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TO: Mayor Richard C. Irvin
FROM: Alex G. Alexandrou, Chief Management Officer, Mayor's Office
DATE: December 7, 2020
SUBJECT:
A Resolution Authorizing Purchase of Property/Boiler Machinery, Fine Arts, Crime, Cyber Liability, General Liability/Law Enforcement/Auto Liability, Excess Liability, Excess Workers Compensation, Liquor Liability, Special Events Liability and Drone Liability insurance policies for the period of December 31, 2020 through December 31, 2021.
PURPOSE:
To obtain approval of the proposal from broker Hub International Midwest Limited for Property/Boiler Machinery insurance from Chubb Insurance Company, Fine Arts Insurance from Hanover Insurance Company, Cyber Liability Insurance from AIG, Excess Cyber from Swiss Re, Crime Insurance from Travelers, Excess General Liability/Law Enforcement/Auto Liability Insurance from Allied World National Assurance Company, Hallmark Insurance Company and Great American Insurance Company, Excess Workers Compensation insurance from Safety National Casualty Insurance, Liquor Liability insurance from Lloyds of London, Special Events Liability from Cincinnati Specialty and Drone Liability from American Alternative Insurance Company for the period of December 31, 2020 through December 31, 2021.
BACKGROUND:
The City has historically maintained these types of insurance coverages as part of its overall insurance and risk management program including self-insured retention levels. For 2020 the City purchased through broker Hub Property/Boiler Machinery and Inland Marine from Chubb, Crime coverage from Travelers, Excess Workers Compensation Insurance from Safety National, Excess General Liability/Law Enforcement/Auto Liability Insurance from Allied World National Assurance Company, Excess Liability from StarStone National Insurance Company and Endurance American Insurance Company, Cyber Liability Insurance from AIG, Fine Arts coverage from Hanover Insurance, Liquor Liability from Lloyds of London, Special Events Liability Insurance from Cincinnati Specialty and Drone Liability Insurance from AAIC. 2020 total program cost including broker service fee was $987,387.00.
DISCUSSION:
Our authorized broker Hub International reviewed our existing program and solicited additional market bids beyond renewal of the existing program. Hub's marketing summary is attached. In light of the worldwide pandemic and its adverse and ongoing effect on the economy and insurance markets for these coverages, the city's total overall program cost has increased approximately 17% over 2020 for 2021. Also contributing adversely to our renewals are increased risk and claims activity in nationwide markets for public safety liability coverages which have resulted in increased premiums for excess liability and excess workers compensation for municipalities and their police and fire personnel in 2021. Similar increases in Cyber and Crime premiums can be attributed to increases in cybersecurity attacks and criminal fraudulent activity involving both the public and private sectors. Attached is the 2020-21 Program Summary. As a result, all of the listed carriers are recommended for 2020-2021 program renewal. Doing so will maintain the three layers of excess liability coverage of $35M above the City's $2M self-insured retention. Also in order to maintain our $10M total Cyber coverage we have to split the coverages into two $5M policies as no carriers including the incumbent AIG would cover more than $5M maximum so we are recommending excess cyber coverage for $5M. Originally this excess layer was going to be through Axis however they notified our broker today that they were withdrawing. Fortunately HUB was able to obtain the same coverage from carrier Swiss Re at a premium savings of $5,000 below Axis' quote. Attached is the revised 2020-2021 Program SIR structure showing Swiss Re in place of Axis for excess cyber layer. Overall, based on the increased renewal premium costs and increased coverage limits for Cyber and Crime coverages, the total cost including broker service fee is $1,152,655.00 as compared to $987,387.00 for 2020. Funds for these insurance policies are budgeted for in the Property and Casualty Fund budget.
IMPACT STATEMENT:
N/A.
RECOMMENDATIONS:
That the City Council approve the resolution authorizing the purchase from broker Hub International Midwest Limited for Property/Boiler Machinery insurance from Chubb Insurance Company, Fine Arts Insurance from Hanover Insurance Company, Crime Insurance from Travelers, Cyber Liability Insurance from AIG, Excess Cyber from Swiss Re, Excess General Liability/Law Enforcement/Auto Liability Insurance from Allied World National Assurance Company, Excess Liability Insurance from Allied World National Assurance Company, Hallmark Insurance Company and Great American Insurance Company, Excess Workers Compensation insurance from Safety National Casualty Insurance, Liquor Liability insurance from Lloyds of London, Special Events Liability from Cincinnati Specialty and Drone Liability from American Alternative Insurance Company for the period of December 31, 2020 through December 31, 2021 per the attached documentation for $1,152,655.00 inclusive of all applicable premiums, taxes and broker service fees.
cc: Finance Committee
CITY OF AURORA, ILLINOIS
RESOLUTION NO. _________
DATE OF PASSAGE ________________
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A Resolution Authorizing Purchase of Property/Boiler Machinery, Fine Arts, Crime, Cyber Liability, Excess Cyber, General Liability/Law Enforcement/Auto Liability, Excess Liability, Excess Workers Compensation, Liquor Liability, Special Events Liability and Drone Liability insurance policies for the period of December 31, 2020 through December 31, 2021.
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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 Council has determined it is the best interest of the citizens of Aurora that the City purchase Property/Boiler Machinery, Fine Arts, Crime, Cyber Liability, Excess Cyber, General Liability/Law Enforcement/Auto Liability, Excess Liability, Excess Workers Compensation, Liquor Liability, Special Events Liability and Drone Liability insurance policies for the period of December 31, 2020 through December 31, 2021; and
WHEREAS, the renewal proposal from insurance broker Hub International Midwest Limited, for Property/Boiler Machinery insurance from Chubb Insurance Company, Fine Arts Insurance from Hanover Insurance Company, Crime Insurance from Travelers, Cyber Liability Insurance from AIG, Excess Cyber from Swiss Re, Excess General Liability/Law Enforcement/Auto Liability Insurance from Allied World National Assurance Company, Excess Liability Insurance from Allied World National Assurance Company, Hallmark Insurance Company and Great American Insurance Company, Excess Workers Compensation insurance from Safety National Casualty Insurance, Liquor Liability insurance from Lloyds of London, Special Events Liability from Cincinnati Specialty and Drone Liability from American Alternative Insurance Company for the period of December 31, 2020 through December 31, 2021 best meets the City's insurance policy and coverage requirements;
WHEREAS, the 2021 City Budget provides for this item in account numbers 601-0000-410-40-10, 601-0000-410-40-40, and 601-0000-410-40-70.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Aurora, Illinois, as follows: that one (1) year of Property/Boiler Machinery, Fine Arts, Crime, Cyber Liability, Excess Cyber, General Liability/Law Enforcement/Auto Liability, Excess Liability, Excess Workers Compensation, Liquor Liability, Special Events Liability and Drone Liability insurance policies from Chubb Insurance Company, Hanover Insurance, Travelers Insurance, AIG, Swiss Re, Safety National Casualty Corporation, Lloyds of London, Allied World National Assurance Company, Hallmark Insurance Company, Great American Insurance Company, Cincinnati Specialty and American Alternative Insurance Company be purchased through insurance broker Hub International Midwest Limited, with a December 31, 2019 effective date of coverage for the total cost of $1,152,655.00 inclusive of all premiums, taxes and broker service fees.