Metro - File #: 2017-0062

• File #: 2017-0062
• Type: Program
• Status: Passed
• File created: 1/30/2017
• In control: Finance, Budget and Audit Committee
• On agenda: 4/19/2017
• Final action: 4/27/2017
• Title: AUTHORIZE the Chief Executive Officer to negotiate and award All Risk Property and Boiler and Machinery insurance policies for all property at the current policy limits at a not to exceed price of $2.4 million for the 12-month period May 10, 2017 through May 10, 2018.
• Indexes: Budgeting, Expo Line Operating Project (Project), General Overhead (Project), Gold Line Operations (Project), Insurance, Los Angeles Union Station, Maintenance practices, Metro Exposition Line, Metro Gold Line, Metro Green Line, Metro Orange Line, Metro Rail A Line, Metro Rail B Line, Metro Rail C Line, Metro Rail E Line, Metro Rail L Line, Metro Red Line, Operations and Maintenance, Operations Maintenance (Project), Operations Transportation (Project), Owned Property (Project), Program, Project management, Purchasing, Rail Operations - Blue Line (Project), Rail Operations - Green Line (Project), Rail Operations - Red Line (Project), Station operations, Terrorism, Union Station Property Management (Project)

Date	Action By	Action	Result
4/27/2017	Board of Directors - Regular Board Meeting
4/19/2017	Finance, Budget and Audit Committee

Meeting_Body
FINANCE, BUDGET AND AUDIT COMMITTEE
APRIL 19, 2017

Subject/Action
SUBJECT: PROPERTY INSURANCE PROGRAM

ACTION: PURCHASE ALL RISK PROPERTY AND BOILER AND MACHINERY INSURANCE

Heading
RECOMMENDATION

Title
AUTHORIZE the Chief Executive Officer to negotiate and award All Risk Property and Boiler and Machinery insurance policies for all property at the current policy limits at a not to exceed price of $2.4 million for the 12-month period May 10, 2017 through May 10, 2018.

Issue
ISSUE

The All Risk Property and Boiler and Machinery insurance policies expire on May 10, 2017.

Discussion
DISCUSSION

Property insurance protects against losses to our structures and improvements, which are valued at approximately $11.9 billion up from last year's $11.2 billion. The increase in total insured value is primarily due to general replacement cost growth, acquisition of new light rail vehicles, revaluation of existing rail vehicles and revaluation of some light rail station properties. Property insurance is required by many contracts and agreements, such as our lease/leaseback deals involving a number of our operating assets.

Our insurance broker, Wells Fargo Insurance Services ("Wells Fargo"), marketed the property program to qualified insurance carriers to obtain final property insurance pricing with coverage limits of $400 million. Quotations for our property insurance program were received from carriers with A.M. Best ratings indicative of acceptable financial soundness and ability to pay claims.

The Recommended Program secures the All Risk deductible at $250,000 with no earthquake coverage and a flood deductible at 5% per location subject to a $250,000 minimum. If a loss exceeds the deductible, All Risk coverage is provided up to $400 million per occurrence for losses except for flood related damages that are covered up to $150 million. The recommended program is the same as the prior year program. Attachment A is a premium history. Attachme...