AGENDA ITEM EXECUTIVE SUMMARY

Transcription

1 AGENDA ITEM EXECUTIVE SUMMARY Agenda Item: Presenter & Title: Consider draft resolution approving renewal of General Liability/Property, Excess Workers Compensation Insurance, Excess Liability Policies Renewals, and brokerage fees effective April 30, Stephanie K. Dawkins, Asst. City Admin./Dir. of Admin. Services Date: April 8, 2013 Please Check Appropriate Box: X Committee of the Whole Meeting Special Committee of the Whole Meeting X City Council Meeting Special City Council Meeting Public Hearing Other - Estimated Cost: $436,659 annually If NO, please explain how the item will be funded: Budgeted? X YES NO Executive Summary: The City s current commercial insurance packages and excess workers compensation coverage is with Argonaut Great Central Insurance Company (Trident) and Midwest Employers Casualty (excess workers compensation coverage) which includes coverage for City property, inland marine, general liability, employee benefits liability, employment practices liability, law enforcement liability, public officials liability, automobile liability, automobile physical damage, crime, umbrella liability, excess errors and omissions, boiler and machinery coverage, electric utility, and workers compensation excess coverages expires on April 30, Workers compensation coverage has been funded through a self-insured program since 2003 with reinsurance through Midwest Employers Casualty. This excess coverage policy also expires on April 30, The attached is a memorandum from Arthur J. Gallagher Risk Management Services, Inc. outlines the renewal proposal for those coverages. After reviewing all information, it is recommended to remain with the current program with a premium increase of 3.4% over the prior year with no change in terms or conditions. Industry average for a public entity this year is 9.8%. The minimal increase was driven by property and electric utility premium rates. This is strictly due to the industry rates being increased, and not due to the City s losses/exposures. Attachments: (please list) Memorandum Resolution Recommendation / Suggested Action (briefly explain): Recommend approval of the commercial package, workers compensation excess coverage, excess liability coverage and brokerage fee as presented at a total cost of $436,659. This proposed amount is manageable within the proposed FY budgets of the respective funds.

2 Arthur J. Gallagher Risk Management Services, Inc Wednesday, April 3, 2013 Stephanie K. Dawkins Assistant City Administrator Director of Administrative Services 22 South First Street Geneva, IL RE: RENEW AL OF INSURANCE Dear Stephanie, We would li.ke to thank you and the City of Geneva for the opportunity to present our renewal proposal of i.nsurance for the policy term. Here is a recap of our 1/7 /2013 renewal discussion/ planning meeting: In 2012 we bypassed marketing the liability policies to our carriers due to the Jack of competitive interest in the marketplace in prior years. Since then, we had two new insurance companies come into the Public Entity Sector. As discussed, we marketed Geneva to seven insurance companies: Argonaut/Trident (incumbent carrier), Underwriters' at Lloyd's of London (Brit), CNA, Travelers, OneBeacon, Glatfelter, American Public Risk. These markets were chosen based on prior interest in quoting the City of Geneva, ability to quote similar coverages and deductibles, as well as financial strength. The current property marketplace has seen drastic increases in rates over the past two years due to the unfortunate catastrophes that took place in Insurance companies are trying to recoup their losses, and therefore extending rate increases across the Country to all clients. Most accounts are seeing an 8-10% rate increase, even when no losses have been reported and no exposures have changed. Last year the property coverages were marketed out. Chubb remained the City's insurance carrier as their program structure and pricing far surpassed their competition. Since we are focusing on the Uability coverages this year, we decided to market the property out every other year to gain more market interest and competitive results. Jn 2012 we marketed the Workers' Compensation coverage out to the 5 markets that would be able to quote fire/ police exposures. Of those markets, we received 3 declinations as they were unable to compete with Safety National's current self insured retention levels as well as premium. We did receive a quote from the Illinois Public Risk The Gallagher Centre Two Pierce Place Itasca fl Fax

3 Arthur J. Gallagher Risk Management Services, Inc Fund which was much higher in premium, but the Fund offered coverage on a first dollar basis (no retention level). We agreed that this line of coverage would not be marketed out and would coincide with the property coverage's in tem1s of marketing. The City's excess liability carrier rates have remained flat over the past 4 years. Since we did not market this coverage out last year, I recommend sending it to a few companies to see if we can get a more competitive rate. This also makes the current carriers, American Alternative and Evanston, re-evaluate the risk and see if additional credits can be given for good loss history. We decided these coverages would be marketed in conjunction with the primary Jjability coverage's. Here is the outcome of our efforts: From the primary Uabtlity markets selected to quote, Trident and Brit offered competitive terms. CNA and Travelers declined to quote due to the City's electric generation exposure. Glatfelter declined to quote as they felt they would not be competitive against the current program structure, and American Public Risk and OneBeacon could not compete on the current pricing offered by Argonaut/Trident. There is a lack of companies willing to write workers' compensation in Illinois, especially for Illinois municipalities. Midwest Employer's initially wanted to raise the current SIR of $SOOK to $600K. Gallagher was able to negotiate terms and keep the $SOOK SIR this year due to the lower claim frequency and the City's wonderful formalized return to work/light duty program. Premium is up slightly due to a few larger claims in prior years. Here are the claims referenced in the renewal quotation (names have been removed for privacy): o Cl arm closed for $498K when SIR was $350K o Open clain1 for $565K up from $5071< last year when SIR was $400K o Open claim for $300K - new to the analysis last year when SlR was $400K Many of our excess Li.ability markets have minimum premiums that need to be reached. Most of the time, these minimums are set at $50,000. American Alternative and Evanston (the City's current excess liability carriers) do not have these minimums in place. We marketed a few options out to other companies, and the best option we received was more than 41 % higher in premium than the City's current program. American Alternative remained at a flat rate for the 5 1 " year in a row. Evanston had a 2% increase which was driven strictly by industry rates and not by the City's exposures or losses. Evanston's portion of the premium is at $22, not even half of the other companies minimum premiums. If the City decides to renew with the current program, total premium is up 3.4% over the prior year with no change in terms or conditions. Industry average for a public entity this year is 9.8% The Gallagher Centre Two Pierce Place Itasca JL Fax

4 Arthur J. Gallagher Risk Management Services, Inc which makes this renewal a very competitive one. This increase was driven by property and electric utility premium rates. As discussed, this is strictly due to the industry rates being increased, and not due to the City's losses/ exposures. The City also has the option to move the primary Uability policies from Argonaut/Trident to Brit. Total premium savings would be $2,607 or 2.2%. The programs are comparable, but given the City's great history with Argonaut/Trident insurance, as well as the relationship that has been built in prior years, we would recommend staying with your current program. In spite of current economic conditions, the overall results of this year's renewal were very reasonable. As you may recall, the premiums in 2009 decreased dramatically (by $104,172) as a result of an aggressive marketing effort taken on by our public entity team. Since that time, the premium rates have remained steady and consistent, most often surpassing the benchmarked averages for Public Entities in Illinois. On behalf of the entire Arthur J. Gallagher Risk Management Service team, we want to thank you for the opportunity to be of service to the City of Geneva. We look forward to another great year! Best Regards, 9zoi1~ Jessica E. Edelman, CLCS Area Assistant Vice President Public Entity Division The Gallagher Centre Two Pierce Place Itasca IL fax

5 RESOLUTION NO RESOLUTION AUTHORIZING ACCEPTANCE OF PROPOSAL TO BIND COVERAGE FOR COMMERCIAL LIABILITY, EXCESS WORKERS COMPENSATION, PROPERTY, BOILER AND MACHINERY, AND EXCESS LIABILITY EFFECTIVE APRIL 30, 2013 BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF GENEVA, KANE COUNTY, ILLINOIS, as follows: SECTION 1: That City staff is hereby authorized to accept the proposal to bind the City s commercial package policies, excess workers compensation, property, boiler and machinery, and excess liability coverage effective April 30, SECTION 2: This Resolution shall become effective from and after its passage as in accordance with law. PASSED by the City Council of the City of Geneva, Kane County, Illinois, this day of, AYES: NAYS: ABSENT: ABSTAINING: HOLDING OFFICE: Approved by me this day of April, ATTEST: Mayor City Clerk

6 City of Geneva Client Authorization to Bind Coverage After careful consideration of Gallagher's proposal dated April 3, 2013, City of Geneva accepts the follow.ing coverage(s). Please check the desired coverage(s). / Line of Covera2e Carrier \ Accept D Reject Property, Inland Marine and Electric Utility Federal Insurance (Chubb) v Accept D Reject Excess Liability American Alternative (Second Layer) \. Accept D Reject Excess Liability Evanston Insurance (fhird Layer) v Accept D Reject Crime Travelers Casualty and Surety v Accept Reject Package (Casualty Lines) Argonaut Great Central Insurance Company D Accept I ".Reject Package (Casualty Lines) Underwriters at Lloyd's, London ~Accept Reject Excess \V'orkers Compensation Option I Midwest Employers Casualty Company D Accept [U-'Reject Excess \V'orkers Compensation Option II Midwest Employers Casualty Company 0Accept IQ1teject Excess Workers Compensation Option III Midwest E mployers Casualty Company TRI.A/Terrorism Covetaee Line of Covera2e Carrier D Accept [yj'reject Bind TRIA Terrorism Coverage Act as Federal Insurance Company (Chubb), quoted Underwriters at Lloyd's, London or Argonaut Great Central Insurance Company, American Alternative, and Evanston Insurance P. oyjde Quotations or Additional Information on the Followi Considerations 0Yes No Cyher Liability C ber Liabili /Iden ti Theft It is understood this proposal provides only a summary of the details; the policies will conta.in the actual coverages. City of Geneva confirms the values, schedules, and other data conta.ined.in the proposal are from our records and acknowledge it is our responsibility to see that they are ma.inta.ined accurately. We agree that your liability to us aris.ing from your negligent acts or omissions, whether related to the.insurance or surety placed pursuant to these b.inding.instructions or not, shall not exceed $20.tnillion, in tb.e aggregate. Further, without limiting the forego.ing, we agree that in the event you breach your obligations you hall only be liable for actual damages we.incur and that you shall not be liable for any indirect, consequential or punitive damages. Client Signature <Jt.4-1(,,'DI3 Dated Arthur J. Gallagher Risk Management Services, Inc. DCN D~I S Prop,Cns,\VC (GENEVA0-01) 68 68

7 City of Geneva Gallagher Compensation Agreement THIS COMPENSATION AGREEMENT is made and entered into and effective the 30th day of April, 2013 ("Effective Date") by and between CITY OF GENEVA, an Illinois entity ("Client"), and ARTHUR]. GALLAGHER RISK MANAGEMENT SERVICES, INC., an Illinois corporation ("Gallagher"). I. TERM AND TERMINATION This Agreement shall commence on the Effective Date for a term of one (1) year and shall automatically renew on the first anniversary of the Effective Date and annually thereafter for additional one- (1) year terms but may be terminated by either party at any time upon one hundred twenty (120) days prior written notice. II. OBLIGATIONS OF GALLAGHER Gallagher will provide the services set out on Exhibit A attached hereto (collectively, the "Services") to Client. If the Services include the placement of insurance coverages, Gallagher will use its commercial best efforts to secure such insurance coverages on Client's behalf. In the event an insurance company cancels or refuses to place such insurance coverages, Gallagher will use its commercial best efforts to obtain the coverage from another insurance company. III. OBLIGATIONS OF CLIENT Client shall remunerate Gallagher its usual and customary brokerage commission for the Services. In addition to or in lieu of commission, Client shall pay Gallagher an annual fee of $28,941 for the Services, which such fee may be revised at the time of renewal of this Agreement by the execution of an amendment to this Agreement signed by the parties hereto. If work is required to be performed in addition to the Services, Client agrees to compensate Gallagher for such additional work at its usual and customary rates. So long as the terms and conditions of the Services are substantially similar and Gallagher's performance is acceptable, in subsequent years the annual fee shall be increased 5% over the prior year, and shall be payable and earned as provided herein. IV. DISCLOSURES A. In addition to such fees and commissions provided herein, Gallagher may also receive investment income on fiduciary funds temporarily held by it, such as premiums or return premiums. Other parties, such as excess and surplus lines brokers, wholesalers, reinsurance intermediaries, underwriting managers, captive managers and similar parties, some of which may be owned in whole or in part by Gallagher's corporate parent, may earn and retain usual and customary commissions and fees in the course of providing insurance products to clients. Gallagher may also participate in contingent and supplemental commission arrangements with insurance companies. Contingent commission arrangements provide for additional contingent compensation if underwriting, profitability, volume or retention goals are achieved. Such goals are typically based on the total amount of certain insurance coverages placed by Gallagher with the insurance company, not on an individual policy basis. Supplemental commissions, unlike contingents, are known at the effective date of the policy, but are typically paid later and apart from when usual and customary commission is paid. Any such fees or commission will not constitute compensation to Gallagher under Section III. above. Arthur j. Gnllngher llldk DCN OMS Prop,Cas,\VC (GENE\' A0-01) 69 69

8 City of Geneva B. Gallagher's fees under this Agreement shall be fully earned on the execution of this Agreement (and any renewal thereof), and payable on invoicing. Client is responsible for payment of premiums for all insurance placed by Gallagher on its behalf. If any amount is not paid in full when due, including premium payments to insurance companies, that nonpayment will constitute a material breach of this Agreement that will allow Gallagher to immediately terminate this Agreement, at its option, without notice to Client. C. Where applicable, insurance coverage placements which Gallagher makes on Client's behalf, may require the payment of federal excise taxes, surplus lines taxes, stamping or other fees, to the Internal Revenue Set-vice (federal), various state(s) departments of revenue, state regulators, boards or associations. In such cases, Client is responsible for the payment of such taxes and/ or fees, which will be identified separately by G allagher on invoices covering these placements. Under no circumstances will these taxes or other related fees or charges be offset against the amount of Gallagher's brokerage fees or commissions referred to herein. D. Gallagher will be operating only as Client's broker, obtaining a variety of coverage terms and conditions to protect the risks of Client's enterprise. Gallagher will seek to bind those coverages based upon Client's authorization, however, Gallagher can make no warranties in respect to policy limits or coverage considerations of the carrier. Actual coverage is determined by policy language, so read all policies carefully. Contact Gallagher with questions on these or any other issues of concern. V. LIMITATION OF LIABILITY Gallagher's liability to Client, arising fron1 any negligent acts or omissions of Gallagher, whether related to the Services provided hereunder or not, shall not exceed $20 million in the aggregate. Without limiting the foregoing, Gallagher shall only be liable for actual damages incurred by Client, and shall not be liable for any indirect, consequential or punitive damages. IN \VI1NESS WHEREOF, tl1e parties hereto have caused this Agreement to be executed on ilie date first written above. ARlHURJ. GALLAGHER RISK MANAGEMENT SERVICES, INC. By: Name: Title: By: Name: Title: Arthur J. Gallagher Risk Management Services, Inc. DCN Dl\IS Pmp,c,,,,wc (GENEVA0-01) 70 70

9 City of Geneva Exhibit A Services Perform risk management services, which Client may from time to time need or require. The services include: I Arthur J. Gallagher & Co. receives from the City of Geneva an annual fee for proving brokerage and adrninistrative services. The services that Arthur J. Gallagher & Co. will provide the City of Geneva include, but are not limited to the following: Provide information regarding insurance markets from the standpoint of cost, service, coverage, and security. Keep client informed of changes in insurance market conditions that may affect the insurance program. Coordinate and develop renewal information with client. Assist in the preparation of materials, specifications, and underwriting data required by insurers. Market required insurance coverages. Prepare and present a formal annual renewal presentation to the client. Place coverage as instructed by client. Review the accuracy and adequacy of all policies, policy endorsements, and invoices prior to delivery. Assist the client in the design of policy form as needed. Issue binders, certificates of insurance, and other coverage verification documents as required. Assist staff in identifying and monitoring loss exposures including two loss prevention seminars. Present policy coverage questions to underwriters. Assist in obtaining settlements from insurers for losses that penetrate excess insurance layers. Act as liaison with insurance companies and any Claim Adrninistrators. Be available to answer day-to-day questions from staff personnel. Attend client meetings when requested. Arthur J. Gallagher Risk Management Services, Inc. DCN DMS Prop,C.s,WC (G E NEVA0-01) 71 71

10 This Notice pertains to the following quotation issued by an insurer of the Chubb Group oflnsurance Companies. If you have more than one Chubb policy, you will receive individual notice(s) for each policy to which the Terrorism Risk Insurance Act applies. Mailing Date Insured Name Mailing Street Address Mailing City, State, Zip March 8, 2013 City Of Geneva Electric Utility 22 S. First Street Geneva, Illinois Policy Number Effective Date /30/2013 Underwritln Com any Federal Insurance Com an CHUBB IMPORTANT NOTICE TO POLICYHOLDER TERRORISM RISK INSURANCE ACT You are hereby notified that pursuant to the Terrorism Risk Insurance Act (the "Act") effective December 26, 2007, we arc making available to you insurance for losses arising out of certain acts ofterrolism. Terrorism is defined as any act certified by the Secretary of the Treasury, in concurrence with the Secretary of State and the Attorney General of the United States, to be an act ofterrorism; to be a violent act or an act that is dangerous to human life, property or infrastructure; to have resulted in damage within the United States, or outside the United States in the case of an air carrier or vessel or the premises ofa United States Mission; and to have been committed by an individual or individuals as part of an effort to coerce the civilian population of the United States or to influence the policy or affect the conduct of the United States Government by coercion. You should know that the insurance provided by your policy for losses caused by acts ofterrorism is partially reimbursed by the United States of America under the fommla set forth in the Act. Under this formula, the United States of America pays 85% of covered terrorism losses that exceed the statutorily established deductible to be paid by the insurance company providing the insurance. However, if aggregate insured losses attributable to terrorist acts certified under the Terrorism Risk Insurance Act exceed $100 billion in a Program Year (January 1 through December 31), the Treasury shall not make any payment for any portion of the amount of such losses that exceeds $100 billion. If aggregate insured losses attributable to terrorist acts certified under the Terrorism Risk Insurance Act exceed $100 billion in a Program Year (January I through December 31) and we have met our insurer deductible under the Terrorism Risk Insurance Act, we shall not be liable for the payment of any portion of the amount of such losses that exceeds $I 00 billion, and in such case insured losses up to that amount are subject to pro rata allocation in. accordance with procedures established by the Secretary of the Treasury. The portion of your annual premium that is attributable to insurance for such acts of terrorism is: $. 4,082 If you elect not to purchase coverage for terrorism and your policy provides commercial property insurance in a jurisdiction that has a statutory standard fire policy, the premium shown here for Ensuing Fire is the amount attributable to the Insurance provided pursuant to that statutory standard fire policy. This coverage cannot be rejected. That amount is $ ---'8_1_3 Important Notice Form (Rev.12-07) Property - important Notice to Policyholder Page 1of3 13 DCN DMS Prop,C:ts,WC (GENEVA0-01) 72 72

11 This Notice pertains to the following quotation issued by an insurer of the Chubb Group of Insurance Companies. If you have more than one Chubb policy, you will receive individual notice(s) for each policy to which the Terrorism Risk Insurance Act applies. Malling Date hlsured Name Malling Street Address Mailing City, State, Zip March 8, 2013 City Of Geneva Electric Utility 22 S. First Street Geneva, Illinois Polk Number Effective Date /30/2013 Under the Act, you have thirty (30) days from the date of this notice to consider whether or not you wish to maintain insurance for terrorism losses covered by the Act. If you elect not to maintain this insurance, please so indicate by placing an "X" in the space provided on the next page, sign and return this disclosure notice to your agent or broker as soon as possible. By electing not to maintain this Insurance, you agree that we may attach a terrorism exclusion or sub limits to your policy. If you do not sign and return this disclosure notice, you will be deemed to have decided to maintain this insurance, subject to the next paragraph. If you elect to maintain this insurance, you must pay the premium disclosed above, otherwise we will avail ourselves of our normal remedies for nonpayment of premium, including cancellation of your policy in accordance with its terms. Important Notice. Form (Rev.12-07) Property - Important Notice to Policyholder Page 2 of3 14 DCN DMS Prop,Cas,WC (GENEVA0-01) 73 73

12 POLICYHOLDER DISCLOSURE NOTICE OF TERRORISM INSURANCE COVERAGE - UMBRELLA POLICY ~, -. Brit JnSIJf~nce You are hereby notified that under the Terrorism Risk Insu rance Act of 2002, as amended ("TRIA"), that you now have a right to purchase insurance coverage for losses arising out of acts of terrorism, as defined in Section 102(1) of the Act, as amended: The term "act of terrorism" means any act that is certified by the Secretary of the Treasury, in concurrence with the Secretary of State, and the Attorney General of the United States -to be an act of terrorism; to be a violent act or an act that ls dangerous to human life, property, or infrastructure; to have resulted in damage within the United States, or outside the United States in the case of an air carrier or vessel or the premises of a United States mission; and to have been committed by an individual or individuals, as part of an effort to coerce the civilian population of the United States or to influence to the policy or affect the conduct of the United States Government by coercion. Any coverage you purchase for "acts of terrorism" shall expire at 12:00 midnight December 31, 2014, the date on which the TRIA Program is scheduled to terminate or the expiry date of the policy whichever occurs first, and shall not cover any losses or events which arise after the earlier of these dates. YOU SHOULD KNOW THAT COVERAGE PROVIDED BY THIS POLICY FOR LOSSES CAUSED BY CERTIFIED ACTS OF TERRORISM ARE PARTIALLY REIMBURSED BY THE UNITED STATES UNDER A FORMULA ESTABLISHED BY FEDERAL LAW. HOWEVER, YOUR POLICY MAY CONTAIN OTHER EXCLUSIONS WHICH MIGHT AFFECT YOUR COVERAGE, SUCH AS AN EXCLUSION FOR NUCLEAR EVENTS. UNDER THIS FORMULA, THE UNITED STATES PAYS 85% OF COVERED TERRORISM LOSSES EXCEEDING THE STATUTORILY ESTABLISHED DEDUCTIBLE PAID BY THE lnsurer(s) PROVIDING THE COVERAGE. YOU SHOULD ALSO KNOW THAT THE TERRORISM RISK INSURANCE ACT, AS AMENDED, CONTAINS A $100 BILLION CAP THAT LIMITS U.S. GOVERNMENT REIMBURSEMENT AS WELL AS INSURERS' LIABILITY FOR LOSSES RESULTING FROM CERTIFIED ACTS OF TERRORISM WHEN THE AMOUNT OF SUCH LOSSES IN ANY ONE CALENDAR YEAR EXCEEDS $100 BILLION. IF THE AGGREGATE INSURED LOSSES FOR ALL INSURERS EXCEED $100 BILLION, YOUR COVERAGE MAY BE REDUCED. THE PREMIUM CHARGED FOR THIS COVERAGE IS PROVIDED BELOW AND DOES NOT INCLUDE ANY CHARGES FOR THE PORTION OF LOSS COVERED BY THE FEDERAL GOVERNMENT UNDER THE ACT. I hereby elect to purchase coverage for acts of terrorism for a prospective premium of &~~F, ~"!;J\'<~'iifilllr.: - / I hereby elect to have coverage for acts of terrorism excluded from my policy. I understand that I will have no coverage for losses arising from acts of terrorism s:. ~~ lr 13,S,$1., ~ pll~~. ke~mll Datf ~+9 Mvi:te K Print Name and Title Da..w~n!, fkr Ar}Uu~~ladr- Insured Name: City of Geneva 22 South First Street Geneva, IL Policy Period: April 30, 2013 to April 30, 2014 Brit Global Specialty USA A member of the Brit Insurance Group DCN DMS Prop,Cas,\VC (GENEVA0-01 ) 76 76

13 UNINSURED/UNOERINSURED MOTORISTS SUPPLEMENTARY AUTO APPLICATION A. OFFER OF UNINSURED/UNDERINSURED MOTORIST COVERAGE (UM/UIM COVERAGE) 'iiit llls!jffilfce Carrier: D Companion Commercial Insurance Company D Underwriters at Lloyd's, London Insurance Company indicated above hereby offers to provide UM/UIM coverage in limits equal to the automobile motor vehicle liability coverage limits of the policy number indicated below. B. EXPLANATION OF UM/UIM COVERAGE Uninsured Motorist Coverage provides protection for bodily Injury, sickness or disease, including death, under provisions approved by the applicable state Department or Bureau of Insurance for the protection of insureds hereunder who are legally entitled to recover from owners or operators of uninsured motor vehicles because of bodily injury, sickness or disease, including death, suffered by any person insured under that coverage in the policy to which this form references. Underinsured Motorist Coverage provides protection for insureds under that coverage in the pollcy for bodily injury, sickness, disease, including death, suffered by any person insured under the policy to which this form references, where the limits of coverage available for payment to the insured under all insurance policies covering persons liable to the insured are less than the limits for the insured's uninsured motorist coverage. Limitations on Coverage Uninsured Motorist and Underinsured Motorist coverage are subject to the limitations, conditions, and exclusions approved by the applicable state Department or Bureau of Insurance and the laws of the applicable state. C. ACCEPTANCE/REJECTION OF UNINSUREO/UNOERINSURED (other than Commercial Umbrella) Uninsured/Underinsured Motorist Coverage has been explained to me and I have read the foregoing explanation of UM/UIM coverage and I hereby: D D Totally Reject UM/UIM coverage. Accept UM/UIM coverage in limits equal to the limits of the motor vehicle liability coverage. 0 Wish to purchase limits of UM/UIM as indicated below: D D $35,000 $50,000 0 D $100,000 $250,000 D $500,000 D s1,ooo,ooo D. COMMERCIAL UMBRELLA (where appllcable) - Uninsured Motorists/Underinsured Motorists Uninsured/Underinsured Motorists Coverage has been explained to me and I have read the foregoing explanatlon of UM/UIM coverage and I hereby: 0 Totally Reject all UM/UIM coverage under the Commercial Umbrella. 0 Wish to purchase Umbrella limits of UM/UIM as indicated below: Limit $1,000,000 $2,000,000 $3,000,000 $4,000,000 Premium $50,000 $100,000 $150,000 $200,000 Selection D $5,000,000 $250,000 D The limit of liability indicated cannot be greater than the limit of liability afforded by the motor vehicle liability coverage under the commercial umbrella coverage. Brit Global Specialty USA A member of the Brit Insurance Group DCN DMS Prop,Cas,WC (GENEVAO OI) 77 77

14 1iiit rnsutance E. UNINSUR ED/UNDERINSURED COVERAGE REJECTED OR ACCEPTED IN LESSER LIMITS NEED NOT BE REOFFERED UPON RENEWAL UNLESS REQUESTED IN WRITING. I understand that the coverage selection or rejection indicated in Item C. above shall apply on policy(ies) in effect at the time this form Is executed and all future renewal policies until the carrier is notified in WRITING of any changes. If I sign below, and/or pay any premium, I have evidenced my actual knowledge and understanding or the availability of these benefits and limits as well as the benefits and limits you have selected. FRAUD WARNING: Any person who, with intent to defraud or knowing that he is facilitating a fraud against an insurer, submits an application or files a claim containing a false or deceptive statement is guilty of insurance fraud. The signature written below must be executed by a duly authorized representative of the Named Insured and applicant listed within this form. For the purposes of this application, a represented entity (as listed under the Named lnsured(s) or Applicant(s)) is defined as a public entity that the individual authorized with signing this application represents. The signing individual is a public official, employee or other representative authorized to enter into contracts on the entity's behalf. Cdlf rl G-UIV/IL ~I~ Policyholder I Applicant's Signature otf-llrt3 Date Signed Print Name and Title Insured Name: City of Geneva 22 South First Street Geneva, IL Policy Period: April 30, 2013 Policy Number: to April 30, 2014 Brit Global Specialty USA A member of the Brit Insurance Group DCN DMS Prop,Cas,WC (GENEVA0-01) 78 78

15 AM tl-llft1j htv!jj Ar1 v 'L- $ lopoo, ODO xs ~ $ I,OOD Named Insured : City of Geneva Policy No. or Type of Policy: 69A2FF Effective Date: 04/30/2013 t'nsurance Company: American Alternative Insurance Company POLICYHOLDER DISCLOSURE NOTICE OF TERRORISM INSURANCE COVERAGE You are hereby notified that under the Terrorism Risk Insurance Act, as amended, you now have a right to purchase insurance coverage tor losses resulting from acts of terrorism, as defined in Section 102(1)of the Act: The term "act of terrorism" means any act that is certified by the Secretary of the Treasury--in concurrence with the Secretary of State, and the Attorney General of the United States- to be.an act of terrorism; to be a violent act or an act that is dangerous to hum an life, property, or infrastructure; to have resulted in damage within the United States, or outside the United States in the case of certain air carriers or vessels or the pre mises of a United States mission; and to have been committed by an individual or individuals as part of an effort to coerce the civilian population of the United States or to influence the policy or affect the conduct of the United States Government by coercion. YOU SHOULD KNOW THAT WHERE COVERAGE IS PROVIDED BY THIS POLICY FOR LOSSES RESULTING FROM CERTIFIED ACTS OF TERRORISM, SUCH LOSSES MAY BE PARTIALLY REIMBURSED BY THE UNITED STATES GOVERNMENT UNDER A FORMULA ESTABLISHED BY FEDERAL LAW. HOWEVER, YOUR POLICY MAY CONTAIN OTHER EXCLUSIONS WHICH MIGHT AFFECT YOUR COVERAGE, SUCH AS AN EXCLUSION FOR NUCLEAR EVENTS. UNDER THE FORMULA, THE UNITED STATES GOVERNMENT GENERALLY REIMBURSES 85% OF COVERED TERRORISM LOSSES EXCEEDING THE STATUTORILY ESTABLISHED DEDUCTIBLE PAID BY THE INSURANCE COMPANY PROVIDING THE COVERAGE. THE PREMIUM CHARGED FOR THIS COVERAGE IS PROVIDED BELOW AND DOES NOT INCLUDE ANY CHARGES FOR THE PORTION OF LOSS THAT MAY BE COVERED BY THE FEDERAL GOVERNMENT UNDER THE ACT. YOU SHOULD ALSO KNOW THAT THE TERRORISM RISK INSURANCE ACT, AS AMENDED, CONTAINS A $100 BILLION CAP THAT LIMITS U.S. GOVERNMENT REIMBURSEMENT AS WELL AS INSURERS' LIABILITY FOR LOSSES RESULTING FROM CERTIFIED ACTS OF TERRORISM WHEN THE AMOUNT OF SUCH LOSSES IN ANY ONE CALENDAR YEAR EXCEEDS $100 BILLION, IF THE AGGREGATE INSURED LOSSES FOR ALL INSURERS EXCEED $100 BILLION, YOUR COVERAGE MAY BE REDUCED. SELECTION OR REJECTION OF TERRORISM INSURANCE COVERAGE I hereby elect to purchase Terrorism coverage as defined in the Terrorism Risk Insurance Act, as amended, for a prospective premium of $_.l!w.w. I hereby elect to have the exclusion for terrorism coverage attached to my policy. I understand that an exclusion will be attached to my policy and I will have no coverage for losses resrjing from certified, ~c~f terrorism. Ct-~ 6f Geru.,V(t t;'ike_f ktul!--z- POicyholder/Appl icant's Signature S'+e.p~vtie. Print Name ~. D~nJ Date TerrNotice05 (01111) Page 1of3 D CN Dll!S Prop,Cas,WC (GENEVA0-01) 80 80

16 :sv AN sr o~!lj ~. Co. $\o,ooo, ooo xs of 'it I. oop, ooo DISCLOSURE NOTICE OF TERRORISM INSURANCE COVERAGE 111 N. Canal, Suite #940, Chicago, IL (312) Fax: March 19, 2013 To Whom ll May Concern: We are required to send you this notice pur.>uantto federal legislation concerning terrorism insurance. You are hereby notified that under the Terrorism Risk Insurance Act, as amended, that you have a right to purchase insurance coverage for losses resulting from acts of terrorism, as defined in Section 102(1) of the Act: The tenn "act of terrorism" means any act that is certified by the Secretaiy of the Treasul)'-in concurrence with the Secretaiy of State, and the Attorney General oflhe United States-to be an act of terrorism; to be a violent act or an act that is dangerous to human life, property, or infrastructure; to have resulted in damage within the United States, or outside the United States in the case of cerlain air carriers or vessels or the premises of a United States mission; and to have been committed by an individu~ or individuals as part of an effort to coerce the civilian population of the United States or to influence the policy or affect the conduct of the United States Government by coercion. YOU SHOULD KNOW THAT WHERE COVERAGE rs PROVIDED BY THIS POLICY FOR LOSSES RESULTING FROM CERTIFIED ACTS OF TERRORISM, SUCH LOSSES MAY BE PARTIALLY REJMBURSED BY THE UNITED STATES GOVERNMENT UNDER A FORMULA ESTABLISHED BY FEDERAL LAW. HOWEVER, YOUR POLICY MAY CONTAfN OTHER EXCLUSrONS WHICH MIGHT AFFECT YOUR COVERAGE, SUCH AS AN EXCLUSION FOR NUCLEAR EVENTS. UNDER THE FORMULA, THE UNITED STATES GOVERNMENT GENERALLY REIMBURSES 85% OF COVERED TERRORISM LOSSES EXCEEDING THE STATUTORJLY ESTABLISHED DEDUCTIBLE PAID BY THE INSURANCE COMPANY PROVIDING THE COVERAGE. THE PREMIUM CHARGED FOR THIS COVERAGE JS PROVIDED BELOW AND DOES NOT INCLUDE ANY CHARGES FOR THE PORTION OF LOSS TI!AT MAY BE COVERED BY THE FEDERAL GOVERNMENT UNDER THE ACT. YOU SHOULD ALSO KNOW THAT THE TERRORLSM RISK INSURANCE ACT, AS AMENDED, CONTAINS A $100 BILLION CAP THAT L!MlTS U.S. GOVERNMENT REIMBURSEMENT AS WELL AS INSURERS' LIABILITY FOR LOSSES RESULTING FROM CERTIFIED ACTS OF TERRORISM WHEN THE AMOUNT OF SUCH LOSSES ln ANY ONE CALENDAR YEAR EXCEEDS $100 BILLION. IF THE AGGREG<\TE INSURED LOSSES FOR ALL lnsurers EXCEED $100 BILLION, YOUR COVERAGE MAY BE REDUCED. SELECTION OR REJECTION OF TERRORISM INSURANCE COVERAGE PLEASE "X" ONE OF THE BOXES BELOW AND TAKE THE ACTION INDICATED. r herby electto purchase the Terrorism Coverage required to be offered under TRIPRA for a premium of $15 (plus applicable taxes and fees). ~---- Action: Plea$e sign and return this form with your payment for premium to your Insurance agent. l decline to purchase the Terrorism Coverage required to be offered under TRTPRA. Acliou: Please ig n and return this form to your Insurance agtnf, Signature K S+eP h an it /(_ Daw K-rnJ. Print Name Date: Insured: City of Geneva Submission#: I bs Page 3 of3 DCN DMS Prop,Cas,WC (GENEVA0-01) 81 81