Exhibit 1 - Agenda Information SheetCity of Denton
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AGENDA INFORMATION SHEET
DEPARTMENT: Procurement & Compliance
ACM: David Gaines
DATE: December 17, 2020
SUBJECT
Consider adoption of an ordinance of the City of Denton, a Texas home-rule municipal corporation,
providing for, authorizing, and approving the purchase of aviation liability insurance coverage for the City
of Denton through the City’s broker of record, Lockton Companies, LLC; and providing an effective date
(File 7576 – awarded to Global Aerospace, Inc. for a three (3) year not-to-exceed amount of $56,000.00).
INFORMATION/BACKGROUND
The City of Denton purchases aviation liability that covers the ground operations at the Municipal Airport.
Given the complexities of this insurance product solicitation and given that Chapter 252.024 of the Texas
Local Government Code provides that insurance products are exempt from the requirements of competitive
bidding, the City utilized the services of our broker of record, Lockton, to assist with procuring this coverage
without going through the Request for Proposal (RFP) process.
Lockton was appointed the broker of record for the City of Denton on August 6, 2020, and information
about the City’s current program started coming into Lockton for review shortly afterward. While Lockton
has access to markets all over the world, there are specific Public Entity insurance markets that Lockton
does not have access to. In order to access these markets, Lockton works with an intermediary named
CRC. CRC has a specific Public Entity division and has worked for the City of Denton for the past two
years, alongside Denton’s prior retail broker(s).
State of the Market:
The firming pricing landscape of 2019 gave way to a new reality in 2020, as insurance markets reduced
capacity, tightened terms, and delivered some of the steepest premium increases on record. Already
struggling with unsustainable loss activity, the market was also forced to confront challenges associated
with COVID-19, a rolling shutdown of the global economy, historically low interest rates, natural
catastrophes, and civil strife.
Renewals in the second quarter of 2020 saw some of the largest pricing increases since 2003, led by
umbrella/excess liability, directors and officers liability, property, and commercial auto. This trend is likely
to continue through 2022 although the rate of increase should begin to moderate by late 2021. Any
prediction, however, is clouded by ongoing uncertainty.
The renewal premium quoted from the incumbent carrier, Global Aerospace, was $14,662.00 and
represented a 25% increase over the expiring policy, which is in line with the hardened aviation market. At
City Hall
215 E. McKinney Street
Denton, Texas
www.cityofdenton.com
this time, the average rate increase in the market for this line is ranging between 25% - 45%. Since the
increase offered by the incumbent carrier was on the low end of that spectrum and due to the compressed
time period to bind adequate coverage before the current policy expired, the coverage was not marketed to
other carriers. The coverage terms and conditions for the renewal remain the same as in the expiring policy
except for an increase in the hangar keepers deductible ($5,000 expiring vs. $10,000 renewal), which is also
in line with the market.
RECOMMENDATION
Award a contract with Lockton Companies, LLC., for the purchase of aviation liability insurance coverage
for the City of Denton, in the amount of $14,662.00 for the first year, approximately $18,328.00 in the
second year, approximately $22,909.00 in the third year with total three (3) year not-to-exceed amount of
$56,000.00.
PRIOR ACTION/REVIEW (Council, Boards, Commissions)
On October 1, 2019, City Council awarded a contract for aviation liability coverage to Global Aerospace.
PRINCIPAL PLACE OF BUSINESS
Lockton Companies, LLC
Kansas City, MO
ESTIMATED SCHEDULE OF PROJECT
This is a three (3) year contract.
FISCAL INFORMATION
These services will be funded from Risk Retention funds.
EXHIBITS
Exhibit 1: Agenda Information Sheet
Exhibit 2: Aviation Insurance Quote
Exhibit 3: Broker Recommendation Letter
Exhibit 4: LLC Members
Exhibit 5: Ordinance
Respectfully submitted:
Lori Hewell, 940-349-7100
Purchasing Manager
For information concerning this acquisition, contact: Deby Skawinski, 940-349-7810.
Legal point of contact: Marcella Lunn at 940-349-8333.