Share to Facebook Share to Twitter Bookmark and Share
File #: 2018-0014   
Type: Program Status: Agenda Ready
File created: 1/29/2018 In control: Finance, Budget and Audit Committee
On agenda: 4/11/2018 Final action:
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 $2.5 million for the 12-month period May 10, 2018 through May 10, 2019.
Sponsors: Finance, Budget and Audit Committee
Indexes: Expo Line Operating Project, General Overhead, Gold Line Operations, Los Angeles Union Station, Metro Exposition Line, Metro Gold Line, Metro Orange Line, Operations Maintenance (Project), Operations Transportation (Project), Owned Property, Program, Rail Operations - Blue Line (Project), Rail Operations - Green Line (Project), Rail Operations - Red Line (Project), Surveys, Terrorism, Union Station Property Management (Project)
Attachments: 1. Attachment A - Premium History.pdf, 2. Attachment B - Recommended Program.pdf, 3. Attachment C - Alternatives Considered.pdf
Meeting_Body
FINANCE, BUDGET AND AUDIT COMMITTEE
APRIL 11, 2018

Subject
SUBJECT: PROPERTY INSURANCE PROGRAM

Action
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 $2.5 million for the 12-month period May 10, 2018 through May 10, 2019.

Issue
ISSUE

The All Risk Property and Boiler and Machinery insurance policies expire on May 10, 2018.

Discussion
DISCUSSION

Property insurance protects against losses to our structures and improvements, which are valued at approximately $12.1 billion up from last year's $11.9 billion. The increase in total insured value is primarily due to general replacement cost growth along with revaluation of both heavy and light rail vehicles. Property insurance is required by many contracts and agreements, such as our lease/leaseback deals involving a number of our operating assets.

Natural disasters last year will take a toll on property insurance carriers. Catastrophic events included Hurricane Harvey (estimated $40 billion in insured losses), Hurricane Irma (estimated $35 billion in insured losses), Hurricane Maria (estimated $30 billion in insured losses), California wildfires (estimated $12 billion in insured losses) and earthquakes in Mexico (estimated $1.5 billion in insured losses). Commercial property prices, which had been decreasing for much of the recent past, now indicate increases in the single digits according to a March 2018 Willis Towers Watson commercial lines insurance pricing survey. Pierre Laurin, Willis Towers Watson's Americas property/casualty sales and practice leader for insurance consulting and technology, said, "Last year's weather disasters were some of the most financially disruptive in history, and the survey results indicate we're likely now ...

Click here for full text