Report Prepared by: Roxanne Rodrigues, Risk Analyst
Title
SUBJECT: Approval of Property, Boiler and Machinery Insurance Renewal Through Alliant Property Insurance Program in the Amount of $551,105.84 for Program Year 2021/2022
REPORT IN BRIEF
Considers approving the renewal of the City’s policy through Alliant Property Insurance Programs (APIP) at 33.76% premium increase, amounting to $551,105.84 for program year 2021/2022.
RECOMMENDATION
City Council- Adopt a motion ratifying the renewal of the property and boiler and machinery insurance through the Alliant Property Insurance Programs (APIP), administered by Alliant Insurance Services for the period of July 1, 2021 through June 30, 2022; and authorizing the City Manager or designee to execute the necessary documents.
Body
ALTERNATIVES
1. Approve, as recommended by staff; or,
2. Refer to staff for further study; or,
3. Take no action.
AUTHORITY
Charter of the City of Merced, Article XI, Fiscal Administration.
CITY COUNCIL PRIORITIES
As provided for in the 2021-22 Adopted Budget.
DISCUSSION
The City of Merced joined the Public Entity Property Insurance Program (PEPIP), a group purchasing program, as authorized by the City Council in 1993. The PEPIP program changed its name to Alliant Property Insurance Programs (APIP) after having merged with two other large Alliant Insurance purchasing pools. APIP now insures approximately 10,000 members with a total insurance value of $500 billion. The advantage of being a member of a purchasing group is that we can capitalize on lower premium rates based on the volume and value (per hundred dollars) of insured property.
The property market has been in a hard cycle with underwriters giving increases based on the catastrophe losses worldwide and a record capacity and surplus in the marketplace. The City experienced an increase in account rate (per hundred dollars) of 35.61% in the amount of $551,105.84 (based on today’s total insured values of $314,370,137), the total account rate of $0.1753048 for program year 2021/2022. Last year the rate was $0.1292683. The City’s increase in rate per hundred dollars is approximately $0.18 for the program year 2021/2022 compared to last year program rate of $0.13 per hundred dollars. The total Annual Cost is up a net of 33.76%. The City experienced an increase of all risk deductible from $10,000 to $25,000 (APIP program as a whole deductible increased to $25,000).
Vehicle physical damage deductible change from $5,000 to $25,000, except $50,000 for police vehicles under $250,000, $100,000 for all vehicles with RCV of $250,000 to $750,000, $250,000 for all vehicles with RCV more than $750,000.
The City’s Boiler and Machinery has been increased from $2,500 to $10,000. The Pollution coverage has been included again this year and the cost is now $2,218 compared to program year 2020/2021 the cost was $1,938.
The annual premium for Cyber coverage is $5,905 compared to program year 2020/2021 the cost was $1,995.
These increases are primarily related to the negative impact the COVID-19 pandemic has had on insurance market conditions. As these increases were anticipated based on the evaluation of the previous year’s increases, funding is available in the FY 2021/22 budget as recommended by the City Manager. Coverage terms and conditions remain the same.
IMPACT ON CITY RESOURCES
Funding is available within the proposed Fiscal Year 2021-2022 Budget.
ATTACHMENTS
1. City of Merced APIP Proposal- Page 2 of the Executive Summary illustrates the variances for program year 2020/2021 and 2021/2022