TRANSMITTAL LETTER FOR BOARD MEETING OF NOVEMBER 19, 2015
COMMITTEE ON PROCUREMENT
Mr. David St. Pierre, Executive Director
Title
Issue purchase order to Mesirow Insurance Services, Inc. for Furnishing Excess Workers’ Compensation Coverage and Excess Casualty Insurance Coverage for the District in an amount not to exceed $1,072,550.00, Account 101-25000-612290, Requisition 1409589
Body
Dear Sir:
At the Board Meeting of December 6, 2012, in accordance with Contract 12-RFP-22, the Board of Commissioners awarded a purchase order to Mesirow Insurance Services, Inc. (Mesirow) to serve as the District's broker-of-record for casualty lines of insurance and related services for a three-year period. In this capacity, Mesirow now has responsibility for securing quotes from the insurance market for specified insurance policies.
On November 3, 2015, the District received certain bid quotations which Mesirow had solicited pursuant to the detailed specifications in the Excess Casualty Underwriting Submission for casualty insurance for a one-year period to be effective December 11, 2015 to provide: 1) excess workers’ compensation insurance, and 2) a tower of excess casualty insurance, including general liability, public officials liability, employment practices liability, law enforcement/police professional liability, and excess liability.
Excess workers’ compensation insurance was requested with a Specific Excess Limit of Statutory and with an Employer’s Liability Limit of $1,000,000.00 with a self-insured retention (SIR) of $2,000,000.00. For excess casualty insurance, coverage with a layered insurance policy structure was requested with minimum excess casualty program limits of $50,000,000.00 over an SIR of $1,000,000.00, with the exception of an SIR of $5,000,000.00 for class action suits for flood/sewer back-up.
For the 2015 excess workers’ compensation placement, seven insurance companies were approached for quotations. One company (the incumbent) provided a renewal quotation at the expiring rate and another company provided a premium indication at more than 50% higher than the expiring premium. The quotes were provided with a Specific Excess Limit of Statutory and with an Employer’s Liability Limit of $1,000,000.00 and an SIR of $2,000,000.00.
It was determined that optimal program design, coverage and pricing for excess workers’ compensation coverage was offered by Safety National Casualty Corporation with a Specific Excess Limit of Statutory (unlimited except where limited by State or Federal law) and with an Employer’s Liability Limit of $1,000,000.00 over an SIR of $2,000,000.00 at a cost of $288,422.00. This renewal placement was quoted at the expiring rate. The premium for this policy is subject to audit, and will be adjusted to reflect a premium based on actual payroll after the end of the policy term.
For the 2015 excess casualty program, thirty-one insurance companies were approached for quotations. With the exception of the second layer of coverage ($10,000,000.00 excess of the $10,000,000.00 first layer) quotations were only received from the incumbent insurance companies for each layer.
Pricing for this coverage is based on payroll, which has increased year over year. These premiums are not subject to audit so the premiums will not be adjusted at the end of the term.
For the 2015 excess casualty insurance, we recommend a program with total limits of $50,000,000.00 over an SIR of $1,000,000.00 with an SIR of $5,000,000.00 for class action suits for flood/sewer back-up at a total program cost of $784,128.00, which incorporates a 4.0% overall rate decrease plus an increase of $369 in the cost of the Surplus Lines Stamping Fee. Coverage will be provided by the following insurance companies:
AIG/Lexington Insurance Company: Limit of $10,000,000.00 with an SIR of $1,000,000.00 except $5,000,000.00 for class action suits for flood/sewer back-up at a cost of $382,249.00.
Starr Indemnity & Liability Company: Limit of $10,000,000.00 excess of the $10,000,000.00 first layer at a cost of $151,879.00.
Allied World National Assurance Company: Limit of $10,000,000.00 excess of $20,000,000.00 at a cost of $100,000.00.
Great American Assurance Company: Limit of $10,000,000.00, 50% quota share of $20,000,000.00 excess of $30,000,000.00 at a cost of $75,000.00
National Casualty Company: Limit of $10,000,000.00, 50% quota share of $20,000,000.00 excess of $30,000,000.00 at a cost of $75,000.00.
This is the total amount for both the workers’ compensation placement and the excess casualty program placements. The quotations were evaluated by Mesirow, the District’s Risk Manager, the Director of Human Resources, and a representative from the Procurement and Materials Management Department.
Carriers who declined to offer a quotation cited various reasons, including the lack of competitiveness of their quotations in the prior year, the size of the District, and the class of business.
All insurance carriers being recommended for this placement are licensed to do business in Illinois and meet the District’s A.M. Best Company insurance ratings requirements of A- VII or better.
In view of the foregoing, it is recommended that the Director of Procurement and Materials Management be authorized to issue a purchase order to Mesirow Insurance Services, Inc. in an amount not to exceed $1,072,550.00.
Funds for the 2015 expenditure in the amount of $1,072,550.00 are available in Account 101-25000-612290.
Requested, Denice E. Korcal, Director of Human Resources
Recommended, Darlene A. LoCascio, Director of Procurement and Materials Management
Respectfully Submitted, Barbara J. McGowan, Chairman Committee on Procurement
Disposition of this agenda item will be documented in the official Regular Board Meeting Minutes of the Board of Commissioners for Novembe