Glendale Insurance Market Update 23-24 Renewal

Aliant

City of Glendale, AZ
Insurance Market Update

2023/2024 Renewal

Chris Tobin, Banesa Laird, and
Pam Dominguez

(THIS INFORMATION HAS BEEN CONSOLIDATED FROM VARIOUS INDUSTRY SOURCES)

Market Conditions

impactful issues for insureds:

Property

Excess Liability

Sat)
ap’.
sere
Cyber

Liability capacity pull back and withdrawals have been significant over the past two years
Property capacity reductions:

* 15% to 30% reduction in capacity from incumbents

* Coastal and wildfire capacity continues to be especially difficult

Cyber capacity is shrinking and particularly acute for certain industries (Public Entity)

Insurers produced negligible profit in 2021 —$112b in Global Insured CAT losses in 2021 —
4th Worst Loss Year on Record.

Workers Compensation remains stable.
Historically low interest rates have hampered carrier investment returns.

An increased pattern of major property catastrophes such as hurricanes, typhoons,
wildfires, etc. over the past 5 years. Is this the new normal?

Consistent increases in attritional property losses (fires, water damage, tornados, hail,
wildfires).

Increased inflation has added to the issue of valuation across al! property classes.
Social inflation & Litigation Financing driving up liability verdicts and settlements.

Ransomware cyber losses are systemic - $6 Trillion Impact in 2021 — Expecting $10
Trillion by 2025 — 2019 was $2 Trillion

Alliant

Recent CAT Losses

&

50% of the

Lower 48 States are
in drought

299.9 Million

acres of crops in U.S.
are experiencing
drought conditions
this week.

120.2 Million
people in the U.S. are
affected by drought
this week.

Flooding

2021 - More than 50
severe flood events

$80b Economic Loss

— only $20b insured

2022 — KY Floods

37 deaths

apm) Record-breaking 21

4

named storms in 2021

S45B+ in insured

losses (US ) IDA =
$30b Alone

© Hurricane lan = $?

=> @ kh >

Wildfires

2021 wildfires

Burned over

7,000,000 acres

$15B in

insured loss

2022 To Date = _
5.7M acres

Tornado/Convective Storm

2021 1376 tornadoes

in the US compared to
1075 in 2020

Over 100

deaths associated

Estimated $10B+

insured losses

Aliant

Spotlight: Cyber Liability

Marketplace stabilizing after several years of dramatic Sector view on resilience to cyber risk
claims development.

Security standards across the marketplace:
* Multi-factor authentication

* Well managed end point detection
* Well managed RDP connections — VPN, MFA, etc.

b
S
x
w
0
x

41% 1 33% L 52% )

* Back Ups

. a vo te) oo
* Planning and Training (and Frequency) 8 = x € & Sy Sg - Se es
; 3 2 8 2 5m 52 82 85 BSE @8
* Reasonable patching schedule/plan a 3 fi 2 es Pad s os 38 aS cs
* Plan or adequate measures in place to protect end of life software 5 = s ® % £6 aS 23 se = §
2o = DG =o S o
¢ IT Security Budgets g 2 2 Fs £ = £ BB a e
iS) wd _ ow
* Email Security s 2 3 2 sg #
. oO i a 2 2 iL
* Identity Access Management x= 2 g gs
=x

¢ Service Account Management
mmm By Sector —=Median

Percentage of US and UK companies feeling ‘very prepared’ to anticipate and respond to cyber
risk in 2021, Median line indicates the mid-point of the data set across all industries surveyed.

. “Aiant

Increasing Impact on Liability Market

S)

Hyper Social Inflation Reviver Legislation

Amendments

Litigation Financing

continues to driv claims
and 68% of firms

are using it in 2¢

“A Texas jury awarded $300
billion to the family of a teen
and her grandmother, who
were killed in a 2017 crash

Arise in Sexual Abuse and
Molestation claims and
settlements

with a drunk driv This

va

Law Enforcement Underwriter Scrutiny Exclusions
S| - continued restrictions surrounding sexual abuse, Wildfire

reinsurers are seeking to
Exclusions, COVID, cyber, opioids and man made chemicals

cS

inc sed fo
grow prudently and a

maintaining a disciplin (PFAS — new focus)

policy and ¢
well as pressure on

Qualified Immunity
approach.

Aliant

Toward

the Future

Alhant

Pricing Capacity

Market Trends

Challenged Exposures

+
Non-Challenged Exposures e
+

Builder’s Risk

eS

General Liability

Excess Liability

Workers’ Compensation

¢tee¢? lt tt

¢
+t
Automobile Liability *
Sad
*t

Umbrella Liability

Gi =
js = p f

Cyber

+

Employment Practice Liability *
Fiduciary *
*

Fidelity/Crime

What direction are pricing,
capacity, limits, deductibles
and coverages moving?

@ increasing
€> Stabliizing / No change
= Decreasing

As a buyer, is that movement
positive, neutral, or something
that could present a challenge
during my renewal?

l@im Positive change
‘em Neutral / No change
(mm Potential Challenge

»Alfant

f 1 Continued scrutiny of data (SOV, COPE, ITV
all with Increased Construction Cost)

= Increased retentions and caps on certain types
of exposure

* Windstorm & Hail

Rate increases expected and highly dependent
€)- on Wind Season, Reinsurance Market and
individual client losses

Property Renewal

Outlook

&, 1 Underwriter submission activity remains
mf (=) high - imperative to engage early and access
. global market

Bey Regional Underwriting: Property markets
are affected differently across the nation.

e.g. West Wildfire, East Hurricanes, Midwest Hail, etc.

“Aliant

Liability Renewal

Outlook

Excess liability continues
to be a challenge

Oo

Specific Problem areas:

* Aggregate limits — Many carriers are
looking to cap their exposure on pool
programs .

* Attachment point/Retentions are being
closely examined

* Underwriter scrutiny on Law Enforcement
and Sexual Abuse/Misconduct coverages

° Emerging Exclusion - PFAS

Pricing expectations based on Q2 results for
2022 = Flat to +10% — based on losses and
jurisdiction

Engage incumbent carriers early to gain
commitment on renewal

; »Alliant

Leading insurers have indicated
“We may have hit rate equilibrium”

* 15% to 25% increases, at a minimum, for
“good” risks and most starting much higher

¢ Lower overall capacity deployment

Cyber Renewal 5 f * Increased per-claim, self-insured retentions
Outlook ja | . a A for poor security posture
\) : : * Potential coinsurance percentages added for
ransomware

* Further reduction of ransomware limit

Requirement to evidence security posture:
— + MFA 100%
=e * Data Backups

* Endpoint Detection

* Employee Education & Training Programs

e “Aliant

* Rate Expectations: Account Specific

Workers Compensation

Renewal Outlook * Underwriter Concerns: Per occurrence exposure to
Cat Loss

* Wage Inflation’s Impact on premiums & Medical
Expense Inflation

Presumptive Claims

* Arizona Legislature will reimburse public safety cancer losses,
but it will take time for the insurance carriers to see these
savings and pass them on in the form of lower premiums. -

Engage incumbent carriers early to

O)
e. gain commitment on renewal
e@

ns »Aliant

3lendale

Property/Casualty
Coverage overview

Review of Current Insurance Programs

City of Glendale . Property
Presentation Overview
« General Liability
: Workers Compensation
« Cyber liability
« Ancillary Coverages

Renewal Strategy -Marketing

Insurance Premium Budget Projections 23/24

Parting thoughts on Insurance Renewals

Overview i Insurance Programs

Property
General Liability
Workers’ Compensation
Miscellaneous Lines
Pollution
Cyber Liability -Primary and Excess
Airport Liability
Crime
Fiduciary
Drones

PROPERTY COVERAGE OVERVIEW

Alliant aa Program Glendale Property Coverage in APIP

* Replacement cost for physical damage

* APIP provides the best coverage * Earthquake Coverage provided
terms for municipalities * Flood Coverage including Zones A&V

F ¢ Automatic acquisition of new locations
* Broad Insuring Agreement q
* Blanket fine arts coverage

e
Coverage for all property (personal ¢ Municipal bond and tax revenue interruption coverage

and real) ;
* Course of construction coverage
* First party Automobile coverage * Coverage for Misc./Unnamed locations
¢ APIP is unique in that it provides * Boiler and machinery (includes jurisdictional inspections)
separate coverage for Cyber and * First Party Automobile Coverage
Pollution Liability * Cyber liability limits up to S2M

* Pollution limits up to S2M
ie «~~ Built-in loss control and appraisals

Current Property Insurance Overview

ee a 23/24 Updates

Total Insured Values $927,593,499 $996,262,625
Policy Limit $1,000,000,000 $1,000,000,000
Deductible $100,000 All Risk Deductible $100,000 All Risk Deductible

Key Sub-limits: Sub-limits: Sub-limits:

Business Interruption $100,000,000 $100,000,000

Course of Construction $25,000,000 $25,000,000

Terrorism $100,000,000 $100,000,000

Flood (Non High Hazard) $75,000,000 $75,000,000
Flood (Flood Zone A&V) $7,500,000 $7,500,000

Earthquake $100,000,000 $100,000,000

Boiler and Machinery (APIP) $100,000,000 $100,000,000
Cyber Liability (APIP) > ee nia, member $2,000,000
Pollution (APIP) ae ae $2,000000

Expiring Premium $1,283,642.81

22/23 Earthquake and Flood Overview- in APIP

Current Coverage

2 Coverage is provided through the
APIP program

0 Earthquake: $100,000,000 limits
with a $100K deductible

2 Flood: $75,000,000 Limits with a
$250,00 all flood zones

a $7,500,000 Flood for Zones A&V
with a $500,000 deductible

General Liability

Coverage for damages to third parties arising out of
the City’ negligence includes:

¢ General Liability- Occurrence

Ce

¢ Law Enforcement Liability Mey,

¢ Automobile Liability ly Vy ;

* Public Officials (Directors and Su, (ap.
Officers) Liability é ‘ey iy,

¢ Employment Practices Liability

en

Current — 22/23 Glendale Excess Liability Limits Structure

Great American Assurance Company
340M $5M xs $35M excess of $1M SIR

$26M a inte = a Hallmark Specialty Insurance Company
‘s , Foe. $5M xs $20M excess of $1M SIR im

$11M The Princeton Excess and Surplus Lines Insurance Company
$5M xs $5M excess of $1M SIR

S6M
S1M $1,000,000 Retention

Total Annual Premium - $1,835,874.26 Plus Taxes/Fees —“Allliant

*Limits shown do not reflect the applicable Policy Aggregates for each layer participant

22/23 Excess Workers’ Compensation Coverage
Overview

= Coverage for injuries to employees while in the
course and scope of employment

» Insurance Carrier Safety National
« Limits Statutory

» Employers Liability Limit S 2,000,000

« Current Retention $ 2,000,000

= Presumptive Retention S$ 2,500,000
= Payroll at Binding § 152,439,355
« Expiring Premium S 423,781

20