TRANSMITTAL LETTER FOR BOARD MEETING OF NOVEMBER 16, 2023
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 $1,370,689.00, Account 101-25000-612290, Requisition 1609446
Body
Dear Sir:
At the Board Meeting of December 1, 2022, in accordance with Contract 22-RFP-12, 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 the excess casualty insurance policies. The current excess casualty insurance policies will expire on December 11, 2023.
On October 27, 2023, 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, 2023 to provide a tower of excess casualty insurance, including general liability, public officials liability, employment practices liability, law enforcement/police professional 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 2023 excess casualty program, twenty-eight insurance carriers were approached for quotes. Six carriers provided quotes. Eighteen carriers declined to offer a quote citing various reasons, including the public entity class of business, particularly in Cook County, and nature of operations. Four carriers did not respond to requests for quote.
The quotes have been evaluated by Mesirow, the Senior Risk Analyst, the Risk Manager, and the Director of Human Resources. Based on the collective review, it is recommended that the District purchase a program with reduced total Liability Limits of $20,000,000.00 over a SIR of $7,500,000.00 at a total program cost of $1,370,689.00 structured as follows:
First Layer: AIG/Lexington Insurance Company: Limit of $5,000,000.00 with a SIR of $7,500,000.00 at a cost of $488,709.00
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 $596,830.00
Third Layer: Upland Insurance Company: Limit of $5,000,000.00 excess of $15,000,000.00 at a cost of $285,150.00
For the recommended program, the overall premium is $1,370,689.00, which is an increase of $203,450.00 (17.43%) over the comparable limits/layers of the expiring program. It is a decrease of $26,550.00 (1.90%) over total premium paid (total cost) for the prior year’s program. The recommendation to reduce the total liability limits of the casualty insurance program is solely to control the cost of the District’s insurance program. While the policy limits are lower than provided by the expiring program, the limits are adequate and should be considered acceptable.
The casualty insurance market continues to be challenged by large jury verdicts, class action lawsuits, litigation funding and tort reform rollbacks, which continue to have a significant effect on claims-related losses. Social inflation and adverse judgments against public entities have resulted in less competition among insurance carriers for new public entity business, as well as a decreasing interest in underwriting public sector risks altogether.
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), VIII ($100 Million to $250 Million) 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: 20% MBE, 10% 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 $1,370,689.00. This is the total amount for the excess casualty program placements.
Funds for the 2023 expenditure in the amount of $1,370,689.00 will be made available in Account 101-25000-612290 with a funds transfer approved by the Executive Director.
Requested, Thaddeus J. Kosowski, Director of Human Resources, TJK:BLW
Recommended, Darlene A. LoCascio, Director of Procurement and Materials Management
Respectfully Submitted, Marcelino Garcia, 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 16, 2023
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