Res 50-14 i
RESOLUTION NO. 50-14
A RESOLUTTON OF THE CITY COM1\4ISSION OF THE CITY OF DELRAY
BEACH, FLORIDA, APPROVING A RENEWAL OF ITS POLICY WITH
FLORIDA MUNICIPAL INSURANCE TRUST (FMIT); DECLARING BY A
FOUR-FIFTHS AFFIRMATIVE VOTE THAT THE CITY'S SEALED
COMPETITIVE METHOD .OR WRITTEN QUOTATIONS PROCUREMENT
METHOD IS NOT IN THE BEST INTEREST OF THE CITY; PROVIDING
FOR AN EFFECTIVE DATE.
WHEREAS; the City of Delray Beacli Risk Management Division seeps approval to renew
its policy with the Florida Municipal Insurance Trust (FMIT) for Property and Casualty Insurance
with a renewal quote of$1,507,428;and
WHEREAS, the Florida Municipal Insurance Trust (FMIT) has provided Property and
Casualty Insurance coverage to the City since 2009 and staff has determined that FMTT is the
program to best serve the City's interests; and
WHEREAS, the policy currently in effect with the Florida Municipal Insurance Trust
(FMIT) will expire on September 30, 2014; and
WHEREAS, the City's broker, Ascension Benefits & Insurance Solutions, sunreyed the
marketplace and determined along with staff that FMIT is the program that best serves the City's
interest above the alternative programs; and
WHEREAS, one competitor, Public Risk Management (PRM), is a property and casualty
insurance pool. PRM requires that the City use their Third Party Administrator. Currently the City
utilizes a Third Party Claim Administrator that was selected through an RFP competitive bid
process. For this reason,PRM is not a viable option at this time for the City of Delray Beach; and, �
WHEREAS, the other competitor, Preferred Governmental Insurance Trust (PGIT) does
not have the resources that FMIT possesses. PGIT has approxmately $85 million in premiw-a and
surplus of approximately $70 million, Whereas, FMIT has $110 million in premium and a sLu-plus of
$213 million. PGIT currently retains $2 million risk per d-,d a on their workers compensation
program, whereas FMTT has $2.5 million. The PGIT property program relies on the excess carriers
to perform any claims administration services should a catastrophic event occur;and
WHEREAS, the Florida Municipal Insurance Trust (FMIT) program has been in existence
since 1977 and is the oldest and largest governmental insurance trust in the state of Florida. EMIT
is administered by the Florida League of Cities (FLC). They exist only to administer the FMIT
services and are not owned by any publicly traded or privately held insurance brokerage company.
FMIT currently has apptoxitnately $110 million in premium and $213 million in surplus. FMIT has
almost a 2 to 1 ratio of surplus to premium making it financially the strongest governmental
insurance trust in Florida. FMIT provides all property claims administration services, including
catastrophic through their exclusive SimpliCity program. There is no additional cost to the City of
Delray Beach for the FMIT catastrophic claims administration program. FMIT retains $2.5 million
risk per workers coinpensation claim and$3 nvllion risk per property claim; and
WHEREAS, the Florida Municipal Insurance Trust (FMM provides a return of premium
to their members and currently the City of Delray Beach is scheduled to receive $198,305.00
following the October 1,2014 renewal; and
WHEREAS, the quotation from the Florida Municipal Insurance Trust (FMIT) represents a
$39,285 or 2.5% decrease from last year's premium.
WHEREAS, based on the City of Delray Beach long-standing relationship with the Florida
Municipal Insurance Trust (FMIT) and the Florida League of Cities (FLC) and with the various
quote options they provided, it was determined by staff, which concurred with the broker's
recommendation., that the Florida Municipal Insurance Trust (FMIT), was the most cost effective
and service driven program;and
WHEREAS, utilization of the City's competitive procurement -methods for the
uninterrupted continuation of Property and Casualty Insurance Coverage is not practical or cost
effective due to the City's immediate need to renew the coverage; and
WHEREAS, Section 36.02 (C)(11) of the City Code provides that the City may acquire or
contract for non-real property, goods, or services without utilizing a Sealed Competitive Method or
the Written Quotations Method where the City ColTmiission declares by at least a four-fifths (4/5)
affitmative vote that the Sealed Competitive method or the Written Quotations Method is not in the
best interest of the City.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COMMISSION OF
THE CITY OF DELRAY BEACH,FLORIDA,AS FOLLOWS:
Section 1. That the foregoing "WHEREAS" clauses are ratified and confu med as being
true and correct factual findings and are made a specific part of this Resolution.
Res No. 50-14
Section 2. The City Commission of the City of Delray Beach hereby declares, by a
nib-yimum four fifths affirmative vote, that the City's Sealed Competitive Method or Written
Quotations procurement Method is not in the best interest of the City. The City Commission
declares that the attached Quotation from FMTT,which provides for the uninterrupted continuation
of Property and Casualty Insurance Coverage to the City,is in the best interest of the City.
Section 3. The City Commission of the City of Delray Beach hereby approves the
Continuity of Property and Casualty Insurance Renewal Quotation, attached as Exhibit"A".
Section 4. The City Manager: is authorized to do all things necessary and expedient to
carry out the aims of this Resolution.
Section 5. This Resolution shall take effect itnmediately upon adoption.
PASSED AND ADOPTED this 16a' day of September,2014.
Mayor
ATTEST:
��•VoCity Clerk
3
Res No. 50-14
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MEMORANDUM
TO: Mayor and City Commissioners
FROM: Edward DeMicco, Risk Manager
Shirley O'Neal McKennon, Human Resources Director
THROUGH: Terry Stewart, Interim City Manager
DATE: August 27, 2014
SUBJECT: AGENDA ITEM 9.E.-REGULAR COMMISSION MEETING OF SEPTEMBER 16,2014
RESOLUTION NO.50-14: RENEWAL OF INSURANCE POLICY[ IT
BACKGROUND
The City of Delray Beach is due to renew its Property and Casualty Insurance policy through the
Florida Municipal Insurance Trust (FMIT) program on October 1, 2014. The City has purchased an
insurance policy with FMIT since 2009 for their property and casualty coverage, which includes
coverage for Property Insurance, Excess. Liability Coverage and Excess Workers' Compensation
coverage.
The Florida Municipal Insurance Trust has been in existence in Florida since 1977 and is administered
by the Florida League of Cities. As of their most recent fmancials, FMIT has $110,000,000.00 in
premium and $213,000,000.00 in surplus. The FMIT program is the largest insurer of cities, towns and
counties in the state of Florida.
This year's quote has an option of raising the $50,000 deductible per event, for non-named storms to
$1 00,000. Under this option, the City will experience a $77,119 reduction in premium from the quote,
which is highlighted in the attached quotation document. Staff highly recommends increasing the
deductible to $100,000 based upon the City's claim loss history of only $17,212 for the past five years.
The final quote is $1,507,428 for the 2014/2015 coverage year. This represents a $39,285 or 2.5%
decrease in premium from last year.
Furthermore, each year, the FMIT returns a portion of the premiums to each member based upon the
claims experience from the prior year. The City will receive a return of premium totaling
approximately $198;305.00 during the course of this fiscal year.
Currently there are three primary options available for the City of Delray Beach. Each was surveyed by
the City's broker:
Public Risk Management (PRM)
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PRM is a property and casualty insurance pool. This pool has operated in Florida for approximately 25
years. Unfortunately, in reviewing the possibility of getting a quote there were several issues of note.
1. PRM is an "all or nothing" insurance pool. You can only have membership if you agree to place all of
your property & casualty coverage with them.
2. Mandated TPA. Currently the City of Delray Beach utilizes a Third Party Claim Administrator that
was selected through a RFP competitive bid process. If the City were to go into the PRM insurance
pool, the City would be mandated to use the PRM claims administration services.
3. PRM has for the past several years been declining in governmental members. They are now down to
approximately $20-25 million in premium and approximately $13 million in surplus.
4. PRM will provide an insurance quote only if the City agrees to review their quote only, thus forcing
the City to accept their program.
Based on the above listed conditions, PRM was not a viable option at this time for the City of Delray
Beach.
Preferred Governmental Insurance Trust(PGIT)
The PGIT program is the 2nd largest governmental insurance trust in the state of Florida. This insurance
trust has been in existence since October 1, 1999. The following are issues of note regarding PGIT:
1. PGIT has approximately$85 million in premium and surplus of approximately $70 million.
2. PGIT currently retains $2 million risk per claim on their workers compensation program.
3. The PGIT property program relies on the excess carriers to perform any claims administration
services should a catastrophic event occur.
4. PGIT is administered by Public Risk Underwriters, which is owned by Brown & Brown insurance.
PRU has demonstrated a preference in utilizing Brown&Brown owned retail agencies including Public
Risk Insurance Agency (PRIA). An inquiry was made from our broker of PRU to find out if they were
interested in quoting the property and casualty insurance. The City did not receive a response.
Florida Municipal Insurance Trust (FMIT)
The FMIT program has been in existence since 1977 and is the oldest governmental insurance trust in
the state of Florida. The FMIT program is also the largest governmental insurance trust in the state of
Florida. The following is of note:
1. FMIT is administered by the Florida League of Cities (FLC). They exist only to administer the FMIT
services and are not owned by any publicly traded or privately held insurance brokerage company.
2. FMIT currently has approximately $110 million in premium and $213 million in surplus. FMIT has
almost a 2 to 1 ratio of surplus to premium making it financially the strongest governmental insurance
trust in Florida.
3. FMIT provides all property claims administration services, including catastrophic through their
exclusive SimpliCity program. There is no additional cost to the City of Delray Beach for the FMIT
catastrophic claims administration program.
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4. FMIT retains $2.5 million risk per workers compensation claim and $3 million risk per property
claim.
5. FMIT provides a return of premium to their members and currently the City of Delray Beach is
scheduled to receive $198,305.00 following the October 1,.2014 renewal.
We asked the FMIT program to provide various different options and quotes for the upcoming renewal.
After careful review of these 5 different quotes/options it was determined that the City of Delray Beach
could reduce their premium by approximately $77,000.00 by adjusting the deductible on their properly
program.
In the last 18+ months, Florida has seen two stand-alone governmental insurance companies withdraw
from the workers compensation market. The immediate withdrawal of these companies from the
market created a reduction in available and affordable coverage in the municipal marketplace. For a
City with employment exposure of law enforcement and Fire Fighters, an insurance trust or pool
became the most viable and cost effective option.
The southeast Tri-County area of Florida, Palm Beach, Broward and Dade County, is considered one of
the highest risk areas in the country for property coverage. Stand-alone coverage has to be secured in
layers as no one property carrier is willing to take a 100%o of the risk. A multi-layered program can
create a more complex and costly process for administering claims in a catastrophic event. It can also
create more premium cost depending on the amount of risk a governmental entity decides to take.
Based on the City of Delray Beach's long-standing relationship with FMIT/FLC and the various quote
options they provided, it was determined by staff, which concurred with the broker's recommendation,
that FMIT was the most cost effective and service driven program.. Therefore, City staff is requesting
the City Commission make the required factual finding based on the forgoing information to adopt a
resolution stating it is in the City's best interest to not require a competitive selection and waive certain
requirements of the procurement code in accordance with section 36.02(c)(11).
LEGAL DEPARTMENT REVIEW
Approved as to legal form and sufficiency.
FINANCIAL DEPARTMENT REVIEW
The Finance Department recommends approval.
DISCUSSION
This item before Commission is the approval of the renewal insurance policy with Florida Municipal
Trust(FMIT) with the increased deductible of$100,000.
TIMING OF THE REQUEST
Policy has a renewal date of October 1, 2014.
FUNDING SOURCE
Funding is available from General Liability Account 551-1575-591-45.11, Package Policy Premium
Account 551-1575-591-45.31 and Excess Workers' Compensation Premium Account 551-1575-591-32.
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Staff recommends approval of Resolution No. 50-14 for the Florida Municipal Insurance Trust (FMIT)
premium quote of$1,507,428 for the FY 2014/15 policy renewal period.
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RESOLUTION NO. 50-14
A RESOLUTION OF THE CITY COMMISSION OF THE CITY OF DELRAY
BEACH, FLORIDA, APPROVING A RENEWAL OF ITS POLICY WITH
FLORIDA MUNICIPAL INSURANCE TRUST (EMIT); DECLARING BY A
FOUR-FIFTHS AFFIRMATIVE VOTE THAT THE CITY'S SEALED
COMPETITIVE METHOD OR WRITTEN QUOTATIONS PROCUREMENT
METHOD IS NOT IN THE BEST INTEREST OF THE CITY; PROVIDING
FOR AN EFFECTIVE DATE.
WHEREAS, the City of Delray Beach Risk Management Division seeks approval to renew
its policy with the Florida Municipal Insurance Trust (EMIT) for Property and Casualty Insurance
with a renewal quote of$1,507,428; and
WHEREAS, the Florida Municipal Insurance Trust (FMIT) has provided Property and
Casualty Insurance coverage to the City since 2009 and staff has determined that FMIT is the
program to best serve the City's interests; and
WHEREAS, the policy currently in effect with the Florida Municipal Insurance Trust
(FMIT) will expire on September 30, 2014;and
WHEREAS, the City's broker, Ascension Benefits & Insurance Solutions, surveyed the
marketplace and determined along with staff that FMIT is the program that best serves the City's
interest above the alternative programs;and
WHEREAS, one competitor, Public Risk Management (PRM), is a property and casualty
insurance pool. PRM requires that the City use their Third Party Administrator. Currently the City
utilizes a Third Party Claim Administrator that was selected through an RFP competitive bid
process. For this reason, PRL'LI is not a viable option at this time for the City of Delray Beach; and,
WHEREAS, the other competitor, Preferred Governmental Insurance Trust (PGI't� does
not have the resources that FMIT possesses. PGIT has approximately $85 million in premium and
surplus of approximately$70 million. Whereas, FMIT has $110 million in premium and a surplus of
$213 million. PGIT currently retains $2 million risk per claim on their -workers compensation
program, whereas FMIT has $2.5 million. The PGIT property program relies on the excess carriers
to perform any claims administration services should a catastrophic event occur; and
WHEREAS, the Florida Municipal Insurance Trust (FMIT) program has been in existence
since 1977 and is the oldest and largest governmental insurance trust in the state of Florida. FMIT
is administered by the Florida League of Cities (FLC)_ They exist only to administer the FMIT
services and are not owned by any publicly traded or privately held insurance brokerage company.
FMIT currently has approximately $110 million in premium and $213 nvllion in surplus. FMIT has
almost a 2 to 1 ratio of surplus to premium making it financially the strongest governmental
insurance trust in Florida. FMIT provides all property claims administration services, including
catastrophic through their exclusive SimpliCity program. There is no additional cost to the City of
Delray Beach for the FMIT catastrophic claims administration program. FMIT retains $2.5 million
risk per workers compensation claim and$3 million risk per property claim; and
WHEREAS, the Florida Municipal Insurance Trust (FMIT) provides a return of premium
to their members and currently the City of Delray Beach is scheduled to receive $198,305.00
following the October 1, 2014 renewal;and
WHEREAS,the quotation from the Florida Municipal Insurance Trust (FMIT) represents a
$39,285 or 2.5% decrease from last year's premium.
WHEREAS, based on the City of Delray Beach long-standing relationship with the Florida
Municipal Insurance Trust (FMIT) and the Florida League of Cities (FLC) and with the various
quote options they provided, it was determined by staff, which concurred with the broker's
recommendation, that the Florida. Municipal Insurance Trust (FMIT), was the most cost effective
and service driven program;and
WHEREAS, utilization of the City's competitive procurement methods for the
uninterrupted continuation of Property and Casualty Insurance Coverage is not practical or cost
effective due to the City's immediate need to renew the coverage; and
WHEREAS, Section 36.02 (C)(11) of the City Code provides that the City may acquire or
contract for non-real property, goods, or services without utilizing a Sealed Competitive Method or
the Written Quotations Method where the City Commission declares by at least a four fifths (4/5)
affirmative vote that the Sealed Competitive method or the Written Quotations Method is not in the
best interest of the City.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COMMISSION OF
THE CITY OF DELRAY BEACH, FLORIDA,AS FOLLOWS:
Section 1. That the foregoing "WHEREAS" clauses are ratified and confirmed as being
true and correct factual findings and are made.a specific part of this Resolution.
2
Res No. 50-14
Section 2. The City Commission of the City of Delray Beach hereby declares, by a
minimum four-fifths affirmative vote, that the City's Sealed Competitive Method or Written
Quotations procurement Method is not in the best interest of the City. The City Commission
declares that the attached Quotation from FMIT,which provides for the uninterrupted continuation
of Property and Casualty Insurance Coverage to the City, is in the best interest of the City.
Section 3. The City Commission of the City of Delray Beach hereby approves the
Continuity of Property and Casualty Insurance Renewal Quotation, attached as Exhibit"A".
Section 4. The City Manager is authorized to do all things necessary and expedient to
carry out the aims of this Resolution.
Section 5. This Resolution shall take effect immediately upon adoption.
PASSED AND ADOPTED this 16th day of September,_2014.
Mayor
ATTEST:
City Clerk
3
Res No. 50-14