Title
Purchase of Property and Casualty Insurance Policies for the City of Phoenix (Ordinance S-48661)
Description
Request to authorize the City Manager, or his designee, to purchase various property and casualty insurance policies on behalf of the City for July 2022 through June 2023. Further request authorization for the City Controller to disburse funds, not to exceed $22,036,000.
Report
Summary
Competitive quotes are sought from all viable commercial insurance markets to assure the best coverage and cost available. The total estimated cost for all insurance is approximately $22,036,000 for Fiscal Year 2022-23, up from $14,785,387 in the current year. The increase of $7,250,613 is due to: (1) a high demand for insurance coverage in the property and excess liability coverage and a reduced supply of capacity in the commercial insurance market throughout the country; (2) the City experienced a large property loss over the last 10 years that exceeded $10 million; (3) the City experienced its first loss that pierced the excess liability insurance; (4) claims are increasing in frequency and severity throughout the country; (5) insurers are hesitant to underwrite public entity insurance programs; (6) the former Wells Fargo Plaza at 100 W. Washington St. was added to the City's schedule of covered properties; and (7) ransomware and other cyber attacks globally are driving unprecedented increases in the cyber liability market.
Citywide insurance policies are purchased from the Risk Management Self-Insurance Fund or the Workers' Compensation Self-Insurance Fund and are then allocated to each department's budget. Funds for special policies purchased are available from those departments' budgets. The insurance quote process is ongoing, and staff will continue to gather bids through mid-June. The amount requested is based on estimated rate increases as advised by the City's contracted insurance broker, Marsh USA, Inc. Depending on final quotes, staff may need to return to Council for a retroactive increase in spending authority.
Insurance Policy Type Department Estimated Cost
Blanket Property and Boiler and Citywide $8,701,000
Machinery Insurance
Excess Liability Insurance Citywide $8,456,000
(Multiple Layers)
Excess Workers' Compensation Citywide $405,000
Insurance
Network Security and Cyber Citywide $3,052,000
Police Aircraft Liability and Hull Police $210,000
Insurance
Aviation Airport Liability Aviation $714,000
Insurance
Miscellaneous Property and Casualty Citywide $498,000
Insurance
Financial Impact
The amount will not exceed $22,036,000, comprised of funds from the Risk Management Self-Insurance Fund, and are included in the Fiscal Year 2022-23 budget.
Department
Responsible Department
This item is submitted by City Manager Jeffrey Barton and the Finance Department.