CITY COUNCIL AGENDA ITEM
Memo Date: August 14, 2024
Agenda Date: September 10, 2024
Prepared By: Tammy Gemmati, Administrative Services Director
Through: Stockton Whitten, City Manager
Requested Action:
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Approve a one-year policy renewal for the General Insurance Program with Florida League of Cities, Inc., for the period October 1, 2024 through September 30, 2025 with an estimated premium of $2,175,789 pending approval of the FY2025 budget. Approve a resolution to waive competitive bidding. Authorize the City Manager to execute the agreement, if necessary.End
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BACKGROUND:
The City has been insured with Florida League of Cities’ Florida Municipal Insurance Trust since October 1, 2001. The current policy covering general liability, automobile, and property coverage expires September 30, 2024. The Florida League of Cities has submitted a one-year renewal proposal, making the total renewal premium $2,175,690. This proposal represents an overall increase of $511,504 (31%) based on the FY2024 premium of $1,664,285. There has been a significant increase in the insured property asset values which is the largest impact to the renewal.
Under the Finance Operations Manual, Section 12.2 Purchasing Procedures, the City Council may determine exceptions to competitive sealed bidding, under particular circumstances, if such exception is deemed in the best interests of the City and authorized by law. City Staff recommends to waive competitive bidding for this purchase so the City can remain a member of the FMIT for an additional year. The additional services and offers of coverage and services received from FMIT are not offered by other carriers as more fully explained below, premiums are competitive, and past claims service with the FMIT has been excellent. In sum, City staff does not believe it is in the City’s best interest to leave FMIT.
At the regular City Council Meeting on September 10, 2014, as part of the General Insurance Program renewal for Fiscal Year 2015, the staff report outlined key differences of the FMIT policy compared to a competitor. Unlike many other insurance coverage, defense/legal costs are not deducted from coverage limits or charged to the member as part of the deductible. As a tool to manage liability and exposure to the City, this is a vital covered item and protected the City from extensive legal expenses over the years. The City has worked with FMIT through our City Attorney’s office to defend several important and costly trials where the City has prevailed at trial. In addition, the FMIT policy also provides additional coverage amounts for public officials’ liability and property rights claims including extra-contractual coverage for EEOC claims and public official ethics defense. Additionally, FMIT members automatically participate in the SynergyNDS Program which is a proprietary program that provides the City with crucial disaster preparedness, response and recovery services for crisis planning, disaster response and loss recovery. For example, in the event of a natural disaster in which the City suffers extensive property damage, this turnkey recovery program will eliminate the City’s upfront out-of-pocket expense associated with an insured property loss, expedite the overall claim and recovery process while allowing members the flexibility to have it done in coordination with the City’s requirements, and provide real time reporting and experienced project management at no additional cost to the City.
A summary of the City’s FY2025 renewal is:
General Liability 2024 / 2025 Premium - $599,283
The General Liability (GL) premium is based on the loss data from the prior three years and the upcoming fiscal year’s projected payroll. Using both of these factors, the proposal represents a $49,302 or approximate 8% increase based on the FY2024 premium of $549,981.
Auto Liability & Physical Damage 2024 / 2025 Premium - $303,351
This proposal represents a $27,573 or 9% increase based on the FY2024 premium of $275,778. The City continues to monitor vehicle accidents and attempts to limit the liability for our City vehicles. This premium also fluctuates based on vehicle replacements.
Property Coverage 2024 / 2025 Premium - $1,273,155
This coverage includes Real & Personal Property, Windstorm/Hail, Equipment and Inland Marine. This proposal represents a $434,629 or 52% increase based on the FY2024 premium of $838,526. This is a significant increase due to the increase of property asset values due to the City adopting the values of a resent asset survey that was conducted.
An asset survey was conducted by Synergy this year to catalog the City’s property in a database. This hasn’t been completed since 2017; therefore, the City’s property values were under valued significantly. The total insured value increased with this renewal changed the covered insured assets from approximately $157,000,000 to $237,000,000. This major increase is not unique to Cocoa and all property owners and municipalities are suffering from the substantial premium increases.
Alternative property renewal scenarios were explored by Gehring Group, the City’s insurance broker, to help reduce the overall property renewal. Doing so though would increase the City’s risk in the event of a Named Storm (hurricane) event. Staff recommends the accepting the renewal with no change in benefits. The potential premium savings with increasing the hurricane deductible is not recommended due to it not having a large impact on the property premium.
Overall, the FMIT policy is increasing by 31%. The insurance expenses are split between multiple account lines and those are broken down below in the budgetary impact section. The City has budgeted this item in the proposed Fiscal Year 2025 budget.
STRATEGIC PLAN CONNECTION:
Organizational Effectiveness
BUDGETARY IMPACT:
Budgeted (in Proposed FY25) Yes
If not budgeted, is amendment/transfer attached? N/A
There are some smaller ancillary insurance policies within the City Manager’s spending authority that do not come to City Council for approval but are in the proposed budget. The total budgetary impact for this insurance renewal is $2,175,789 and is split by Fund/Account below.
Account Name Insurance
Amount Requested General Liability
Account Number $371,555 001-1600-513.45-00
$221,735 421-4010-536.45-00
$5,993 423-3570-538.45-00
Account Name Insurance
Amount Requested Auto Liability/Physical Damage
Account Number $136,508 001-1600-513.45-00
$157,743 421-4010-536.45-00
$9,101 423-3570-538.45-00
Account Name Property Insurance
Amount Requested
Account Number $369,215 001-1600-513.45-00
$903,940 421-4010-536.45-00
PREVIOUS ACTION:
The City Council at its September 26, 2023 meeting, approved a one-year renewal policy with the Florida League of Cities, Inc., for the period October 1, 2023 through September 30, 2024, pending approval of the FY2024 budget.
RECOMMENDED MOTION:
Recommendation
Approve a one-year policy renewal for the General Insurance Program with Florida League of Cities, Inc., for the period October 1, 2024 through September 30, 2025 with an estimated premium of $2,175,789 pending approval of the FY2025 budget. Approve a resolution to waive competitive bidding. Authorize the City Manager to Execute the Agreement, if necessary.