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Home My WebLink AboutBRIEFING re: 2022 Washington Counties Risk Pool (WCRP) Insurance Premium Increases JEFFERSON COUNTY BOARD OF COUNTY COMMISSIONERS REGULAR AGENDA REQUEST TO: Board of County Commissioners FROM: Mark McCauley, County Administrator DATE: August 8, 2022 SUBJECT: Briefing: 2022 Washington Counties Risk Pool (WCRP) Insurance Premium Increases STATEMENT OF ISSUE: The insurance market has been becoming more difficult in recent years due to a variety of factors.This has caused significant rate increases in our various insurance premiums for liability,property, crime and cyber coverages. 2022 is proving to be no different. ANALYSIS: Staff wishes to brief the Board of County Commissioners on 2022 insurance premium increases that will become due when we are invoiced by WCRP in the very near future. These premium increases will be paid out of General Fund Non-departmental initially. The County Auditor will then allocate the cost to the various departments that benefit from the insurance coverages. The attached spreadsheet shows premiums paid in 2021 and expected increases for 2022. The attached briefing slides explain why premiums are increasing at such a fast rate. FISCAL IMPACT: This request has no fiscal impact. RECOMMENDATION: That the Board of County Commissioners listen to the briefing and then ask questions or comment. REV ED BY: (7‘,- ) Mark McCauley, County Administrator Date 2022 Washington Counties Risk Pool Expected Premium Increases 2021% IncreaseCost Increase2022 Liability$556,12740%$222,451$778,578 Property$266,64512%$31,997$298,642 Cyber$20,47117%$3,480$23,951 Crime$1,1817%$83$1,264 Total$846,445$258,011$1,104,457 Terrorism$ 1,577no data Note: costs are distributed by the Auditor after payment ar a 62% – ©2022 ARTHUR J. GALLAGHER & CO. f of 236 Profits. Page 9 Delays Covid flation/High Jury Awards/Nucle ys/ In erdicts/Aggressive Plaintif nd wholesale markets too. Social VAttorneWe have engaged with all 7 of the carriersa y hotter: •• arch Board presentation. An update: In tate. ncome & Underwriting Since March Board meeting, hot spots areonlMarkets concern w/ Inflation, InvestmentIFewer carriers writing Pools in WashingtonSYou may recognize this chart from ourM2019, the median value of the top 50 USVerdicts is estimated to be $88M over 2018. •••• Liability Renewal Market Update 3 ©2022 ARTHUR J. GALLAGHER & CO. $411,620 $835,000$800,000 $3,197,500$3,400,000$1,074,900$3,624,900$1,275,000 of 236 Difference Page 9 $1,361,620$1,150,000$2,000,000$3,250,000$3,750,000$1,125,000$3,700,000$2,250,000 Incurred 3/2022 $52,500$50,100$75,100 $350,000$975,000 $950,000$315,000 $1,200,000 Incurred 3/2021 Rights AllegationNegligent HandlingCivilExcessive ForceNegligentSupervisionExcessive ForceExcessive ForceNegligent HandingDiscrimination 28 claims are now valued over $1M compared to 20 last policy term.10 claims valued over $2M compared with 7 last policy term.Total incurred = $83,940,555 compared to $65,324,950 a year ago. Policy Year20122013201520152017201820182018••• Social Inflation and the WCRP 4 Not Can’t Pending - –- ©2022 ARTHUR J. GALLAGHER & CO. PendingPending Pending DeclinedDeclined -- - -- Quota Share of 236 Quota Share Can’t compete w/ Old – Response Competitive XS $3M Page 9 Republic’s pricing $2M $3M XS $2M $5M XS $5M $5M XS $15M $5M XS $15M compete with Old Republic's pricing $5M XS $5M/50%$5M XS $5M $5M XS $5M/50% $10M XS $10M/50% Quota Share Upland Market London Genesis MunichRe Response Everest Re Competing GallagherRe Safety NationalSafety National Great American Washington State No longer writing Public Entity/Pools/or in Quoted Quoted Quoted Pending - – - – Pending - QuotedQuoted Pending Markel Market Declined - Specialty Argonaut –– - Brit Global Competing Response $2M XS $3M $5M XS $5M $3M XS $2M $5M XS $10M $10M/50% Quota Share Optional $5M XS $20M $5M XS $5M/50% Quota Share $5M XS $5M/50% Quota Share $10M xs $10M/50%Quota Share $10M xs AWAC Market Hallmark Ace/ChubbAce/Chubb Incumbent Old Republic Liability Marketing 9 & e alues v costs ©2022 ARTHUR J. GALLAGHER & CO. of 236 no longer writing Page urricanes, Tornadoes,iscox elays, cost of labor) =rimary due to pricing Wildfires, Freeze Events,HEarthquakesTrending Property Cost of repairs (supply chaindincreased claim Lexington replaced on thpRSUI, LSMA, James River H ––––– Global storm activity InflationCarriers Property Renewal Market Update 11 for ©2022 ARTHUR J. GALLAGHER & CO. ublimits s of 236 Page ggregate limit Data security controlsWCRP proactive approachMandatory ransom payments becomingcommonplaceReduction to overall policyaFew choices in Public SectorQuoting come September –––––– Underwriting DisciplineRetentions/Limits/PremiumsCarriers Cyber Renewal Market Update 14 $0 Renewal $18,000 Renewal 2022/2023 $25,000 2022/2025*$43,000* $2,000,000 $25,000,000 ©2022 ARTHUR J. GALLAGHER & CO. of 236 $0 Page Expiring $16,530 Expiring 2021/2022 $25,000$40,057 2021/2022 $2,000,000 $25,000,000 Crime Carrier proposing a three year policy term - Crime Renewal LimitRetentionPremium*estimate Liability Limit RetentionPremium Renewal $23,118 $10,000 TBDTBDTBD 2022/2023 Renewal 2022/2023 $100,000,000 Expiring $10,000$20,543 2021/2022 Expiring 2021/2022 $2M/$5M$250,000$195,885 $100,000,000 Cyber Renewal LimitRetentionPremium Property LimitRetentionPremium Standalone Terrorism Renewal 15 6 $3m SIR2023 2023 Page 116 of 236 2022 2022 2021 - $26.6 Net position $2m SIR2019 2020 $24.7 2019 $1mSIR $19.8 2018 $19.9 Risk capital target 2017 $18.1 Year ending Sep 30 2016 $18.0 2018 - 2015 $18.9 $100k SIR1999 2014 Regulatory minimum $19.4 2013 $16.7 2012 $12.9 $0 $80$70$60$50$40$30$20$10 Millions Funding adequacy Historical net position versus risk capital target PwC | Actuarial Review