Loading...
Exhibit 1 - Agenda Information SheetCity of Denton _____________________________________________________________________________________ AGENDA INFORMATION SHEET DEPARTMENT: Procurement ACM: Cassey Ogden DATE: October 24, 2023 SUBJECT Consider adoption of an ordinance of the City of Denton, a Texas home-rule municipal corporation, ratifying the expenditure of funds by the City Manager for emergency 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 8342 – awarded to National Union Fire Insurance Company of Pittsburgh, PA (AIG), in the three (3) year not-to-exceed amount of $53.270.00). STRATEGIC ALIGNMENT This action supports Key Focus Area: Pursue Organizational Excellence and Collaborative and Respectful Leadership. INFORMATION/BACKGROUND The City of Denton purchases aviation liability, which covers the ground operations at the Denton Municipal Airport. Given the complexities of this insurance product solicitation and given that Chapter 252.024 of the Texas Local Government Code allows the City to utilize the services of our insurance broker of record, Lockton Companies, LLC (Lockton), to assist with competitively procuring this coverage. State of the Aviation Insurance Market: Insurers continue to take a measured wait-and-see approach to the impact of Russia’s confiscation of Western aircraft, the impacts of which are not expected to manifest fully until some time in 2024 or 2025. For the aviation liability insurance industry, this has potentially created one of the largest claims in the history of aviation insurance and could have significant ramifications on future pricing of premiums. Aircraft and passenger traffic continues to rebound in a post-COVID era, driving increased on-site exposure. The annual renewal premium quoted from the City’s incumbent aviation insurance carrier, AIG, was $12,702.00 for the 10/1/2023-2024 renewal. Despite a 30% increase in take-offs and landings at Denton Enterprise Airport, the new premium represents only a 10% increase over the expiring policy, which is below the current aviation market trend of 15%-25%. The coverage terms and conditions for the renewal remain the same as in the expiring policy. City Hall 215 E. McKinney Street Denton, Texas www.cityofdenton.com Policy Term (Renews 10/1) Estimated Premium and Estimated 3-year Expenditure Policy Term 2023/2024 $12,702.00 Policy Term 2024/2025 $15,878.00 Policy Term 2025/2026 $19,847.00 Contingency (10% of Total) $4,843.00 Total $53,270.00 Due to the uncertainty of the future effects of the war in Ukraine, a potential increase in operations at the airport, and other trends in the airport operations liability insurance market, a conservative increase of 25% year over year was used in the above calculations to ensure the City has adequate spending authority approved for future policy renewals for the 2024/25 and 2025/26 policy years. RECOMMENDATION Approve the purchase of aviation liability insurance coverage for the City of Denton, in a (3) year not-to- exceed amount of $53,270. PRINCIPAL PLACE OF BUSINESS Lockton Companies, LLC Kansas City, MO ESTIMATED SCHEDULE OF PROJECT This is a three (3) year contract. FISCAL INFORMATION This policy is budgeted and funded from the Risk Retention Fund account 860002.6708. Requisition #161969 has been entered into the Purchasing software system in the amount of $12,702. The budgeted amount for this item is $53,270. EXHIBITS Exhibit 1: Agenda Information Sheet Exhibit 2: Insurance Quote Exhibit 3: Comparison Exhibit 4: Recommendation Letter Exhibit 5: Ordinance Respectfully submitted: Lori Hewell, 940-349-7100 Purchasing Manager For information concerning this acquisition, contact: Sarah Kuechler, 940-349-8356. Legal point of contact: Marcella Lunn at 940-349-8333.