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TO: Mayor Richard C. Irvin
FROM: Alex G. Alexandrou, Chief Management Officer
DATE: April 19, 2019
SUBJECT:
A Resolution Authorizing the Purchase of Pollution Liability Insurance for the Period of March 31, 2019 through March 31, 2022
PURPOSE:
To obtain approval to purchase Pollution Liability Insurance for the period of March 31, 2019 through March 31, 2022.
BACKGROUND:
The City has had in place for the past three (3) years a ten ($10) million dollar pollution liability insurance policy with a $250,000 self-insured deductible amount from Allied World Assurance Company (AWAC) as an essential component of its overall self-insurance liability program for any pollution claims against the City. This expiring three (3) year policy inclusive of the premium, applicable taxes and broker fee totaled $80,123.00.
DISCUSSION:
The City's broker, Hub International, reviewed the existing coverage for adequacy, updated the City's schedule of covered locations and surveyed the market conditions for pollution liability coverage. Other markets contacted were either not competitive or could not match the current coverage offered by AWAC. The recommendation is to accept the three (3) year renewal quote from incumbent Allied World Assurance Company (AWAC). Attached as reference is a premium summary and coverage terms. The overall renewal rate is flat and the three (3) year policy has increased by approximately $5,000 due to an eight percent (8%) increase in ratable coverage square footage of new city-owned properties since 2016. In addition Hub was able to negotiate the addition of automatic grant of coverage for inclusion of newly acquired properties. AWAC's premium quote inclusive of premium and taxes is $85,840.00. Hub is not charging a broker fee for this transaction. AWAC is highly rated in terms of financial stability and ability to pay claims. $100,000 was allocated in 2019 for pollution liability insurance are budgeted in account #601-0000-410.40-01.
IMPACT STATEMENT:
City would have a gap in coverage and be financially responsible for any pollution liability claims beyond $250,000 per claim for existing properties and no coverage for newly acquired properties.
RECOMMENDATIONS:
That the Finance Committee approve the resolution authorizing the purchase of pollution liability insurance through Allied World Assurance Company as proposed by broker Hub International for a total of $85,840.00.
cc: Alderman O’Connor, Chairman
Alderman Bugg
Alderman Mesiacos
Alderman Mervine, Alternate
CITY OF AURORA, ILLINOIS
RESOLUTION NO. _________
DATE OF PASSAGE ________________
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A Resolution Authorizing the Purchase of Pollution Liability Insurance for the Period of March 31, 2019 through March 31, 2022.
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WHEREAS, the City of Aurora has a population of more than 25,000 persons and is, therefore, a home rule unit under subsection (a) of Section 6 of Article VII of the Illinois Constitution of 1970; and
WHEREAS, subject to said Section, a home rule unit may exercise any power and perform any function pertaining to its government and affairs for the protection of the public health, safety, morals, and welfare; and
WHEREAS, the City has had in place for the past three (3) years a ten ($10) million dollar pollution liability insurance policy with a $250,000 self-insured deductible amount from Allied World Assurance Company (AWAC) as an essential component of its overall self-insurance liability program for any pollution claims against the City, and
WHEREAS, the City Council has determined it is in the best interests of the citizens of Aurora that the City purchase pollution liability insurance for a three year term through Allied World Assurance Company ("AWAC") as proposed by broker Hub International for a total of $85,840.00.
WHEREAS, the proposal from broker Hub International for coverage through Allied World Assurance Company best meets the City’s pollution liability coverage requirements at the lowest cost. Relevant AWAC documents are attached as reference.
WHEREAS, the 2019 City Budget provides $100,000.00 for this item in account no. 601-0000-410-40-01.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Aurora, Illinois, as follows: That three (3) years of pollution liability insurance be purchased from Allied World Assurance Company through insurance broker Hub International with a March 31, 2019 effective date of coverage inclusive of premium and taxes for the total cost of $85,840.00.