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Indian River County Board of County Commissioners
<br />Executive Summary
<br />C:CORE36CI
<br />Arthur J. Gallagher Risk Management Services, Inc. appreciates the opportunity to present this proposal for your
<br />consideration.
<br />We are very pleased to present Indian River County BOCC with a comprehensive property and casualty insurance proposal
<br />effective May 1, 2019 - May 1, 2020
<br />Market Conditions
<br />In early 2017, insurance industry surplus was approaching record levels and the market was continuing a softening trend. With
<br />capital continuing to increase, carrier competition and demand for growth kept rates down in the core property and casualty lines
<br />with the exception of auto liability.
<br />Unfortunately, the past two years of loss activity has changed the direction of the market, summarized below:
<br />• In 2017, industry property losses exceeded $100 Billion mainly due to hurricanes Harvey, Irma, and Maria (HIM),
<br />leading to a tightening of the property market in 2018. Average rate increases for Florida loss -free programs were
<br />approximately +10%.
<br />• In 2018, hurricanes Florence & Michael along with the California wildfires lead to a further hardening of the property
<br />market going into 2019's renewals
<br />• As a result of 2 unprofitable years, nearly all carriers both domestically and internationally are re -underwriting their
<br />books of business. Certain Lloyds syndicates are shutting down their direct insurance businesses, and multiple
<br />domestic carriers are cutting back capacity, or dramatically increasing rates
<br />These challenges have resulted in a difficult property market in 2019 - the market has actually gotten worse as the year has
<br />progressed. Many loss -free, $1 Billion+ TIV accounts are experiencing 15% to 20% rate increases in Florida this year. Smaller
<br />accounts have experienced fewer challenges than those programs, where you have a large percentage of the overall market
<br />engaged on the program.
<br />In addition to the pressure and hardening of the property insurance market, we continue to see deterioration of results and
<br />upward rate pressure in the Auto liability. The rest of the casualty lines are flat or up slightly.
<br />Catastrophe Model
<br />In order to assist in selection of an appropriate named windstorm limit of insurance, we have included the windstorm catastrophe
<br />model.
<br />Critical Return
<br />Prob. Period
<br />RMS VERSION 9.1
<br />RMS VERSION 11 (2013)
<br />[_ l[ Ground Up rGross Loss
<br />0.20%11 500'[ $ 58,734,3451[$49,150,564_]
<br />x0.40%1
<br />Ground Up
<br />-Gross Loss
<br />RMS VERSION 18 (2019)
<br />[ Ground Up 1
<br />Gross Loss -
<br />80,633,3303 $73,681,555J, $ 57,573,0-$ 52,708,665
<br />61,388,653]
<br />2501 $ 35,108,293J $29,864,682 $
<br />1.00%1 100 [$ 20,074,369[[$14,119,862JL$
<br />AAL $ - 786,1871x$ 599,166,; $
<br />[$55,425,938]
<br />E$ 40,138,592
<br />X35,824,4651
<br />44,226,4317V39,260,026[ $ 25,659,47-77f,_$ 22,086,5891
<br />25,048, 777
<br />$21,353,155
<br />[$ 11,589,316
<br />[$ 9,104,369]
<br />984,4§-617$ 755,490! $ 471,4321$ 351,9001
<br />�I'r
<br />Gallagher
<br />Insurance I Risk Management I Consulting
<br />
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