Meeting_Body
FINANCE, BUDGET AND AUDIT COMMITTEE
APRIL 14, 2021
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 purchase All Risk Property and Boiler and Machinery insurance policies for all property at increased policy limits at a not to exceed price of $4.75 million for the 12-month period May 10, 2021 through May 10, 2022.
Issue
ISSUE
The All Risk Property and Boiler and Machinery insurance policies expire on May 10, 2021.
Discussion
DISCUSSION
Property insurance protects against losses to our structures, fleets, and improvements, which are valued at approximately $13.6 billion, up from last year's $13.3 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. Last year we included the value of the Crenshaw/LAX Line in our total insured values. However, through an agreement with our insurance carriers, we did not pay for the premium incurred by adding the Line since the Line was not accepted by Metro during the insurance term. We will pay premium attributed to the addition of the Crenshaw/LAX Line this policy period. 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, USI Insurance Services ("USI") marketed the property program to qualified insurance carriers to obtain property insurance pricing with coverage limits of $425 million. This limit is $25 million more than the last program to reflect an increase in insured values for Metro's assets over the years. 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. Final pricing is pending, so the quotes inc...
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