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 Marine Liability and Hull Insurance for District marine vessels in an amount not to exceed $33,315.00, Account 101-25000-612290, Requisition 1590712
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 the handling of marine 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. As allowed by Contract, the District elected to extend the term for an additional two years to expire on December 31, 2022. The current marine insurance coverage will expire on December 11, 2022.
On October 28, 2022, the District received a quote and market responses which Mesirow solicited pursuant to the detailed specifications for marine insurance for a one-year period from December 11, 2022 to December 11, 2023 to provide insurance coverage for liability arising out of the operation of the District’s thirteen marine vessels used for pollution control, monitoring of water quality along Lake Michigan and the District’s waterways, as well as debris clearance. An annual aggregate liability limit of $10,000,000.00 and hull coverage for physical damage to the vessels on an agreed amount basis of original cost, subject to a deductible of $10,000.00 per claim, was requested.
For the 2022 placement, eighteen insurance carriers were approached. One carrier provided a quote at the limits and retention levels requested. This quote includes a quota share arrangement with another carrier for a portion of the Excess Limits to be provided. Eight carriers declined to offer quotes for a variety of reasons, with several indicating an inability to provide standalone marine coverage or that the risk is outside of current underwriting guidelines. Eight carriers did not respond to requests for quote.
The quote was 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 $10,000,000.00 and hull coverage for physical damage to the vessels on an agreed amount basis per original cost, subject to a deductible of $10,000.00, as quoted by Mitsui Sumitomo Insurance USA, Inc. with participation by Markel American Insurance Company. The program structure for the 2022 Marine Insurance would be as follows:
Primary Layer: Mitsui Sumitomo Insurance USA, Inc., Liability Limit of $1,000,000.00 and hull coverage for physical damage to the vessels on an agreed amount basis per original cost, subject to a deductible of $10,000.00, at a cost of $14,940.00
First Excess Layer: Total Liability Limit of $4,000,000.00 excess of the $1,000,000.00 Primary Layer at a total cost of $10,500.00 comprised of Mitsui Sumitomo Insurance USA, Inc. (lead carrier) with a Liability Limit of $2,000,000.00, 50% quota share of $4,000,000.00 excess of $1,000,000.00 and Markel American Insurance Company with a Liability Limit of $2,000,000.00, 50% quota share of $4,000,000.00 excess of $1,000,000.00
Second Excess Layer: Mitsui Sumitomo Insurance USA, Inc., Liability Limit of $5,000,000.00 excess of $5,000,000.00, at a cost of $7,875.00
For the recommended program, the overall premium is $33,315.00 which is an increase of $1,481.00 (4.65%) in premium over the prior year.
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 Insurance Services, Inc. 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 in an amount not to exceed $33,315.00.
Funds for the 2022 expenditure in the amount of $33,315.00 are available in Account 101-25000-612290. Funds being requested for 2023 are contingent on the Board of Commissioners’ approval of the District’s budget for that year.
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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