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Signed Contract_Fiedman Insurance Property Insurance ProposalTHE CITY OF Dubuque --~., DUB E A°~~'~'~~~ t - Masterpiece on the Mississippi 2007 TO: The Honorable Mayor and City Council Members FROM: Michael C. Van Milligen, City Manager SUBJECT: Property Insurance Renewal FY'10 DATE: June 30, 2009 The City has taken out property insurance for FY2010 after Friedman Insurance Company solicited proposals on behalf of the City. The City chose Travelers Insurance for property with a savings of $100,000 compared to the Fiscal Year 2010 budget. Cincinnati Insurance was chosen for the boiler insurance. Michael C. Van Milligen MCVM:Iw Attachment cc: Barry Lindahl, City Attorney Cindy Steinhauser, Assistant City Manager Ken Tekippe, Finance Director Jennifer Larson, Budget Director ' ~ THE CITY OF , DAB E Masterpiece on the Mississippi ~~~~~ V M Dubuque All-AmedcaGity f 2007 TO: Michael Van Milligen, City Manager FROM: Ken TeKippe, Finance Director (~- C-~~~° SUBJECT: Property Insurance Renewal FY'10 DATE: June 22, 2009 INTRODUCTION Scott DeSousa, Friedman Insurance Company agent, provided FY'10 property insurance proposals last Thursday. The good news is that there is a soft market for government property insurance, coupled with the limited City claims in recent years, resulting in proposals that are very financially beneficial to the City of Dubuque. DISCUSSION ' Proposals were received from Cincinnati Insurance and Travelers Insurance. Cincinnati Insurance has provided property insurance to the City of Dubuque since 2000. Travelers Insurance bought St. Paul Insurance approximately three years ago. Both Travelers and Cincinnati are A+ top twenty-five insurance carriers. The companies would not offer amulti-year quote. The proposals have the same deductible for property insurance ($25,000), Inland Marine ($500) and boiler and machinery ($1,000). It is recommended to continue with Cincinnati Insurance for boiler and machinery coverage though Travelers Insurance premiums are $3,000 less. The reason is Travelers Insurance deducts depreciation for equipment over 25 years old if a claim and Cincinnati Insurance provides replacement coverage. Since many City boilers and machinery are over 25 years old, our agent recommends continuing with Cincinnati Insurance. Property values were increased three percent from FY' 09 value with property insured at ninety percent of the agreed upon value, earthquake coverage was increased to $25,000,000 a couple years ago. Information on the renewal is provided. The premiums for Travelers are approximately $80,000 less than Cincinnati Insurance and Cincinnati offered rates $30,000 lower than FY'09 rates. The FY'10 budget estimated a five percent increase. Accepting Travelers Insurance as our property carrier will result in approximately $100,000 in savings to the City's FY'10 property insurance budget. RECOMMENDATION Your approval to utilize Travelers Insurance for City property insurance is requested. I would like to notify Scott within the next couple days since our new fiscal year begins on July 1. If you have any questions on this request, please feel free to contact me at 4133. KT/jg Insurance Proposal Prepared For: City of Dubuque PRESENTED BY: Scott DeSonsa CIC FRIEDMAN INSURANCE, INC. P.O. BOX 759 880 LOCUST DUBUQUE, IA. 52004-0759 PHONE: (563) 556-0272 FAX: (563) 556-4425 June 18, 2009 E-MAIL: desousas(a%friedman-group.com C C~1' Frs~En~uv CROUP~._ June 18, 2009 Mr. Ken TeKippe, Director of Finance City of Dubuque City Hall Dubuque, IA 52001 RE: Insurance Evaluation -Cincinnati Insurance/Travelers Insurance Dear Ken: We sincerely appreciate the opportunity to evaluate the insurance programs offered by Cincinnati Insurance of Cincinnati, Ohio and the Travelers Insurance Company of San Antonio, Texas. C` Our evaluation is meant to provide an overview of both programs, and highlight some of the differences between them. We have relied on both companies to provide us with the information we requested, including, but not limited to, policy forms. In addition, we included other information regarding the insurance companies we felt could enter into your decision, such as financial rating, experience in insuring cities and claims philosophy. Our goal has been to be completely objective, and fairly portray and evaluate both insurance companies and their programs. Both companies received a copy of this evaluation prior to its final draft, minus premiums and items pertinent to the competing company. Thank you for the confidence you have placed in us to evaluate these programs, and to continue as the insurance agent for the City of Dubuque. We hope you find our evaluation is acceptable and will help you select the insurance company that best serves the needs of the City. If you have any questions or would like additional information, please let me know. Si a yours, tt DeSousa, CIC Vice President, Sales & Marketing The Friedman Group Lmv • Friedman Insurance, Inc. Friedman Financial Services, Inc. 880 Locust Street, Suite 200, P.O. Box 759, Dubuque, IA 52004-0759 Phone: (563) 556-0272 Fax: (563) 556-4425 e-mail: infoC~friedman-group.com i¢Truzted Choice ~ •%r~.~..~ r w. • FRIEDMAN INSURANCE, INC 880 LOCUST STREET P O BOX 759 DUBUQUE, IA 52004-0759 Phone:563-556-0272 Fax:563-556-4425 SERVICE TEAM 1. ACCOUNT EXECUTIVES Primary Account Executive ............ Scott A. DeSousa, CIC Backup ........................... Terry J. Friedman, CPCU Robert J. Miller, CIC Mark Phalen Patrick Donovan • 2. CUSTOMER SERVICE STAFF Primary Service Contact ............ . Backup Service Contacts ........... . Stephen Schlueter, CPCU Jena Wilwert, CISR Joni Talsma, CISR Paula Fitzgerald, CISR All Customer Service Agents are licensed agents and are responsible for counseling and processing miscellaneous policy changes. 3. CLAIMS SERVICE STAFF Commercial Claims Manager ......... Marly Schilling, CISR As a licensed agent, the responsibilities of the Claims Department includes complete claims processing, gathering claim information and submitting it promptly to the appropriate insurance companies, reviewing claim status, assist clients in completing claim reports when necessary, issuing claim drafts when possible and following the claim through until our client is satisfied. • • Cincinnati Financial Corporation The Cincinnati Insurance Companies Who We Are Cincinnati Financial, formed in 1968, stands amoung the nation's top 25 property casualty insurer groups, based on net written premiums. It operates through The Cincinnati Insurance Company, which itself has four insurance subsidiaries, and through two financial services subsidiaries. How We Build Value Our core strength and most important competitive advantage is our commitment to the independent agency system. Our mission places independent agents at the center of our identity, recognizing that locally based agents have the relationships that lead to satisfied, • loyal policyholders and profitable business. This approach has produced above average profitability and growth of shareholder dividends, benefiting from our low expense field structure. Empowered field representatives work out of their homes in the same communities as the agents and policyholders they serve. The company's five-year combined loss and expense ratio through 2007 was 91.4 percent, outperforming the estimated industry average of 98.1 percent. The Cincinnati Insurance Companies continuously strengthen service by offering agents and policyholders a stronger local presence, unparalleled claim service, work-saving technology initiatives and competitive products, rates and compensation. • Cincinnati Financial Corporation - A.M. Best Page 1 of 1 The Cincinnati Insurance Companies • Print ~ Close A.M. Best This independent provider of insurance ratings since 1899 ranks Cincinnati's standard market property casualty group in approximately the top 11 percent of property casualty insurer groups by awarding its A+ rating. Best's outlook on the ratings of all of our companies is stable. Click the links below to view the most recent rating commentary issued by A.M. Best. Standard Market Property Casualty Insurance Group Rating (5/13/2009) Excess and Surplus Insurance Subsidiary Rating (5/13/2009) Life Insurance Subsidiary Rating (5/1312009) The Best's Rating Reports reproduced on this site appear under license from A.M. Best and do not constitute, either expressly or implied, an endorsement of The Cincinnati Insurance Companies' products or services. A.M. Best is not responsible for transcription errors made in presenting Best's Rating Reports. Best's Rating Reports are copyright ©A.M. Best Company and may not be reproduced or distributed without the express written permission of A.M. Best Company. Visitors to this Web site are authorized to print a single copy of the • Best's Rating Reports displayed here for their own personal use. Any other printing, copying or distribution is strictly prohibited. Best's Ratings are under continuous review and subject to change and/or affirmation. To confirm the current rating, please visit the A.M. Best Web site, www.ambest.com. Home I Individuals & Families ~ Businesses & Organizations ~ Investors I Career Seekers ~ Indeue;~ sent Agents Terms and Conditions Privacy Policies Identity Protection, Phishing and Fraud For policy information or service, please contact your local independent ayent Cincinnati Financial Corporation and subsidiaries are located at 6200 S. Gilmore Road, Fairfield, OH 45014-5141 Please send mail to P.O. Box 145496, Cincinnati, OH 45250-5496 cfc_corporate@cinfin.com Telephone 513-870-2000 Copyright ©2009 Cincinnati Financial Corporation L' http://www.cinfin.com/Individuals_N_Families/Ratings/a_m_best.aspx?PrintVersion= l 6/ 15/2009 Ratings 1 Cincinnati Financial Corporation Page 1 of 2 t ; Cincinnati Financial Corporation The Cincinnati Insurance Companies > Individuals & Families > Ratings Find an agency by ZIP code Diicctly billed home and auto m policyholders may make Advanced Agency Search payments online. Please contact Ratings your agent for other services. UserlD + Personal Insurance Cincinnati Financial Corporation Password + Life Insurance Best's Fitch Moody's Standard ' Secure Sign In Disabiht~ Income & Poor s Annuihe~ Corporate Debt a A- A3 BBB+ New Registrations iser ID and Password Hel~~ e.u~~"' A" .,,,~~~r~~~ ~" The Cincinnati Insurance Companies Best's Fitch Moody's Standard 8 P ' Property Casualty Group oor s F~~ ~.. vials Cincinnati Service Standard Market Subsidiaries: A+ -- Al A+ The Cincinnati Insurance Company A+ AA- Al A+ The Cincinnati Indemnity Company A+ AA- Al A+ The Cincinnati Casualty Company A+ AA- Al A+ Excess and Surplus Lines Subsidiary: The Cincinnati Specialty Underwriters Insurance A -- -- -- Company The Cincinnati Life Insurance Company A AA- -- A+ Financial strength allows us to better serve and protect our agents, policyholders and shareholders. Our commitment to all three is how we fulfill our pledge, Making Our Strength Your Future. A.M. Best, an independent provider of insurer ratings since 1899, awards its A+ (Superior) financial strength rating to Cincinnati's standard market property casualty group. Only approximately the top 11 percent of property casualty insurer groups receive A.M. Best's A+ or A++ rating in this Superior category. Best assigns its A (Excellent) rating to The Cincinnati Life Company and to The Cincinnati Specialty °• Underwriters Insurance Company, our excess ",.VBEST and surplus lines company A.M. Best ,, ~,,,,,,, comments on the group's rating: "The stable outlook on all the ratings reflects the enhanced risk management processes, sound liquidity, ""'""' superior risk-adjusted capitalization of its :~ BEST operating entities and successful business : ,,,,.,,., profile within its targeted regional markets, which centers on a distribution system developed through strong relationships with local independent insurance agencies." Please select the A.M. Best icon to the right to see the most recent ratings commentary FitchRatings cites the competitive advantage that Cincinnati's property casualty companies derive from emphasis on long-term relationships with select independent agents, low expense structure and excellent claims service in ~ ! ' awarding its AA- (Very Strong) rating. The Cincinnati Life Insurance Company also earns the AA- rating for a very strong capital position and good earnings and liquidity. Fitch has a http://www.cinfin.com/Individuals_N_Families/Ratings/default.aspx 6/15/2UU9 • • ABOUT TRAVELERS 't'ravelers (NYSE: '1'KV) is a leading provider of property casualty insurance and surety products and of risk management services to a wide variety of businesses, other organizations and to individuals. As the second-largest commercial U.S. property and casualty insurance company in terms. of direct written premium, the company reported 2006 revenues of $25 billion azid total assets of $114 billion. Our products are distributed primarily through U.S. independent insurance agents and brokers. Travelers is the second largest writer of personal insurance through independent agents. Travelers is headquartered in St. Paul, Minnesota, with significant operations in Hartford, Connecticut. The company also has offices in the U.K., Ireland, and Canada. Travelers has about 33,000 employees worldwide. For more information, visit www.travelers.com. Financial Strength The financial strength of an insurance company is understandably important to its policyholders' Independent services, such as A.M. Best, Standazd & Poor's and Moody's, have consistently given high ratings to our claim-paying ability and financial strength. The independent financial strength ratings, which reflect the Travelers claims-paying ability as of June 30, 2006, aze as follows: A.M. Best A+ (A+ is the 2nd highest of 16) Standard & Poor's AA- (AA- is the 4th highest of 21) Moody's Aa3 (Aa3 is the 4th highest of 21) It is the policy of Travelers to comply with all applicable federal, state and local fair employment laws. In addition, Travelers files appropriate EEO-1 reports and voluntarily subscribes to the principles of affirmative action. • PUBLIC SECTOR EXPERTISE 'Travelers is the leading provider of property and casualty insurance for public entities. lt's a position we've worked hard to earn by building lasting relationships and strong foundations in communities across the country. With our expertise, years of hands-on experience and outstanding fmancial strength and stability, clients count on us to deliver thoughtfully designed, tailored uisurasice coverages acid risk management solutions for the exposures they face. Our underwriting, risk control and claim teams work exclusively with public entities. Travelers has impressive capabilities to serve the needs of the market. We're proud to offer: Package products for municipalities, counties, water and sewer districts and other selected special districts. For these segments, we deliver a menu of customized offerings and solutions -including property, liability, auto and professional coverages -designed specifically for local governments. Large public entity property business -including schedules in excess of $250 million total insured values -for the segments listed above as well as for schools, excess property and assumed reinsurance. The team at Travelers takes the time to understand issues affecting local government. They analyze current risks, anticipate those customers may face in the future and create flexible solutions to manage both. Underwriting Our underwriters stay abreast of public affairs, as well as evolving legal and social issues. We develop balanced solutions to meet each customer's unique situation and work with agents and brokers to customize the most effective plan for our clients. Claim Services When it comes to claim handling, one size doesn't fit all. Travelers has claim professionals dedicated to handling claims for public entities. They understand state-specific issues and have extensive knowledge of the immunities and special defenses afforded to public entities. In addition, Travelers retains defense counsel who specialize in representing public entities and understand the complexity of public entity legislation. Risk Control Services Travelers risk control consultants work exclusively with public entity clients. These risk control professionals are dedicated to understanding a customer's unique operations, risks and issues. The value- added risk management programs, seminars and personalized service plans offered by Travelers help prevent losses and reduce overall costs for public entities. • CITY OF DUBUQUE COVERAGE 8~ PREMIUM COMPARISON JULY 1, 2009 CH~CiN~iATI CINCINNATI 20t1-9-20139 2009-2010 COVERAGE LIMITS PREMIUM LIMITS PREMIUM COMM. PROP. (7-1) Agreed Amount Property 268,149,043 177,210 274,837,494 156,311 Ordinance/ Law 3, 264, 366 30, 691 3, 264, 366 26,108 Earthquake 25,000,000 30,713 25,000,000 26,970 Business Interrup. 996,670 736 996,670 628 Inl. Marine -Camera 134,696 471 134,696 471 -Misc. Prop. 1,655,948 8,445 1,655,948 8,445 -Computer 2,483,000 11,620 2,483,000 11,620 -Sign 16,000 389 16,000 389 . -Artwork 319, 035 1,117 319, 035 1,117 -Tri-State Vets Memorial 130,000 338 130,000 338 -Mobile Equipment 6,960,031 27,144 6,960,031 27,144 -Builders Risk Library 5, 500, 000 8, 250 5, 500, 000 8, 250 -Builder Risk Kephart 700, 000 1, 050 700, 000 1, 050 298,174 268,841 Premium includes cost for annualized endorsements n U • CITY OF DUBUQUE COVERAGE & PREMIUM COMPARISON JULY 1, 2009 CINCINNATI 2008-2009 COVERAGE LIMITS PREMIUM BOILER & MACHINERY (7-1) Limit 25,000,000 25,484 • METRO SOLID WASTE AGCY (7-1) -Building & Contents 584,564 -Equipment 2,471,912 -Computer 6,000 CINCINNATI 2009-2010 LIMITS PREMIUM 2,728 13,423 81 16,232 Cincinnati 25,000,000 Cincinnati 584,564 2,471,912 6,000 22,508 3,146 13,422 500 17,068 Premium includes cost for annualized endorsements • C: CITY OF DUBUQUE COVERAGE & PREMIUM COMPARISON JULY 1, 2009 TRAVELERS CINCINNATI 2009-2010 2009-2010 COVERAGE LIMITS PREMIUM LIMITS PREMIUM COMM. PROP. (7-1) Agreed Amount Agreed Amount Property 274,837,494 150,549 274,837,494 156,311 Ordinance/ Law 3,264,366 Included 3,264,366 26,108 Earthquake 25,000,000 15,269 25,000,000 26,970 Business Interrup. 996,670 Included 996,670 628 Inl. Marine -Camera • -Misc. Prop. 134,696 1,655,948 143 1,755 134,696 1,655,948 471 8,445 -Computer 2,483,000 2,632 2,483,000 11,620 -Sign 16,000 17 16,000 389 -Artwork 319,035 338 319,035 1,117 -Tri-State Vets Memorial 130,000 138 130,000 338 -Mobile Equipment 6,960,031 7,891 6,960,031 27,144 -Builders Risk Library 5,500,000 5,500,000 8,250 -Builder Risk Kephart 700,000 700,000 1,050 178,732 268,841 Premium includes cost for annualized endorsements • CITY OF DUBUQUE COVERAGE & PREMIUM COMPARISON JULY 1, 2009 TRAVELERS CINCINNATI 2009-2010 2009-2010 COVERAGE LIMITS PREMIUM LIMITS PREMIUM BOILER & MACHINERY (7-1) Cincinnati Limit 311,574,993 19,576 25,000,000 22,508 • METRO SOLID WASTE AGCY (7-1) Cincinnati Cincinnati -Building & Contents 584,564 2,728 584,564 3,146 -Equipment 2,471,912 13,423 2,471,912 13,422 -Computer 6,000 81 6,000 500 16,232 17,068 Premium includes cost for annualized endorsements • • FRIEDMAN INSURANCE, INC. TOTAL VALUES FOR THE CITY OF DUBUQUE JULY 1, 2009 PROPERTY IN DEPARTMENT BUILDINGS CONTENTS THE OPEN TOTAL City Administration 55,335,844 4,653,980 65,285 60,055,109 Fire 5,628,450 332,965 5,961,415 Park and Recreation 15,933,278 364,369 4,117,982 20,415,629 Library 10,220,249 10,886,520 21,106,769 Water 40,532,858 390,670 9,875,918 50,799,446 Water Pollution 37,126,270 41,101 1,1 14,699 38,282.070 Public Works 13,603,274 638,928 471,488 14,713,690 • Airport 12,613,207 470,452 1,051,277 14,134,936 Parking Ramp * 50,807,391 65,954 50,873,345 Transit 2,465,856 209,669 26,288 2,701,813 Five Flags 21,450,000 1,919,900 23,369,900 Police 369,750 369,750 Community Development 2,468,446 2,468,446 TOTAL 268,056,420 20,468,456 16,850,117 305,374,993 90'%, COINS s .90 BLANKET LIMIT OF LIABILITY -AGREED AMOUNT 274,837,494 • BUSINESS INCOME - $996,670 Property in the Open & Buildings without appraisals adjusted by Inflation Factor of 3.0% • • Program Features and Benefits PROPERTY Property and costs covered only if described in the coverage summary: ^ Underground tanks, flues, pipes or drains, and their contents ^ Outdoor fences or signs, that are not attached to a covered building or structure, except for the coverage provided in the outdoor property additional benefits. Additional Coverages- The following are included in the property limit: ^ Debris Removal - up to 25% of paid loss ^ Preservation of property moved to another location for 30 days Additional Benefits The following additional benefits are included. These benefits are in addition to the property limit and are subject to the property deductible. Limil Accounts Receivable $ 100,000 Blanket Earnings /Extra Expense $ 100,000 Cornmuiucatioii EgU11JIT1eIlt $ SQ QQQ Computer Breakdown $ 50,000 Confiscated Property $ 100,000 Demolition and Increased Cost of Construction $ 100,000* * or 10 percent of the value of the damaged covered building indicated in the statement of values or schedule, whichever is less. Extra Expense $ 25,000 Fairs, Exhibits, or Displays $ 50,000 Fine Arts $ 50,000 Fire Department Service Charge $ 25,000 Inventory & Appraisals $ 10,000 Money & Securities Inside Limit $ 10,000 Outside Limit $ 5,000 Newly Acquired Property -Building for 180 days $ 1,000,000 Newly Acquired Property -Personal Property for 180 days $ 500,000 Off-Premises Utility Failure -Direct Damage $ 50,000 Other People's Property $ 25,000 Outdoor Property -Maximum $2,500 any one item $50,000 Personal Belongings $ 50,000 Pollution Clean-Up or Removal $ 25,000 Property in Transit $ 50,000 Random Attack-Hacking Event or Computer Virus $ 10,000 r~ U 6/12/2009 9 of 18 Rewards Sewer Backup or overflow Spoilage Temporary Location Valuable Records Research • • $ 10,000 $ 50,000 $ 10,000 $ 50,000 $ 100,000 6/12/2009 10 of 18 • RECOMMENDATIONS 1. Are the Contents limits accurate for each department. We would be willing to meet with each department head to review their asset list. 2. Is the Business Income level accurate should a loss occur. The current Business Income levels are for loss of income at the Parking Ramps 3. Both Travelers and Cincinnati have offered the use of loss control services at no charge to the City. 4. We would like to meet on a Quarterly basis to update the Building and Equipment coverages. This would help in staying current of new purchases, renovations, etc.. • • FR[EDMAN ~` ~~o~,,, - - IN5URANCE SUMMARY Ken: To summarize the findings for the property quotes for the City of Dubuque we have found that Travelers Insurance Company has by far been the most competitive quote we have ever received. The City of Dubuque carries approximately $305,374,993 of property coverage for all of the city owned buildings. Within your insurance policy you also have other coverages, for example earthquake coverage, business interruption for losses at the parking ramps, along with various individual coverages for cameras, computers, signs, artwork, etc. The $305,374,993 of coverage is written on a blanket basis. What we mean by that is that overall the city has the use of $305,374,993 of coverage to cover any loss. The city carves a $25,000 deductible for any occurrence. With the competitiveness of the market, we aze recommending that the city move the coverage from Cincinnati Insurance to Travelers Insurance Company. Travelers has a long history of writing public sector business. • The quote we have received, Ken, is quite telling of what a good risk the city of Dubuque is. Approximately three years ago we had Travelers Insurance Company also quote the insurance with the city and at that time they were approximately $4,000 higher than Cincinnati Insurance. As you can see it has been well worth our while to have them quote the city once again. We have examined the quote thoroughly on your behalf to make sure that we aze comparing the same coverages, and we feel very confident that we are. Obviously it is up to you, your department, the city managers, and city council to make this fmal decision, but our recommendation would be to move the coverage effective July 1 gt, 2009 to Travelers Insurance Company. ncer , colt DeSousa, CIC Lmv • Friedman Insurance, Inc. Friedman Financial Services, Inc. _.~_~__------~_.___e.----_-__._ __ _ __. ._ _ _.. 880 Locust Street, Suite 200, P.O. Box 759, Dubuque, IA 52004-0759 Phone: (563) 556-0272 Fax: (563) 556-4425 a,=~~ tTr:~,t .Y Choice ~~~ e-mail: infoC~friedman-group.com ~, Ay.,,,