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Home My Public Portal AboutResolution No. 23-142 FMIT renewal Insurance agreementSponsored by: City Manager RESOLUTION NO. 23-142 A RESOLUTION OF THE CITY COMMISSION OF THE CITY OF OPA-LOCKA, FLORIDA, AUTHORIZING THE CITY MANAGER TO EXECUTE A RENEWAL INSURANCE AGREEMENT WITH THE FLORIDA LEAGUE OF CITIES, INC. (ADMINISTRATOR OF THE FLORIDA MUNICIPAL INSURANCE TRUST) FOR PROPERTY, LIABILITY AND WORKERS COMPENSATION INSURANCE FOR FISCAL YEAR 2023-2024; ACCEPTING AND IMPLEMENTING THE REQUIRED CONDITIONS AT A COST OF THREE MILLION, SEVEN HUNDRED NINETEEN THOUSAND, NINE HUNDRED TWELVE DOLLARS ($3,719,912.00), INCLUDING A 7.5% DEDUCTIBLE FOR PROPERTY LOSSES; AUTHORIZING THE EXECUTION OF ALL NECESSARY DOCUMENTS BY THE PROPER CITY OFFICIALS; PROVIDING FOR AN EFFECTIVE DATE WHEREAS, the City of Opa-Locka ("City") needs to renew its liability insurance for fiscal year 2023-2024; and WHEREAS, the Interim City Manager recommends that the City Commission renew the City's insurance coverage with the Florida Municipal Insurance Trust (FMIT) based on the FMIT fiscal year 2023-2024 Renewal Quote with the seven and a half percent (7.5%) Property Deductible option; and WHEREAS, with a five percent (5%) deductible for property insurance, the total quote is Three Million Seven Hundred Eighty Thousand Seventy Dollars ($3,780,070.00). With a seven and a half percent (7.5%) deductible for property insurance, the total quote is Three Million, Seven Hundred Nineteen Thousand, Nine Hundred Twelve Dollars ($3,719,912.00); and WHEREAS, the Interim City Manager has confirmed that all lines of coverage are essentially equal to or better than fiscal year 2022-2023 with the exception of property insurance, which is up nearly two hundred percent (200%) due to major deterioration of the property insurance market in Florida, particularly for communities on or in proximity to the State's coasts; and WHEREAS, historically, FMIT property insurance has been based on a deductible of five percent (5%) of the property loss with a recognition of the drastic impact that the deterioration of the property insurance market can have on an agency budget; and Resolution No. 23-142 WHEREAS, FMIT is offering to share the risk by offering property insurance deductible options of seven and a half percent (7.5%), a Sixty Thousand One Hundred Fifty -Eight Dollars ($60,158.00) savings from the standard five percent (5%) deductible, and a ten percent (10%) deductible option, a One Hundred Twelve Thousand Seven Hundred Thirty -One Dollars ($112,731.00) saving from the standard five percent (5%) deductible option; and WHEREAS, the City currently has Forty Million One Hundred Thousand Dollars ($40,100,000.00) of property insured. Staff has completed an analysis of the two additional deductible options. For the seven and a half percent (7.5%) option, the City would have to experience Two Million Four Hundred Ten Thousand Dollars ($2,410,000.00) of annual property losses before this option becomes unfavorable in comparison to the five percent (5%) case. In the case of a highly unlikely catastrophic loss of Ten Million Dollars ($10,000,000.00) million loss, the seven and a half percent (7.5%) option would be One Hundred Eighty -Nine Thousand Eight Hundred Forty - Two Dollars ($189,842.00) worse than the five percent (5%) option, which in a risk - benefit analysis is judged to be acceptable by the Interim City Manager; and WHEREAS, for the ten percent (10%) option, the breakeven loss is Two Million Two Hundred Fifty Thousand Dollars ($2,250,000.00) vs. the Two Million Four Hundred Ten Thousand Dollars ($2,410,000.00) for the seven and a half percent (7.5%) option. The ten percent (10%) option provides small benefits to the City if City annual losses were limited to less than two million dollars but greatly increase the City's exposure in a major loss scenario. This analysis is attached hereto as Composite Exhibit "A"; and WHEREAS, in regard to the budget, the quote for the five percent (5%) deductible option is One Hundred Thirteen Thousand Four Hundred Thirty -Seven Dollars ($113,437.00) greater than the budget with all lines of coverage better than or meeting budget expectations, with the exception of workers compensation; and WHEREAS, although workers compensation coverage has improved in comparison to fiscal 2022-2023, the improvement is less than the guidance originally provided by FMIT and this is being reviewed. The seven and a half percent (7.5%) deductible option (recommended) reduces the budget overage to Fifty -Three Thousand Two Hundred Seventy -Nine Dollars ($53,279.00). The ten percent (10%) deductible option (not recommended) reduces the overage to Seven Hundred Six Dollars ($706.00); and Resolution No. 23-142 WHEREAS, the City Commission finds that execution of a renewal insurance agreement with the Florida League of Cities, Incorporated and payment of the premium in installment payments is overall in the best interests of the residents of the City. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COMMISSION OF THE CITY OF OPA-LOCKA, FLORIDA, AS FOLLOWS: Section 1. Adoption of Representations. The foregoing "Whereas" clauses are hereby ratified and confirmed as being true and the same are hereby made a specific part of this Resolution. Section 2. Renewal of Insurance Agreement. The City Commission of the City of Opa-Locka, Florida hereby approves the execution of a Renewal Agreement between the City of Opa-Locka and the Florida League of Cities, Incorporated. Section 3. Authorization of the Interim City Manager and Proper City Officials. The Interim City Manager and designated City Officials are hereby authorized to execute any required documentation in order to implement the intent of this Resolution; the Interim City Manager is further authorized to pay the Florida Municipal Insurance Trust premium of Three Million, Seven Hundred Nineteen Thousand, Nine Hundred Twelve Dollars (3,719,912.00.00), including a 7.5% deductible for property losses. Section 4. Scrivener's Errors. Sections of this Resolution may be renumbered or re - lettered and corrections of typographical errors, which do not affect the intent of this Resolution may be authorized by the Interim City Manager, following review by the City Attorney, without need of public hearing, by filing a corrected copy of same with the City Clerk. Section 5. Effective Date. This Resolution shall take effect upon the adoption and is subject to the approval of the Governor or Governor's Designee. PASSED and ADOPTED this 27th day of Septembe�,2023. TTEST: a Flores, City Clerk John H. ylor, Mayor Resolution No. 23-142 APPROVED AS TO FORM AND LEGAL SUFFICIENCY: d• ,t CS ei Burnadette Norris -Weeks, P.A. City Attorney Moved by: Commissioner Kelley Seconded by: Commissioner Williams VOTE: 5-0 Commissioner Bass YES Commissioner Kelley YES Commissioner Williams YES Vice Mayor Ervin YES Mayor Taylor YES City of Opa-locka Agenda Cover Memo Department Director: Bob Anatlian Department Director Signature: 2— , L Manager:City Darvin E. Williams CM Signature: 1ZJ' L Commission Meeting Date: Sep 27, 2023 Item Type: (EnterX in box) Resolution Ordinance Other X Fiscal Impact: (F.rtterX in box) N/A Yes No Ordinance Reading: (Enter X in box) 15L Reading 2nd Reading X X Public Hearing: (Enter X in box) Yes No Yes No X X Funding Source: Account# : (Enter Fund & Dept) Ex: Advertising Requirement: (EnterXinbox) Advertised on TRIM Notice sent out by County Property Appraiser on August 24, 2023 Yes No X Contract/P.O. Required: (EnterXinbox) Yes No REP/RFQ/Bid#: X Strategic Plan Related (Enter X in box) Yes No Strategic Plan Priority Enhance Organizational Bus. & Economic Dev Public Safety Quality of Education Qual. Of Life & City Image Communication Area: 0 Strategic Plan Obj./Strategy: (list the specific objective/strategy this item will address) X • 0 • 0 0 Sponsor Name City Manager Department: City Manager Short Title: FY 24 Liability Insurance Staff Summary: Issue / Recommendation: The City needs to renew its liability insurance for FY 24. Staff recommends the City Commission renew the City's insurance coverage with the Florida Municipal Insurance Trust (FMIT) based on the FMIT FY 24 Renewal Quote with the 7.5% Property Deductible option. Current Activity: The City has received the FMIT FY 24 Renewal Quote. With a 5% deductible for property insurance, the total quote is $3,780,070. All lines of coverage are essentially equal to or better than FY 23 with the exception of property insurance, which is up nearly 200% due to major deterioration of the property insurance market in Florida, particularly for communities on or in proximity to the State's coasts. Historically, FMIT property insurance has been based on a deductible of 5% of the property loss. Recognizing the drastic impact the deterioration of the property insurance market can have on agency budgets, FMIT is offering to share the risk by offering property insurance deductible options of 7.5%, a $60,158 savings from the standard 5% deductible, and a 10% deductible option, a $112,731 saving from the standard 5% deductible option. The City currently has $40.1 million of property insured. Staff has completed an analysis of the two additional deductible options. For the 7.5% option, the City would have to experience $2.41 million of annual property losses before this option becomes unfavorable in comparison to the 5% case. In the case of a highly unlikely catastrophic loss of $10.0 million loss, the 7.5% option would be $189,842 worse than the 5% option, which in a risk -benefit analysis is judged to be acceptable. For the 10% option, the breakeven loss is $2.25 million vs. the $2.41 million for the 7.5% option. The 10% option provides small benefits to the City if City annual losses were limited to less than $2.0 million but greatly incirease the City exposure in a major loss scenario. This analysis is attached. In regard to the budget, the quote for the 5% deductible option is $113,437 greater than the budget with all lines of coverage better than or meeting budget expectations with the exception of workers compensation. Although workers compensation coverage has improved in comparison to FY 23, the improvement is less than the guidance originally provided by FMIT and this is being reviewed. The 7.5% deductible option (recommended) reduces the budget overage to $53,279. The 10% deductible option (not recommended) reduces the overage to $706. Financial Impact: With the recommended 7.5% deductible option, the cost of liability insurance will be $53,279 greater than budget. If approved, this will be addressed in FY 24 Budget Amendment #1 in November. Proposed Action: Staff recommends the City Commission approve the Florida Municipal Insurance Trust proposal of $3,719,912, including a 7.5% deductible for property losses. Attachment: 1. FMIT FY 24 Renewal Insurance Quote 2. Insurance Cost Options Summary 3. Analysis of Property Deductible Options Insurance Cost Summary General Liability Cyber Security Auto Liability Auto Phys Damage Property Workes Comp Total FY 23 1,768,516 2,391 75,029 49,562 250,685 1,299,928 3,446,111 Incr / (Decr) - 120 3,751 2,478 604,151 (389,978) 220,522 FY 24 Budget 1,768,516 2,511 78,780 52,040 854,836 909,950 3,666,633 Incr / (Decr) (50,739) 0 (5,186) (4,230) (103,715) 277,307 113,437 Quote - 5% Option 1,717,777 2,511 73,594 47,810 751,121 1,187,257 3,780,070 Incr / (Decr) - - - - (60,158) - (60,158) Quote - 7.5% Option 1,717,777 2,511 73,594 47,810 690,963 1,187,257 3,719,912 Incr / (Decr) - - - - (52,573) - (52,573) Quote - 10% Option 1,717,777 2,511 73,594 47,810 638,390 1,187,257 3,667,339 \\aladdin\Budget2\FMIT\Premiums \FY 24\23-09-10 - Rate Summary & Analysis - Quotes 9/10/2023 - 3:59 PM Deductible Options Analysis Favorable / Property (Unfavorable) Loss vs. 5% Deductible 7.5% 10% 1,000,000 35,158 62,731 2,000,000 10,158 12,731 2,254,620 3,793 0 2,406,320 0 (7,585) 3,000,000 (14,842) (37,269) 4,000,000 (39,842) (87,269) 5,000,000 (64,842) (137,269) 10,000,000 (189,842) (387,269) \\aladdin\Budget2\FMIT\Premiums\FY 24\23-09-10 - Rate Summary & Analysis - Options 9/10/2023 - 4:03 PM FMIT FLORIDA MUNICIPAL INSURANCE TRUST Protecting the Communities We Coll Home RENEWAL QUOTE FOR 2023-2024 City of Opa-Locka FMIT 0435 Coverage Deductible Limit Premium General/Professional Liability $25,000 $1,000,000 $1,717,777 Cyber Liability $25,000 $1,000,000 $2,511 Automobile Liability $25,000 $1,000,000 $73,594 Automobile Physical Damage Per Schedule $47,810 Property $2,500 $40,141,000 $751,121 Your FMIT property insurance is changing from a Specified Value coveage basis to a Blanket and Agreed Value coverage basis. Workers' Compensation $0 Experience Modification 1.30 10/1/23 TOTAL NET PREMIUM Total Payroll $10,708,432 $1,187,257 $3,780,070 Please Note: All descriptions of coverage provided herein are intended for illustration and general discussion purposes. Do not rely upon this communication for coverage. Refer to the FMIT Coverage Agreement(s) for applicable coverage terms, conditions, limits and obligations. The premiums quoted above are priced according to the coverage lines presented. Any change or deletion of coverages may result in re -pricing of remaining coverage lines. *Please see next page for options if applicable. DocuSign Envelope ID: Al EE7E04-FC4D-460C-90F7-D1789D33826F Property - Wind Coverage Option 1 Option 2 Option 3 FMIT FLORIDA MUNICIPAL INSURANCE TRUST Prorectrr>q the Communities VIM Can Home RENEWAL QUOTE FOR 2023-2024 City of Opa-Locka FMIT 0435 DEDUCTIBLE / LIMIT OPTIONS Annual Named Storm Deductible Premium 5% $751,121 7.5% $690,963 10% $638,390 Annual Limit Named Storm Deductible Premium Piers, Wharves, and Docks Boardwalks and Bridges Wind Coverage Option 1 . $0 5% or $10,000, whichever is $0 greater Option 2 $0 7.5% or $10,000, whichever is $0 greater. 10% or $10,000, whichever is Option 3 $0 greater. $0 Check Option Accepted Rejected O 0 X O 0 Check Option Accepted Rejected ' 5%, 7.5% or 10% (as selected above) of total insured value per location or a minimum of $10,000 whichever is greater each and every loss, each location. O 0 O 0 O 0 Please note: All descriptions of coverage provided herein are intended for illustration and general discussion purposes. Do not rely upon this communication for coverage. Refer to the FMIT Property Coverage Agreement for applicable coverage terms, conditions, limits, and obligations. Special Note: The 5% Named Storm Deductible option will be the default option unless FMIT is notified otherwise by completing and returning this form to your Account Executive. The City of Opa-Iocka elects to use the 7.5% or $10,000, whichever is arenter fnr the fiscal year October I, 2023 e—DocuSigned by: through September 30, 2024. Vawtiu Uhitio s '— C46C07C 1 E8DE492... Darvin E. Williams September 1, 2023 Interim City Manager