TRANSMITTAL LETTER FOR BOARD MEETING OF NOVEMBER 7, 2024
COMMITTEE ON PROCUREMENT
Mr. Brian A. Perkovich, Executive Director
Title
Issue purchase order to Willis Towers Watson Midwest, Inc. to Furnish Property Insurance Coverage for the District in an amount not to exceed $3,071,000.00, Account 101-25000-612290, Requisition 1626736
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 Willis Towers Watson Midwest, Inc. (Willis) to serve as the District's broker-of-record for property insurance and related services for a three-year period. In this capacity, Willis has responsibility for securing quotes from the insurance market for property insurance for the District.
On October 11, 2024, the District received a quote and market responses which Willis had solicited pursuant to the detailed specifications for property insurance coverage, seeking a minimum of existing terms and conditions, and based on updated/indexed property values for property insurance, for a one-year period to be effective December 6, 2024, to provide insurance coverage for District property. District property includes buildings, structures, and equipment at water reclamation plants, pumping stations, the Lockport Powerhouse, and offices.
For the 2024 property insurance program, four insurance carriers were approached. The incumbent provided a quote, and three carriers declined to quote primarily due to inability to provide competitive pricing.
The quote provided by the incumbent for the District’s property insurance for 2024 is:
AIG/American Home Assurance Company quoted a Limit of $750,000,000.00, with a Deductible of $15,000,000.00 and Sublimits of $100,000,000.00 for Earth Movement and $100,000,000.00 for Flood at a cost of $3,071,000.00. This quote offers limits of coverage that are the same as expiring.
The 2024 property insurance market is more stable and well capitalized than the historically challenging market of last year. This moderation is due to increased capacity and competition among insurers, driven by their strong underwriting and financial results, as well as renewed stability in the reinsurance market.
The quotes were evaluated by Willis, the Risk Manager, and the Senior Risk Analyst. It is recommended that the District purchase property insurance coverage from AIG/American Home Assurance Company, through Willis, with a policy limit of $750,000,000.00 and a deductible of $15,000,000.00 at a cost of $3,071,000.00. The AIG quote of $3,071,000.00 is $56,782.00 (1.88%) more than the expiring program. This increase is due to an increase of approximately 1.87% in property values insured, primarily from property value indexing.
The Diversity Section has reviewed this contract for Willis Towers Watson Midwest, Inc. (Willis), which serves as the District’s intermediary as required in the State of Illinois for the purchase of property insurance, and determined that it 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.
Funds are available in Account 101-25000-612290.
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 7, 2024
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