance program, and the proposed renewal was presented to City Council’s Budget and Fiscal Affairs Committee on March 5, 2019.

A Request for Proposal (RFP) for General Property Insurance was issued and advertised on December 21, 2018 and December 28, 2018, for coverage effective April 1, 2019.  McGriff solicited proposals from 47 domestic and international insurance carriers; 16 carriers submitted proposals.

The recommended funding of $14,251,054.00 includes premium of $14,078,459.00 for the policy term and $172,595.00 as contingent premium for coverage of any properties added during the policy year.

No individual insurance company submitted a proposal to provide coverage for the City’s total property value.  Therefore, McGriff structured a multi-layered Property Insurance policy consisting of a primary layer plus four excess layers.  The terms of the proposed policy are:

• Term: April 1, 2019 to April 1, 2020
• Insurance Carriers: Westchester Fire Insurance Company; Endurance American Specialty Insurance Company; Ironshore Specialty Insurance Company; Lexington Insurance Company; Starr Surplus Lines Insurance Company; Independent Specialty Insurance Company; Interstate Fire & Casualty Company; Underwriters at Lloyds; RSUI Indemnity Company; Arch Specialty Insurance Company; Tokio Marine America Insurance Company; National Fire & Marine Insurance Co.; First Specialty Insurance Corporation; Colony Insurance Company; Everest Indemnity Insurance Company; and Evanston Insurance Company.
• Total Premium: $14,251,054.00 ($14,078,459.00 Premium + $172,595.00 Contingency Premium)
• Rate: $0.134 per $100 of insured property value
• Insured Property Value: $10,083,814,420 (Replacement Cost Basis)
• Insured Revenue Stream: $440,952,567 (Actual Loss Sustained Basis)
• Total Insured Value: $10,524,766,987
• Type of Coverage: All Risk Coverage (excluding terrorism coverage), which includes flood and earthquake for buildings and contents, as well as Business Interruption coverage at scheduled Houston Airport System and General Services Department locations.
• Deductibles: $500,000 per occurrence, except (1) 3% of values for flood at any location from a named storm, subject to a $2,500,000 minimum and $15,000,000 maximum, (2) 3% of values for windstorm losses from a named storm, subject to a $2,500,000 minimum and $15,000,000 maximum and (3) 3% of value for wind driven rain (other than named storm) at any location, subject to a $100,000 minimum.
• Loss Limit: $175,000,000
• Flood Loss Limit: $175,000,000 which may apply fully to Flood Zone A (100-year flood plain).

Fiscal Note:

Funding for this item is included in the FY19 Adopted Budget.  Therefore, no Fiscal Note is required as stated in the Financial Policies.

Departmental Approval Authority:

__________________________­­­­­­­­­___________ __________________________________________

Tina Paez, Director                                       Other Authorization

Administration & Regulatory 

Affairs Department

$ 14,078,459.00 Policy Premium
$      172,595.00 Contingency Premium    
$ 14,251,054.00 Total Proposed Premium

Property / Casualty Fund: 1004

Lara Cottingham                  Phone:  (832) 393-8503

Tina Paquet                         Phone:  (832) 393-8792