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HomeMy WebLinkAboutExhibit 1 - Agenda Information SheetCity of Denton _____________________________________________________________________________________ AGENDA INFORMATION SHEET DEPARTMENT: Procurement ACM: Christine Taylor DATE: September 22, 2026 SUBJECT Consider adoption of an ordinance of the City of Denton, a Texas home-rule corporation, providing for, authorizing, and approving the purchase of primary cyber network liability coverage for the City of Denton, through the City’s sole broker of record, Lockton Companies, LLC; providing for the expenditure of funds therefor; and providing an effective date (File 9100 – awarded to Homeland Insurance Company of New York (Resilience), in the one (1) year not-to-exceed amount of $161,721.00). STRATEGIC ALIGNMENT This action supports Key Focus Area: Pursue Organizational Excellence and Collaborative and Respectful Leadership. INFORMATION/BACKGROUND The City of Denton purchases cyber network liability coverage should the City become a victim of malware, data breach, or ransomware. The City utilized the services of our insurance broker of record, Lockton Companies, LLC. (Lockton) to assist with competitively procuring this coverage. State of the Cyber Insurance Market: The Cyber Insurance market in 2026 remains stable, with conditions generally favorable to buyers with adequate controls, cybersecurity posture, and loss experience. While rates remain stable, with many buyers receiving pricing reductions, insurers remain conscious of the evolving AI, ransomware, and social engineering landscape. Lockton approached three markets, Resilience (incumbent), Coalition, and Starr for renewal terms in 2026. All three (3) markets provided quotations. Resilience, the incumbent carrier, was able to offer competitive terms, at a 25% decrease year over year. Terms and conditions remain aligned with the expiring program, with an improvement in the deductible. The annual premium for the policy is $90,000. Including the additional Edge Services Package and Taxes & Fees, the annual amount due is $124,401. This is a reduction from $156,073 in 2025. Coalition quoted terms for 2026, with an annual premium of $115,617 (including taxes & fees). Starr quoted the program at $85,000 but was unable to meet the full limit requirement that the City requires. Accordingly, $85,000 for the limit is not competitive. City Hall 215 E. McKinney Street Denton, Texas www.cityofdenton.com * Includes estimated applicable taxes and fees Risk Management continues to evaluate the best options for protecting the City against cyber liability risks. Our insurance broker provides industry benchmarking that helps assess appropriate coverage levels based on comparable utility-sector organizations across broad revenue ranges. The benchmarking indicates that organizations within the $100M–$250M revenue range typically purchase cyber liability limits averaging $5 million, which aligns with the City’s current coverage. For organizations within the broader $100M–$500M revenue range, the average purchased limit increases to $10 million. At the City’s current $5 million limit, coverage aligns near the 50th percentile when compared with utility-sector peers. Increasing to a $10 million limit would improve modeled loss coverage from approximately 91 percent to approximately 96 percent. Risk Management will continue to partner with the City’s insurance broker, Finance Department, and Technology Services to evaluate these findings and determine whether adjustments to cyber liability coverage are warranted at any point during the policy period. Pricing or coverage indications for higher limits can be obtained whenever needed, and Risk Management is prepared to request updated pricing if the City wishes to explore this option further. In the event an increase in coverage limits is warranted, a conservative increase of 30% year over year was used in the above calculations to ensure the City has adequate spending authority approved for future policy coverage upgrades. RECOMMENDATION Award a contract with Homeland Insurance Company of New York (Resilience) for primary cyber network liability insurance coverage for the City of Denton through the City’s sole broker of record, Lockton Companies, LLC, in a one (1) year not-to-exceed amount of $161,721. PRINCIPAL PLACE OF BUSINESS Lockton Companies, LLC Kansas City, MO ESTIMATED SCHEDULE OF PROJECT This is a one (1) year contract. FISCAL INFORMATION This policy is budgeted and funded from the Risk Retention Fund account 860002.6704. Requisitions will be entered on an as-needed basis. The City will only pay for services rendered and is not obligated to pay the full contract amount unless needed. Policy Term (Renews 10/1) Estimated Premiums Policy Term 2026/2027 $120,000 Fees* 4,401 Contingency 30 % 37,320 Total $161,721 EXHIBITS Exhibit 1: Agenda Information Sheet Exhibit 2: Quote Exhibit 3: Scorecard, Marketing Summary, and Premium Comparison Exhibit 4: Recommendation Letter Exhibit 5: Ordinance Respectfully submitted: Lori Hewell, 940-349-7100 Purchasing Manager For information concerning this acquisition, contact: Tiffany Harris, 940-349-7822. Legal point of contact: Leah Bush at 940-349-8333.