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New Business - Insurance



  • The policy will cover $2.696 billion in total property values, with catastrophic policy limits of $200 million. There is a $369 million increase (15.8%) in total insured values due to the opening of seven new schools, additions and modernizations to existing schools.  Total premium will be finalized prior to 12/31/2004 and will not exceed $6.804 million.  This policy continues the 4% per location wind deductible as well as self insuring the $10 million primary layer.


  • Although the state suffered four devastating hurricanes this year, premium renewal rates are not expected to increase more than 15% and may actually remain flat through the end of the calendar year.  Expected carriers, taxes and fees have not yet been finalized, thus the not to exceed request of $6.804 million.  The not to exceed premium also includes the projected premium to add four new schools to our schedule when they open next August.  That projected premium would not be paid until the schools actually become the property of the District in August.


  • There is a potential $50 million of increased policy limits above the current $200 million which may be purchased for an additional $250,000 to $300,000.  With the probable maximum loss (PML) for a 100 year storm at $142.8 million and the PML for a 200 year storm at $252.0 million, we are not recommending purchasing the additional capacity at this time.


          The named hurricane deductible has been maintained at  4% of values at damaged locations subject to a $1,000,000 per occurrence minimum.  There is no maximum limit on the named windstorm deductible.


  • The District is able to reduce the premium cost by assuming the corresponding value of risk (co-insurance) in various insurance layers within our program or by accepting a higher deductible for a particular line of coverage (such as wind). For three years the District has chosen to self-insure the first $10 million of any loss for a total three-year premium savings of $4.6 million.  We again recommend continuing to self-insure this first $10 million loss layer for an estimated savings this year of $ 1.35 to $1.5 million.


  • However, for any losses within this $10 million layer, we believe the District would no longer be eligible for Federal Emergency Management Agency (FEMA) reimbursements, which cover the uninsured/underinsured losses should a Federal Disaster be declared. 


  • The flood deductible for buildings and contents (excluding zones A & V) was maintained at $500,000 each.  Flood zones A&V are covered under a separate flood insurance program.  All other perils remain with a $100,000 deductible.


  • Our broker, Arthur J. Gallagher & Co., has contacted more that 50 insurers/reinsurers and assembled a consortium of carriers in order to cover our property insurance renewal.  Since all carriers have not yet committed to participation and price, approval of this board item authorizes our broker to obtain this insurance on behalf of the District at a premium not to exceed $6.804 million.


  •  Arthur J. Gallagher & Co. is compensated on a flat fee basis, which will be reduced by any commissions received when a carrier refuses to reduce their premium when not paying commission, as approved by the Board on July 21, 2004.


I recommend that the School Board approve the purchase of property insurance effective December 31, 2004 to December 31, 2005 at a cost not to exceed $6.804 million.

Financial Impact:
The financial impact to the District for this coverage is not to exceed $6.804 million. The source of funds is the General Funds budget for insurance premiums.

For Additional Information, contact:
Joseph M. Moore (moorej@palmbeach.k12.fl.us) ; Dianne L. Howard

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