DEPARTMENT: Finance
DEPARTMENT HEAD: Troy Elliott, CPA
COUNCIL DISTRICTS IMPACTED: City Wide
SUBJECT:
Purchase of Aircraft Hull and Liability Insurance
SUMMARY:
This ordinance authorizes the City Manager or her designee to pay premiums for the City of San Antonio's Aircraft Hull and Liability insurance in the amount of $118,744. The coverage would be renewed with Commerce and Industry Insurance Company, a subsidiary of American International Group (AIG), for a term beginning May 1, 2015 through May 1, 2016. The proposed coverage term is for one year. This policy provides aircraft hull and liability insurance coverage for potential losses arising out of the operations of the San Antonio Police Department (SAPD) Helicopter Unit.
BACKGROUND INFORMATION:
The Aircraft Hull and Liability policy provides coverage for physical damage to any of the helicopters owned by the City for the use of the San Antonio Police Department. The liability portion of the policy protects the City (officers, officials, and employees) in the event of a claim due to bodily injury or damage to the property of others arising out of the operation of the aircraft. The limit of liability for any single occurrence is set at $10,000,000.00. A special endorsement provides protection for cargo, spare parts, and the FLIR (Forward-Looking Infra-Red) detection system mounted in the aircraft. Protection for risks arising from riots, civil commotion, and terrorism is included. The current coverage is provided by Commerce and Industry Insurance Company (AIG), which has provided this protection since May, 2014.
In December 2014, the Finance Department, Risk Management Division, in cooperation with the City's Broker of Record, Marsh USA, began the renewal process of gathering the information necessary to support an effective and timely request for insurance for these important City assets.
In January, 2015, Marsh published a solicitation for quotes and directly approached nine carriers deemed likely to offer insurance coverage required by the City. Responses were submitted to Marsh in February, 2015. Marsh provided analysis and recommendations to Risk Management for consideration. Eight carriers responded to the solicitation. Five of these declined to submit bids. The three carriers submitting bids were: Commerce and Industry Insurance Company (current incumbent), Starr Aviation and Phoenix Aviation Managers. The offer by Commerce and Industry Insurance Company was determined to offer the best combination of terms and conditions for the City. The quoted submission of $118,744 represents a 10.78% ($14,349) reduction in premium which is primarily due to the removal of one aircraft from inventory.
A summary of insurance coverage is provided in the attached marketing and comparison documents.
ISSUE:
Approval of payment to Commerce and Industry Insurance Company for the recommended premium would continue the Council's policy of providing insurance protection for the City's helicopter fleet. The policy term will be May 1, 2015 through May 1, 2016, in conformance with Council's previous decisions.
The Small Business Economic Development Agency Ordinance requirements were waived due to the lack of qualified SMWBE's available to provide the goods and services.
The Veteran-Owned Small Business Preference Program does not apply to non-professional service contracts.
The recommended award is an exception to the Local Preference Program.
ALTERNATIVES:
The alternative of taking no action would result in cancellation of the insurance coverage for the City's aircraft fleet. Physical damage to the City's helicopters and liabilities arising from their operation would be entirely at the City's expense.
FISCAL IMPACT:
This ordinance authorizes the City Manager or her designee to pay premiums for the City's Aircraft Hull and Liability Insurance payable to Commerce and Industry Insurance Company. Funds in the amount of $118,744.00 are available in the FY 2015 Liability Fund Budget.
RECOMMENDATION:
Staff recommends approval of this professional services agreement for Aircraft Hull and Liability coverage for the period May 1, 2015 to May 1, 2016 with Commerce and Industry Insurance Company. Contracts Disclosure Form is required.