Title:
title
Approve the renewal of the County’s Workers’ Compensation, Property, Casualty Package, Boiler and Machinery, Cyber and Internet Liability, Pollution Liability, Aviation Liability, and Federal Flood Insurance Programs for calendar year 2025 with authorization to bind coverages effective January 1, 2025. Countywide (Lorie Bailey Brown, CFO/Resource Management Director)
end
Division:
division
Resource Management - Risk Management
body
Authorized By:
Lorie Bailey Brown, CFO/Resource Management Director
Contact/Phone Number:
Bill Telkamp/407-665-5258
Background:
The County’s Self-Insurance Program includes excess coverage for Workers’ Compensation, Property, Casualty Package, Boiler and Machinery, Cyber and Internet Liability, Aviation Liability, and Pollution Liability Insurance. The effective date for this renewal will be January 1, 2025. The County’s broker, Arthur J. Gallagher & Company (Gallagher), competitively markets excess insurance coverage for the self-insurance program each year on behalf of the County.
Insurance Market Conditions
The property insurance marketplace in Florida started to soften in the second and third quarters of 2024. However, large market losses from Hurricanes Helene and Milton have slowed the progress of this softening and led to a push for low double digit rate increases going into 2025. Nonetheless, the property market remains stable with ample capacity available for Public Sector risks in Florida
The casualty insurance marketplace for Florida Public Sector entities also remains stable, although rate pressures continue for core casualty lines driven by large nuclear verdicts, continued escalation of auto loss costs and related inflation. Markets continue to push for 10-15% rate increases on the core casualty lines.
The markets for excess workers compensation and cyber coverage remain competitive, with most carriers remaining flat on renewals. Overall, the market remains orderly and stable across most lines of coverage and the expectation will be for only single digit rate increases where needed, with many lines remaining flat.
Renewal Results by Major Line of Coverage
Seminole County’s total insured property values for the 2025 renewal increased from $934,717,233 to $1,024,076,771, a total increase of $89,359,538 or 9.6%. The total increase in property values includes the addition of the Courthouse Annex, $38,670,707, along with increased values in vehicles, heavy equipment, portable equipment, and an annual property valuation adjustment. The expiring rate (including engineering fees and assessments) is .1776 per $100 in total insured values resulting in a total cost of $1,659,864 last year at renewal.
Zurich was selected as the County’s property carrier effective 01/01/2019. Zurich’s premium at that time was significantly lower than all other options and provided 100% of the County’s property coverage with a single carrier. Zurich has remained the most competitive market for the County over the last five (5) years. However, the property insurance market significantly hardened in the wake of losses sustained in Hurricane Ian as well as other Global catastrophes, and, as a result, starting in 2023 Zurich was only able to offer 50% of our need, while Axa/XL was added to provide the remaining 50%.
As Gallagher approached the global property marketplace for the 2025 renewal, the quotes provided by Zurich and Axa/XL remained by far the most competitive option available to the County. Zurich’s rate increase was 5%, while Axa/XL’s rate increase was 8%. The results are a combined rate increase of 6.6% for terms as expiring with a total cost of $1,936,524. Both carriers initially sought 10% rate increases.
Despite the increases in rate, any alternative carrier’s program structures would be significantly more expensive. The alternative property carriers able to quote our program can only deploy an average of $2.5M to $5M per carrier and would require 10+ carriers to provide our entire limit, adding significant expense. The fact that two major carriers are willing to put up $25M each in capacity is helping keep the cost at the lowest level possible.
The market for Excess workers’ compensation coverage, while stable, has limited markets willing to offer coverage to entities with Fire and Police exposures that are subject to presumption laws. This limited marketplace contributes to the cost of excess workers’ compensation coverage.
Arch provides statutory workers’ compensation coverage excess of $1,000,000 self-insured retention (SIR) for Firefighters and $500,000 SIR for all other employees. The expiring premium rate for excess workers’ compensation coverage with Arch is .3734 per $100 in total payroll, or an annual premium of $481,906. The County’s 2025 estimated payroll has increased by $10,770,373 (8.3%) from $129,058,890 to $139,829,263. We are in a multi-year rate agreement with Arch, and therefore their quoted rate for renewal is the same as expiring. If the current SIR structure is kept in place, the renewal premium would be $522,122.
However, Arch has offered an option to increase the SIR for all employees to $1,000,000. This option reduces the annual premium by $142,625. The County has only incurred $257,000 in claims within this layer over the last 10 years, for an average of $25,700 yearly. Accepting this option is recommended and included.
Ambridge is the current carrier for excess General Liability, Auto Liability, Errors and Omissions Liability, Employee Benefits Liability, Crime, Law Enforcement Liability, and Sexual Abuse Liability. The current program with Ambridge has a $300,000 SIR for all casualty coverages. Ambridge also provides $1,000,000 over the road auto physical damage coverage with a $500,000 SIR, which is geared toward our most expensive fire vehicles.
Carriers providing excess casualty to Florida Public Entities have been pushing for 10% rate increases this year and Ambridge has provided a renewal quote below this range. Their renewal premium quoted is $558,625, which represents a 7% overall increase.
The cyber liability market for public sector entities was essentially flat again this year and the incumbent has offered a flat renewal with the same terms as expiring.
The incumbent Pollution Liability carrier, Chubb, quoted a premium increase of 4% for a total of $51,654. However, Chubb will no longer provide coverage for landfill operations. Therefore, Gallagher anticipates placing this coverage with another carrier who will provide coverage for landfill operations at a not to exceed price of $70,000.
Aviation Liability, Terrorism, Flood, and Boiler and Machinery coverage premium increases were nominal.
Program Summary
Expiring premiums and assessments for 2024’s renewal totaled $2,838,459. The renewal premiums and assessments for 2025’s renewal are anticipated to be $3,076,037. The actual premium paid is subject to changes in exposure through the year, such as property additions or changes and audited payroll.
Requested Action:
Staff requests the Board approve the County’s Workers’ Compensation, Property, Casualty Package, Boiler and Machinery, Cyber and Internet Liability, Aviation Liability, Federal Flood Insurance, and Pollution Liability Insurance Programs for calendar year 2025 and authorize staff to bind coverages effective January 1, 2025.