Background:
The Florida Municipal Insurance Trust (FMIT), administered by the Florida League of Cities, Incorporated, is an intergovernmental self-insurance pool authorized under Florida law to allow public entities to collectively pool and manage their insurance risks. FMIT currently provides the City with a comprehensive insurance program that includes Excess General Liability, Auto Liability, Auto Physical Damage, Police Professional Liability, Medical Malpractice Liability, Errors and Omissions Liability, Public Officials' Liability, Property Insurance, Inland Marine Insurance, Stop-Loss Workers' Compensation Insurance, Breach Response and Cyber Liability coverage.
For the upcoming contract year, staff requested that FMIT provide two renewal options for consideration. The first option maintains the City's existing liability limits and property coverages, including a $75 million named storm blanket sub-limit protecting $713,411,703 in Sunrise reported insured property values. The quoted premium for maintaining the existing liability limits and property coverages is $338,522 lower than the prior year’s premium of $6,508,075. The premium of $6,169,553 is within the proposed budget for FY 2026/2027.
The second option provides reduced coverages, including lower liability limits of $2,000,000 compared to $5,000,000; a lower named storm blanket sub-limit of $50 million compared to $75 million; lower business interruption coverage of $2,000,000 compared to $5,000,000; and lower extra expense coverage of $2,000,000 compared to $5,000,000. The second option also limits scheduled property in the open coverage to facility lighting and pavilions only, resulting in $504,657,600 in total reported insured property values compared to $713,411,703. Both options maintain the same deductibles and self-insured retentions and include a new endorsement providing drone liability coverage. The quoted premium for a lower level of coverage is $5,355,139, which is $1,152,936 lower than the prior year's premium of $6,508,075.
The named storm blanket sub-limits are based on actuarial probable maximum loss (PML) modeling using a 1-in-250-year return period, which represents a 0.40% (less than one-half of one percent) probability of exceedance in any given year. This figure represents the modeled probability that a loss of this magnitude or greater could occur in any given year based on the location, construction, occupancy, and insured values reported. While the probability is extremely low, the cost for the higher level of coverage (existing levels) is recommended and prudent to limit the City's risk and potential fiscal impact should we be impacted by a catastrophic storm.
Staff recommends approving the renewal of Option #1 with FMIT, through the Florida League of Cities, for the contract period of October 1, 2026, through September 30, 2027. This recommendation is based on the current property insurance market, which is expected to result in an estimated premium reduction of approximately $338,522 under the current coverage limits. Staff further requests that the City Commission waive the City's formal competitive bidding requirements for good cause pursuant to Section 5-173(c)(5) of the Code of the City of Sunrise, Florida, because FMIT provides a specialized governmental insurance program specifically designed for Florida public entities and their unique exposures under Florida's sovereign immunity statutes, including customized coverage terms, governmental claims handling, liability defense services, property catastrophe protection, and other services specifically tailored to municipal risks.