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Exhibit 1 - Agenda Information SheetCity of Denton _____________________________________________________________________________________ AGENDA INFORMATION SHEET DEPARTMENT: Procurement ACM: Cassey Ogden DATE: January 23, 2024 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 the emergency purchase of excess workers’ compensation, packaged general liability, and automobile physical damage insurance coverage for the City of Denton; and providing an effective date (File 8416 – awarded to Lockton Companies, LLC, for one (1) year, with the option for two (2) additional one (1) year extensions, in the total three (3) year not-to-exceed amount of $3,213,282.66). STRATEGIC ALIGNMENT This action supports Key Focus Area: Support Healthy and Safe Communities. INFORMATION/BACKGROUND The City of Denton currently has packaged insurance policies to provide coverage for excess workers’ compensation and liability exposures (general, auto liability, public officials, law enforcement, and employment practices). The City of Denton’s general liability insurance policy included all liability exposures through Safety National Insurance Company (Safety National) with a $500,000 per occurrence self-insured retention (SIR) under this policy and coverage up to $5,000,000 on all liability exposures. The City’s excess workers’ compensation insurance policy through Safety National Insurance included a $1,000,000 per occurrence SIR and insurance coverage up to the statutory benefit levels under workers’ compensation The City of Denton’s automobile physical damage insurance for the City’s fleet vehicles with values over $100,00 through Safety National expired on December 31, 2023. Commercial automobile liability insurance provides coverage for bodily injury and property damage caused to others by City vehicles. In contrast, commercial automobile physical damage insurance provides coverage for City vehicles that sustain damage from vehicle accidents, the negligence of an uninsured or underinsured motorist, damage caused by weather, and other non-collision causes. Given the complexities of this insurance product solicitation as described in greater detail below, and given that Chapter 252.024 of the Texas Local Government Code provides that the City can utilize the services City Hall 215 E. McKinney Street Denton, Texas www.cityofdenton.com of our broker of record, Lockton, to assist with competitively procuring this coverage, the City elected to work with our broker of record to complete this solicitation. State of the Market Public entities are difficult for insurance carriers to insure due to large property and liability limits placed in small geographical areas. As carriers have left the public sector market due to losses, the remaining carriers have had to make some changes to their limits and deductible structures to maintain feasibility in the market. Since 2021, there has not been a significant change in municipality insurance carrier appetites. This is largely due to social & economic inflation, increasing frequency & cost of litigation, and municipality insurance market performance. Through their public sector partner CRC, Lockton approached 7 markets as part of the solicitation for excess general liability coverage with a new insurer, 6 markets as part of the solicitation for excess workers’ compensation coverage, and 4 markets to solicit the automobile physical damage coverage. Safety National provided the best quote to extend general liability coverage to the City; however, Safety National’s proposal requires the City to also place the excess workers’ compensation coverage with Safety National as a packaged policy. The other 6 markets that were solicited for general liability coverage declined to quote. Safety National also provided a competitive quote for the automobile's physical damage coverage; the other markets were either not competitive or declined to quote. As a result, Lockton received a favorable quote from Safety National to replace the City’s expiring excess workers’ compensation and general liability policies and add automobile physical damage coverage in a packaged casualty program. Based on the evaluation of the proposal, both staff and our broker of record, Lockton, recommend the purchase of excess workers’ compensation, general liability, and automotive physical damage insurance through Lockton from Safety National with the below SIRs: Policy Period Annual Premium 23/34 $805,334.00 24/25 $1,046,934.20 This estimated premium includes the 30% YOY increase 25/26 $1,361,014.46 This estimated premium includes the 30% YOY increase Total NTE $3,213,282.66 Staff recommends the approval of expenditures for the purchase of excess workers’ compensation, packaged general liability, and automobile property damage insurance coverage including funding to accommodate a year-over-year price increase of 30% per year. Safety National is an A++ (Superior) rated carrier by AM Best with a financial strength rating of XV (greater than $2 trillion), and a Standard and Poor’s rating of A+. Safety National is a member of the Tokio Marine Group. With nearly $200 billion in assets, Tokio Marine is among the top ten insurance groups in the world, and its companies are among the highest rated. RECOMMENDATION Approve the emergency purchase of excess workers’ compensation, packaged general liability, and automobile physical damage insurance coverage for the City of Denton, in a one (1) year, with the option for two (2) additional one (1) year extensions, in the total three (3) year not-to-exceed amount of $3,213,282.66. PRINCIPAL PLACE OF BUSINESS Lockton Companies, LLC Kansas City, MO Safety National St. Louis, MO ESTIMATED SCHEDULE OF PROJECT Services under this contract started on December 31, 2023. FISCAL INFORMATION These services will be funded from Risk Retention Fund 860002.6719. Requisition #163393 has been entered into the Purchasing software system in the amount of $805,334.00. The budgeted amount for this item is $3,213,282.66. EXHIBITS Exhibit 1: Agenda Information Sheet Exhibit 2: Declaration of Emergency Exhibit 3: Pricing Exhibit 4: Recommendation Letter Exhibit 5: Comparison Exhibit 6: Ordinance Respectfully submitted: Lori Hewell, 940-349-7100 Purchasing Manager For information concerning this acquisition, contact: Megan Gilbreath, 940-349-8357. Legal point of contact: Marcella Lunn at 940-349-8333.