TRANSMITTAL LETTER FOR BOARD MEETING OF NOVEMBER 17, 2022
COMMITTEE ON PROCUREMENT
Mr. Brian 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 $1,397,239.00, Account 101-25000-612290, Requisition 1590821
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. As allowed by contract, the District elected to extend the term of the Broker service agreement for an additional two years to expire on December 31, 2022. In this capacity, Mesirow has responsibility for securing quotes from the insurance market for the excess casualty insurance policies. The current excess casualty insurance policies will expire on December 11, 2022.
On November 1, 2022, the District received certain bid quotations and market responses which Mesirow had solicited pursuant to the detailed specifications in the underwriting submission for a one-year period to be effective December 11, 2022 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. A liability limit of $25,000,000.00 subject to a self-insured retention (SIR) of $7,500,000.00 was requested.
For the 2022 excess casualty program, fifty-three insurance carriers were approached for quotes. Four carriers provided quotes. One carrier provided an indication. Forty-eight carriers declined to offer a quote citing various reasons, including the class of business/does not meet underwriting guidelines, loss experience and nature of operations.
The quotes have been evaluated by Mesirow, the Risk Manager, the Senior Risk Analyst, and the Director of Human Resources. Based on the collective review, it is recommended that the District purchase a program with total Liability Limits of $25,000,000.00 over an SIR of $7,500,000.00 at a total program cost of $1,397,239.00 structured as follows:
First Layer: AIG/Lexington Insurance Company: Limit of $5,000,000.00 with an SIR of $7,500,000.00 at a cost of $394,916.00
Second Layer: Allied World Assurance Company: Limit of $10,000,000.00 excess of the $5,000,000.00 first layer at a cost of $496,798.00
Third Layer: Arch Insurance Company: Limit of $5,000,000.00 excess of $15,000,000.00 at a cost of $275,525.00
Fourth Layer: Great American Insurance Company: Limit of $5,000,000.00 excess of $20,000,000.00 at a cost of $230,000.00
For the recommended program, the overall premium is $1,397,239.00, which is an increase of $77,133.00 (5.84%) over the expiring program.
The casualty insurance market continues to be in flux due to large jury verdicts, class action lawsuits, litigation funding and tort reform rollbacks, which have had a significant effect on claims-related losses. This has caused many insurance carriers to reduce limits and increase pricing, particularly in the excess layers of cover. Adverse judgments against public entities over the past two years have resulted in less competition among insurance carriers for new business, as well as a decreasing interest in underwriting public sector risks.
All insurance carriers being recommended for this placement are licensed/allowed to do business in Illinois and have A.M. Best Company ratings of A (Excellent), XV ($2.0 Billion or greater) or better.
The Diversity Section has reviewed this contract and determined that Mesirow has met the requirements of Appendix A. The Minority-owned Business Enterprises (MBE), Women-owned Business Enterprises (WBE) and/or Small Business Enterprises (SBE) goals are: 10% MBE, 5% WBE and 10% 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 $1,397,239.00. This is the total amount for the excess casualty program placements.
Funds for the 2022 expenditure in the amount of $1,397,239.00 are available in Account 101-25000-612290.
Requested, Beverly K. Sanders, Director of Human Resources, BKS:BLW
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 17, 2022
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