Memorandum

City of Lawrence

City Manager’s Office

TO:	David L. Corliss – City Manager
FROM:	Cynthia Wagner – Assistant City Manager
CC:	Diane Stoddard – Assistant City Manager
Date:	June 12, 2013
RE:	July 1, 2013 Insurance Policy Renewals: Property and Casualty Insurance Fire and Medical Auto/Professional Liability Insurance

The City’s Property and Casualty and Fire and Medical Auto and Professional Liability coverage will expire at 12:01 a.m. on July 1, 2013.  The City worked with our insurance broker Arthur J. Gallagher to renew our current policies with the results outlined in this memo. 

The property insurance market in the last few years has been hit by catastrophic losses including the Japan earthquake and Superstorm Sandy.  Recent severe tornados in the Midwest have added to these losses.  Factors that are affecting the City of Lawrence include exposure to wind/hail and a February 2012 fire loss at 941 E. 11^th Street totaling $382,387.

The property and casualty policy covers the city’s buildings, business personal property and equipment, and business interruption.  The city has been insured with the Hartford for three years.  We have experienced excellent customer service in relation to fire damage loss in 2012.  The Hartford offered the best renewal terms.  The policy blanket limit is $284,852,370.  Last year, the deductible on this policy increased from $25,000 to $50,000.  The $50,000 deductible remains, with the exception of wind/hail damage, which will change from $50,000 to 1% of loss on buildings of more than $5 million value.  The cost of coverage is $125,920.  This is an increase of only $1,278 over the 2012-2013 policy.

A package program with the Emergency Services Insurance Program covers equipment and operations of the Lawrence-Douglas County Fire & Medical Department for general and professional liability with limits of $1million per occurrence, $10 million aggregate and automobile liability limits of $500,000.  Coverage is also provided for damage to the department vehicles with a stated amount value and fire department portable equipment.  Annual renewal premium is $56,784, compared to $56,064 for the 2012-2013 policy year.

The brokerage fee for these services to Arthur J. Gallagher is $16,510, and has remained static for the past five years.

Staff Recommendation/Request

Staff recommends renewing property and casualty coverage with The Hartford for the insurance period of 7/1/13 to 7/1/14 for $125,920.  Staff further recommends binding coverage for Fire and Medical Auto/Portable Equipment/General, Management, and Professional Liability coverage with ESIP for the insurance period of 7/1/13 to 7/1/14 at a premium of $56,784.