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Home My WebLink About2021-02-09 Meeting AgendaFinance Committee Meeting Virtual/Teleconference- 2/9/2021- 1:20 PM FINANCE 1.Request to approve Augusta Commercial Property Insurance coverage for 2021 offered through Affiliated FM, current carrier, for a premium of $584,984 for full blanket coverage and limited flood coverage in flood prone areas. Attachments 2.Motion to approve the minutes of the Finance Committee held on March 10, 2020.Attachments 3.Approve Excess Workers’ Compensation Insurance with Statutory limits and a $1,000,000 Self Insured Retention (SIR – otherwise known as the deductible) to cover all positions for a premium of $349,048. Safety National – Incumbent Attachments www.augustaga.gov Finance Committee Meeting 2/9/2021 1:20 PM 2021 Augusta Commercial Property Insurance Renewal Department:Finance - Risk Management Presenter:Andy Oates - Donna Williams Caption:Request to approve Augusta Commercial Property Insurance coverage for 2021 offered through Affiliated FM, current carrier, for a premium of $584,984 for full blanket coverage and limited flood coverage in flood prone areas. Background:Augusta has elected to use Property Insurance Broker Services and carry commercial property insurance on its properties since consolidation. The Risk Management Office staff inspects all Augusta properties annually and works with insurance company engineers in helping to reduce risk of property loss to Augusta. Analysis:Dawson & Taylor Insurance Company seeks annual quotes from the insurance market for "all risks" coverage on buildings and contents. Please see attachments for quote summary and list of declinations. Several insurers did not qualify or declined to quote coverage. Quotes are obtained from companies with A or better rating. Affiliated FM is the low bidder and is providing the greatest level of coverage for the exposure. Current coverage carries a $50,000 deductible per occurrence except for flood and earthquake Financial Impact:A premium for blanket coverage is being offered on total property values of $736,947,250 for $584,984 with a $50,000 deductible. The quote from Affiliated FM includes flood coverage. Alternatives:1. Drop coverage and retain risk, 2. Reduce premiums by only insuring those properties representing the largest losses should an event damage the structures (Municipal Building, Law Enforcement Center, Judicial Center, RCCI, etc.) Recommendation: Cover Memo Item # 1 Approve Commercial Property Insurance coverage renewal for 2021 through Affiliated FM for a premium of $584,984 which includes flood coverage and Boiler & Maintenance coverage. Effective March 1, 2021 - March 1, 2022 Funds are Available in the Following Accounts: 611 015212 Risk Management General Insurance Fund Account REVIEWED AND APPROVED BY: Finance. Law. Administrator. Clerk of Commission Cover Memo Item # 1 Augusta-Richmond County Prepared by Dawson, Taylor & Company Coverage & Premium Comparison Affiliated FM Premium Total Insured Value $736,947,250 $584,984 Full Blanket All Risk Boiler & Machinery $736,947,250 Flood $ 50,000,000 Included Flood Tier 1 $ 5,000,000 Included Earthquake $100,000,000 Included Terrorism Included Engineering Fee Included Deductible $50,000 Travelers Total Insured Value $736,947,250 $739,149 Limited Blanket Boiler & Machinery $50,000,000 Included Flood $ 0 Not Offered Earthquake $ 50,000,000 Included Terrorism $10,000 Included Deductible $50,000 NOTE: Earthquake deductibles are $100,000 02/02/2021 Attachment number 1 \nPage 1 of 1 Item # 1 Finance Committee Meeting 2/9/2021 1:20 PM Minutes Department: Presenter: Caption:Motion to approve the minutes of the Finance Committee held on March 10, 2020. Background: Analysis: Financial Impact: Alternatives: Recommendation: Funds are Available in the Following Accounts: REVIEWED AND APPROVED BY: Cover Memo Item # 2 .fr .t - 31r0t2020Finance Committee Meeting Commission Chamber ATTENDANCE: Present: Hon. Hardie Davis, Jr., Mayor; Fennoy, Chairman; D. Williams, Vice Chairman; M. Williams, member. Absent: Hon. Frantom, member. FINANCE 1. Request to approve month to month agreement for WC TPA services for the Item month of February 2020. Action: Approved Motions il,"J:" |'Jrl" Made Bv Seconded Bv fJ;il A ^-_^..^ Motion to Commissioner Commissioner ^pprove approve. Marion Williams Dennis Williams Passes 2. Update from Finance Dept. regarding Link Deposit Funds. (Requested by Item Commissioner Marion Williams) ,q.ction: Approved Motions fr'J:"' Motion rext Motion to approve ^ receiving this item commissioner commissionerADDTOVE- -,-r - '- as information. Dennis williams Marion williams Motion Passes 3-0. 3. Motion to approve the minutes of the Finance committee held on 25,2020. Motions Made By Seconded By Motion Result Passes February Item Action: Approved Attachment number 1 \nPage 1 of 2 Item # 2 Motion Motion Made By seconded By Motion Type Text Result ^ Motion to Commissioner Commissioner ADDTOVC. approve. Dennis Williams Marion Williams Passes 4. Request approval to transfer funds from salary line item 10102111215111110 Item to 10102111215239112 to continue to contract labor line; once the employee Action: returns from worker's compensation leave funds will be returned to salary line Approved item. Motions Motion r rn Motion:"""- Motion Text Made By Seconded ByType rrrvarvu r lat Result Motion to Aoorove approve. Commissioner Commissionerrr Motion Passes Dennis Williams William Fennoy Passes 3-0. 5. Receive updated 2019 report from Finance Dept. regarding overtime payouts Item for employees in the Augusta Utilities Department in accordance with Action: Commission's direction at the March 3 Commission meeting. (Requested by Approved Commissioner Marion Williams) Motions Motion Motion Text Made By seconded By Motion Type rvrvrtvrt r lar Result Motion to approve ^ receiving this item Commissioner CommissionerAoorove ^--."':r,6 Lr'J rrvrrr :" =;-;;;;'^- - ;;";:--";^-:^-. PassesI I as information. Dennis Williams William Fennoy Motion Passes 3-0. www.augustaqa.qov Attachment number 1 \nPage 2 of 2 Item # 2 Finance Committee Meeting 2/9/2021 1:20 PM Renewal of Excess Worker's Compensation Insurance Department:Finance - Risk Management Presenter:Gallagher Consulting, Finance Caption:Approve Excess Workers’ Compensation Insurance with Statutory limits and a $1,000,000 Self Insured Retention (SIR – otherwise known as the deductible) to cover all positions for a premium of $349,048. Safety National – Incumbent Background:Excess Workers Compensation coverage (a per occurrence policy) has been purchased in the past as a measure to cap any potential catastrophic loss against Augusta-Richmond County. Knowing that this area if the industry is still quite volatile and premiums continue to rise, Corvel, our Workers’ Compensation Third Party Administrator, was requested to obtain quotes from A or A+ companies. Analysis:Corvel received the following quotes: 1. Safety National Casualty Corporation – Incumbent a. Statutory Limit with $1,000,000 SIR to cover all positions for a deposit premium of $349,048 OR b. Statutory Limit with $1,500,000 SIR to cover all positions for a deposit premium of $295,479 OR c. Statutory Limit with $750,000 SIR + $250,000 Corridor for deposit premium of $449,278 2. Chubb a. Statutory Limit with $1,500,000 SIR to cover all positions for a deposit premium of $400,000+ 3. Arch a. Statutory Limit with $1,000,000 SIR to cover all positions for a deposit premium of $470,000+ 4. MidWest Employers a. Declined to quote Financial Impact:Augusta would assume all financial responsibility up to the SIR limit of $1,000,000 for all positions per occurrence. Alternatives:Not recommended,1) Drop coverage accepting full exposure/cost for any catastrophic job related injury or 2) pay a substanially higher premium to buy down the level of exposure. Cover Memo Item # 3 Recommendation:Approve coverage with Safety National Casualty – Incumbent with SIR of $1,000,000 for all positions with Statutory Limit for a deposit premium of $349,048. Funds are Available in the Following Accounts: 621 01 5233 55.21110 WC/Risk Management REVIEWED AND APPROVED BY: Finance. Law. Administrator. Clerk of Commission Cover Memo Item # 3 ajg.com 2021 Arthur J. Gallagher & Co. All rights reserved. Arthur J Gallagher Risk Management Services, Inc. Scott K. Thomason | Senior Vice President Matt Simmons | Assistant Vice President January 27, 2021 Augusta-Richmond County Excess Workers Compensation Proposal | 3.1.2021 Executive Summary Attachment number 1 \nPage 1 of 11 Item # 3 Augusta-Richmond County 2021 Workers Compensation Proposal 2021 Arthur J. Gallagher & Co. All rights reserved. 1 Introduction Thank you for this opportunity to present your renewal proposal program options and recommendations for your property & casualty insurance policies. This Executive Summary is a shorter version of your proposal and is intended to summarize the highlights and point you to any decisions that need to be made prior to binding. We highlight each CORE360™ cost driver, beginning with Insurance Premiums and ending with Contractual Liability. This will not only organize the document but ensure that we are deliberate in driving value to each of your six cost drivers which represent your total cost of risk. It also follows the decisions made and action items we discussed in our Strategic Review; which serves as the basis for this proposal. We know that you have a choice and we appreciate your business and continued support. Attachment number 1 \nPage 2 of 11 Item # 3 Augusta-Richmond County 2021 Workers Compensation Proposal 2021 Arthur J. Gallagher & Co. All rights reserved. 2 Core 360 Cost Driver Management:  Gallagher – Perform full marketing efforts, obtain various SIR options  Develop quality underwriting submission  Explore higher retention options ($1m) to expand market options  Explore buffer layer options  Provide optional aggregate protection coverage  Ensure aviation and/or marine exposures are covered  COVID-19 claims are not classified as workers compensation claims unless the state changes the presumption laws  Gallagher will facilitate safety & risk management meetings  Claims reviews with the TPA should occur at least semi-annually  Gallagher will continue to provide consultation on reviewing contracts and discussing insurance requirements for third parties. Attachment number 1 \nPage 3 of 11 Item # 3 Augusta-Richmond County 2021 Workers Compensation Proposal 2021 Arthur J. Gallagher & Co. All rights reserved. 3 Gallagher Public Entity/K-12 Market Update PROPERTY, INCLUDING BUILDERS RISK The pricing of this coverage continues its upward trend with most insureds seeing double-digit premium increases (on average 18% to 22%), year over year. Public Entities (including K-12 schools) continue to utilize deductible increases and reductions in limits to offset premium and rate increases. We expect this trend to continue, and recent storms and CAT losses will continue to put pressure on this line. We have seen a large exodus of Builders Risk carriers from the market. Keep an eye out in this area. GENERAL LIABILITY AND AUTO LIABILITY These lines continue to see upward premium pressures. Certain areas are experiencing more pressure than others, such as:  Public Entities that purchase higher or Excess Liability limits.  Entities with losses, which may find it difficult to purchase coverage at any price.  Many insureds that have had to cut limits while paying the same or even higher premiums.  Sexual Abuse and Molestation coverage continues to be the hardest hit; limits are almost unavailable at any price. Strong risk management policies and procedures must be in place to purchase this coverage. This trend is rolling across the country. WORKER’S COMPENSATION While this is currently the line of coverage with the least upward pressure, expect changes to come as covered COVID-19 claims increase. Laws extending the presumption of coverage continue to develop across the states. Excess Rate increases are starting to exceed 5% or more; and adverse accounts over 10% CYBER LIABILITY We believe that this coverage will see the most upward pressure in the near future. With many, many schools providing distance learning, and Public Entities continuing to offer remote working, losses are bound to happen. We have already seen more than $1 Million+ claims turned in since schools resumed fall classes. Expect increases here. CRISIS RESILIENCE COVERAGE AND CONSULTING SERVICES This continues to be of high interest to Public Entities; there are good alternatives available. COMMUNICABLE DISEASE EXCLUSIONS Because most Public Sector clients renewed early in 2020 before COVID-19 was fully realized, we have not seen significant changes in exclusions. We expect to see those types of exclusions on Property, Liability, and Worker’s Compensation (as applicable) lines for renewals moving forward. Conclusion SPECIAL NOTE OF INTEREST – Cost pressure in the PUBLIC sector As Public Entities and K-12 schools continue to work through the current economic and pandemic environment, many are facing 20% to 30% revenue reductions with no backstop in place. COVID-19 has increased operating expenses overall, and especially for K-12 schools. Public Entities of all type and size are desperately seeking cost reductions and seriously slashing budgets. It is more important than ever for Entities to focus on their total cost of risk and not just the line item of insurance costs. Attachment number 1 \nPage 4 of 11 Item # 3 Augusta-Richmond County 2021 Workers Compensation Proposal 2021 Arthur J. Gallagher & Co. All rights reserved. 4 Gallagher Drive Insights Public Entity & Education Sector – 4th Quarter 2020 Attachment number 1 \nPage 5 of 11 Item # 3 Augusta-Richmond County 2021 Workers Compensation Proposal 2021 Arthur J. Gallagher & Co. All rights reserved. 5 Your Loss Experience We have promulgated loss projections using various Gallagher, actuarial driven, and industry driven benchmarks. Our forecast starts with developing a quality loss summary. And with long-tail workers compensation claims, the claims trend upward if open and can spike years later. We use industry factors to create an IBNR (Incurred But Not Reported) to show net ultimate loss projections. Attachment number 1 \nPage 6 of 11 Item # 3 Augusta-Richmond County 2021 Workers Compensation Proposal 2021 Arthur J. Gallagher & Co. All rights reserved. 6 Marketing Results We approached all active public sector excess markets and the results are as follows: Excess Workers Compensation Markets Market Self-Insured Retention Premium Indicated/Quoted Result Summary Safety National $750k + $250k Corridor $380,979 Expiring Program Safety National (Incumbent) $750k + $250k Corridor $449,278 Most Competitive Carrier at expiring terms Safety National $1,000,000 $349,048 Recommended Program Safety National $1,500,000 $295,479 Optional Program Midwest Employers Declined to quote due to unfavorable loss experience Arch $1,000,000 $470,000+ Indication only Chubb $1,500,000 $400,000+ Indication only Buffer Layer Workers Compensation Markets Market Self-Insured Retention Premium Indicated/Quoted Result Summary Frontegra Insurance $250k xs $750k $81,113 Recommended Option Frontegra Insurance $500k xs $500k $283,461 Quoted BRIT $250k xs $750k $179,500 Quoted Gray Insurance Co. $150k xs $850k $88,366 Quoted Attachment number 1 \nPage 7 of 11 Item # 3 Augusta-Richmond County 2021 Workers Compensation Proposal 2021 Arthur J. Gallagher & Co. All rights reserved. 7 Insurance Program Comparison Policy Effective Date:3/1/2021 Broker:Matt Simmons Policy Expiration Date:3/1/2022 Issue Date:1/27/2021 Program Overview Expiring Option 1 Option 2 Option 3 Option 4 Excess Workers Compensation Carrier Safety National Safety National Safety National Safety National Safety National AM Best Rating A++, XV A++, XV A++, XV A++, XV A++, XV Estimated Payroll $111,822,640 $113,253,745 $113,253,745 $113,253,745 $113,253,745 Minimum Premium 90%90%90%90%90% Policy Term 1 Year 1 Year 1 Year 1 Year 1 Year Buffer Layer Carrier Fortegra Ins Gray Insurance AM Best Rating A-, VIII A-, VIII Estimated Payroll $113,253,745 $113,253,745 Minimum Premium 90%90% Policy Term 1 Year 1 Year Coverage Details Excess Workers Comp Workers Comp Limit Statutory Statutory Statutory Statutory Statutory Employers Liability Limit $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 Self-Insured Retention (SIR)$750,000 $750,000 $1,000,000 $1,000,000 $1,000,000 Police/Fire SIRs $750,000 $750,000 $1,000,000 $1,000,000 $1,000,000 Corridor Deductible $250,000 $250,000 None None None Aggregate Limit None None None None None Buffer Layer Workers Comp Limit $250,000 $150,000 Self-Insured Retention (SIR)$750,000 $850,000 Premium+ Details Excess Workers Comp Annual (Deposit) Premium $380,979 $449,278 $349,048 $349,048 $349,048 Payroll Basis Estimated Estimated Estimated Estimated Estimated Buffer Layer Annual (Deposit) Premium $81,113 $88,366 Payroll Basis Estimated Estimated Risk Management Services Risk Mgmt Fee N/A N/A N/A N/A N/A Total Premium+$380,979 $449,278 $349,048 $430,161 $437,414 Net Rate Change 17.9%-8.4%12.9%14.8% 10 Year Annual Average Ground up Loss Projection $2,769,034 $2,769,034 $2,769,034 $2,769,034 $2,769,034 Projected Excess Losses -$44,967 -$44,967 -$7,301 -$52,268 -$23,426 Total Cost of Risk $3,105,046 $3,173,345 $3,110,781 $3,146,927 $3,183,022 Net TCOR Change 2.2%0.2%1.3%2.5% Augusta-Richmond County Attachment number 1 \nPage 8 of 11 Item # 3 Augusta-Richmond County 2021 Workers Compensation Proposal 2021 Arthur J. Gallagher & Co. All rights reserved. 8 Loss Prevention & Claims Gallagher National Risk Control Resources Our national risk control team will enhance your safety program and reduce your overall total cost of risk. Safety standards are continually evolving to meet industry demands and best practices. Gallagher offers a full range of training services to ensure your staff has the training to be legally compliant and to ensure that they have the knowledge to work safely and employ best practices in their daily activities. Our team consists of over 100 safety, property and risk control professionals with in-depth knowledge of the current and emerging regulations, safety and health management programs, and a hierarchy-based approach to your operational risks and exposures. The team has extensive qualifications implementing risk improvement strategies that positively influence the total cost of risk. This is accomplished with a keen focus on human behaviors, fleet safety, property protection, appropriate employee and supervisor training, as well as education and accountability programs. Gallagher GAP Analysis Attachment number 1 \nPage 9 of 11 Item # 3 Augusta-Richmond County 2021 Workers Compensation Proposal 2021 Arthur J. Gallagher & Co. All rights reserved. 9 CORE360™ Executive Summary Scorecard Your CORE360™ Executive Summary Scorecard has been developed for you to get a quick snapshot of how we have influenced your total cost of risk for the policies detailed in this proposal:  City - Review class codes and payroll projections  Gallagher – Perform full marketing efforts, obtain various SIR options  Develop quality underwriting submission  Explore higher retention options ($1m) to expand market options  Explore buffer layer options  Obtain large loss summary updates (Over $250k)  Review coverage considerations and endorsements  Ensure aviation and/or marine exposures are covered  Discuss Off-Duty Law Enforcement exposures and Gallagher program  Active shooter, liability, reputational risks and soft costs not insured  COVID-19 claims are not classified as workers compensation claims unless the state changes the presumption laws  Gallagher will facilitate safety & risk management meetings  Gallagher will provide online safety training software and resources  Claims reviews with the TPA should occur at least semi-annually  Review contracts as needed for compliance and proper insurance requirements Attachment number 1 \nPage 10 of 11 Item # 3 Augusta-Richmond County 2021 Workers Compensation Proposal 2021 Arthur J. Gallagher & Co. All rights reserved. 10 Thank You for Your Business Legal Disclaimer Gallagher provides insurance and risk management advice that is tailored to our clients’ risk transfer needs. Our review can include evaluation of insurance premium, risk transfer options, finance agreements, insurance limits, indemnification obligations, and contracts to ascertain appropriate coverage. We do emphasize that any risk management advice, insurance analysis, and limited review of contract terms and conditions, is only provided from an insurance/risk management perspective and is NOT legal advice. We do not provide legal advice and always recommend that our clients seek advice from legal counsel to become fully apprised of all legal implications from their business transactions. Attachment number 1 \nPage 11 of 11 Item # 3