Focus Area: Legal
Staff Contact: Ron Shaver & Chris Grunewald
Subject: Consideration of the property and casualty insurance programs for 2025.
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Consideration of the property and casualty insurance programs for 2025.
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Summary:
The City’s property and casualty insurance policies expire at the end of 2024. The City’s insurance broker, Arthur J. Gallagher Risk Management Services, LLC (Gallagher) was directed to negotiate competitive renewal terms with the incumbent carriers on all lines if available, in addition to approaching alternative markets. All proposals have been received and reviewed by City staff and the City’s risk management consultant, Charlesworth Consulting.
Attachment A is a table comparing the current and proposed insurance premiums for property, liability, and ancillary insurance coverages.
Property Insurance
Property insurance is recommended to be renewed with Chubb at an 17.5% premium increase. For the 2025 term, the City has added over $30 million in insured property values. For the City’s property insurance renewal, the City’s rate saw an increase from $0.1297 of premium cost for every $100 insured to $0.1407 (8.5%). The City’s wind/hail deductibles will remain at 1% of the insured value subject to a $100,000 per occurrence minimum except for the Water Treatment Plant which will be a $250,000 per occurrence minimum.
Liability Insurance
In 2024, the City obtained from Safety National a partially self-insured liability program with a retention of $500,000. This is commonly referred to as self-insured retention (SIR).
Gallagher obtained a renewal quote from the City’s incumbent carrier, Safety National, and a competitive quote from Old Republic. The Old Republic proposal comes with a $350,000 SIR and has a significant benefit by including an Auto Physical Damage (APD) policy to provide some coverage for damage to City vehicles from storm events or accidents where the City is at fault. The SIR option proposed by Safety National does not offer APD coverage and would maintain the current $500,000 SIR. Attachment A shows the terms, conditions, and premium costs for the Old Republic SIR program and APD policy along with the ancillary policies for crime and above ground storage tanks.
Based on the coverages, deductibles, and retention limits, staff recommends the Chubb property renewal and Old Republic for the SIR and APD policies, along with the ancillary coverages of crime and storage tank liability provided by the carriers listed in Attachment A. The combination of premiums is $1,360,412.
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Financial Impact:
Adequate funding to cover all premiums is contained in the Risk Management Fund.
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Action Needed:
Approve the 2025 property and casualty insurance premiums in the amount of $1,360,412.
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Attachment(s):
A: 2024-2025 Olathe Insurance Renewal Comparison