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 cyber network liability insurance coverage for the City of Denton
through the City’s broker of record, Lockton Companies, LLC; and providing an effective date (File 7577
– awarded to Brit Syndicates Limited for a three (3) year not-to-exceed amount of $228,179.00).
INFORMATION/BACKGROUND
The City of Denton purchases cyber network liability coverage should the City become a victim of malware,
data breach, or ransomware.
Cyber network liability has become a significant threat to municipalities compromising approximately 22%
of successful cyber attacks. Ransomware and cyber breaches cost governments, businesses, and individuals
$1 trillion per year.
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
City Hall
215 E. McKinney Street
Denton, Texas
www.cityofdenton.com
to continue through 2022, although the rate of increase should begin to moderate by late 2021. Any
prediction, however, is clouded by ongoing uncertainty.
PRIOR ACTION/REVIEW (Council, Boards, Commissions)
On October 1, 2019, City Council awarded a contract to National Union Fire Insurance Co. for cyber
network liability coverage.
RECOMMENDATION
Award a contract with Lockton Companies, LLC., for cyber network liability insurance coverage for the
City of Denton, in the amount of $59,850 for the first year, approximately $74,813 in the second year,
approximately $93,516 in the third year with total three (3) year not-to-exceed amount of $228,179.
PRINCIPAL PLACE OF BUSINESS
Lockton Companies, LLC
Kansas City, MO
ESTIMATED SCHEDULE OF PROJECT
This is a three (3) year contract.
FISCAL INFORMATION
These servies will be funded from Risk Retention funds.
EXHIBITS
Exhibit 1: Agenda Information Sheet
Exhibit 2: Cyber Insurance Quote
Exhibit 3: Comparison
Exhibit 4: Broker Recommendation Letter
Exhibit 5: LLC Members
Exhibit 6: 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.