TRANSMITTAL LETTER FOR BOARD MEETING OF NOVEMBER 21, 2019
COMMITTEE ON PROCUREMENT
Mr. Brian A. Perkovich, Executive Director
Title
Issue purchase order to Mesirow Insurance Services, Inc. for Furnishing Excess Casualty Insurance Coverage for the District in an amount not to exceed $1,107,659.00, Account 101-25000-612290, Requisition 1526314 (As Revised)
Body
Dear Sir:
At the Board Meeting of December 21, 2017, in accordance with Contract 17-RFP-32, 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 has responsibility for securing quotes from the insurance market for specified insurance policies. The current excess casualty insurance policies will expire on December 10, 2019.
On November 6, 2019, 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, 2019 to provide a tower of excess casualty insurance, including general liability, public officials liability, employment practices liability, law enforcement/police professional liability, employers liability, automobile liability, and excess liability for marine.
For the 2019 excess casualty program, 30 insurance companies were approached for quotations. Pricing for this coverage is primarily based on payroll, which has increased year-over-year. Also impacting carrier interest and pricing is the District’s loss history, which includes three open claims that are anticipated to be in excess of the self-insured retention (SIR) as well as the number of open, large class action law suits for flood/sewer backup.
For the 2019 excess casualty insurance, we recommend a program with total limits of $50,000,000.00 over an SIR of $3,000,000.00, with the exception of an SIR of $5,000,000.00 for class action suits, for flood/sewer back-up at a total program cost of $1,107,659.00. Coverage will be provided by the following insurance companies:
First Layer: AIG/Lexington Insurance Company: Limit of $10,000,000.00 with an SIR of $3,000,000.00 except $5,000,000.00 for class action suits for flood/sewer back-up at a cost of $468,655.00.
Second Layer: Allied World National Assurance Company: Limit of $10,000,000.00 excess of the $10,000,000.00 first layer at a cost of $252,904.00.
Third Layer: Arch Insurance Company: Limit of $10,000,000.00 excess of $20,000,000.00 at a cost of $148,500.00.
Fourth Layer: 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 $118,800.00.
Fourth Layer: Berkley National Insurance 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 $118,800.00.
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 inability to be competitive with program pricing, the class of business, the inability to provide required coverages, and claims experience.
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.
The Affirmative Action goals for Contract 17-RFP-32 are 10% Minority Business Enterprises (MBE), 5% Women Business Enterprises (WBE) and 10% Small Business Enterprises (SBE).
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 $1,107,659.00.
Funds for the 2019 expenditure in the amount of $1,107,659.00 are available in Account 101-25000-612290.
Requested, Beverly K. Sanders, Director of Human Resources, BKS:RAJ
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 November 21, 2019
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