Subject: CITYWIDE PROPERTY INSURANCE
COUNCIL DISTRICT: Citywide
SNI AREA: N/A
Approval of purchase of a Citywide property insurance policy from Allianz Insurance Company for the period of July 1, 2001 through June 30, 2002 not to exceed $657,500.
The City of San Jose transfers exposure for catastrophic events via insurance policies when the frequency of events cannot be predicted, the severity of potential losses could seriously hamper the City’s operation, and the cost of coverage is not exorbitant.
The City’s property insurance policy provides coverage for $1 billion of City owned and leased real and personal property (including buildings, contents, business interruption, boiler and machinery, EDP equipment & media, fine arts, mobile and contractors equipment, builders risk, rents and expediting expenses, off premises services interruption, replacement power extra expense, building ordinance coverage, unnamed locations, transit, accounts receivable, valuable papers, and other coverage’s per brokers manuscript policy subject to sub-limits as defined in the policy).
This policy also provides some limited flood coverage. Earthquake and flood coverage costs are prohibitively expensive to purchase and have restrictive limits. The City’s property insurance broker and Risk Management staff consistently looks at the market for this coverage but has found no reasonably priced options.
The City’s Property Insurance Broker (Arthur J. Gallagher & Company) secured bids for the renewal policy term of July 1, 2001 through June 30, 2002. Thirty (30) insurance carriers were solicited to provide insurance premium quotes.
Proposals were compared and evaluated with respects to scope of coverage, cost, and financial strength to pay claims and resources available to provide services such as property inspections, property appraisals and loss control. Staff recommends the Allianz proposal because of price, scope of coverage and quality of service match the City’s needs.
Following are three of the most competitive proposals:
Allianz $657,500
St. Paul $761,500
CNA $988,000
Major Coverage and premium responses follow:
|
|
Allianz (Through Arthur J. Gallagher & Co.) 7/1/2000 – 6/30/2001 |
Allianz (Through Arthur J. Gallagher & Co.) 7/1/2001 – 6/30/2002 |
|
Property Coverage |
$1 Billion |
$1 Billion |
|
Business Interruption |
$50 Million |
$50 Million |
|
Earthquake |
$ 5 Million per occurrence and in the annual aggregate. (5% deductible of TIV, per unit with a $100K minimum) |
Not avaiable at a reasonable price for FY 2001/2002. The Insurance Broker and Risk Management staff will continue to try and secure this coverage. |
|
Flood |
$50 Million - 1st Layer $50 Million - Excess Layer ($100,000 deductible) |
$15 Million – Flood Zone A and V $100 Million – All other Flood Zones ($100,000 deductible) Better pricing was achieved by lowering the primary layer of coverage. |
|
Engineering |
Included |
Included |
|
Annual Premium |
$554,000 |
$657,500 |
|
Other coverage’s as outlined on the insurance policy on file in Risk Management |
|
|
This contract has been coordinated with the City Attorney and Budget Office.
BUDGET REFERENCE
Fund: 001 General Fund
Amount: $300,970
Budget Document: Proposed 01-02 Operating Budget, Page Number 609
Fund: 523 Airport Maintenance and Operation Fund
Amount: $91,860
Budget Document: Proposed 01-02 Operating Budget, Page Number 6
Fund: 536 Convention and Cultural Affairs
Amount: $95,397
Budget Document:
Proposed 01-02 Operating Budget, Page Number 745
Fund: 518 Municipal Golf Course
Amount: $904
Budget Document: Proposed 01-02 Operating Budget, Page Number 784
Fund: 533 General Purpose Parking
Amount: $26,622
Budget Document: Proposed 01-02 Operating Budget, Page Number 755
Fund: 513 Water Pollution Control
Amount: $141,747
Budget Document:
Proposed 01-02 Operating Budget, Page Number 797-798
SCOTT P. JOHNSON
Director,
Finance Department