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07-09-12 RFP 12-02 Agenda Item AGENDA ITEM # 8C JULY 9, 2012 CITY OF ATLANTIC BEACH be-4 i- w-N4"' CITY COMMISSION MEETING m f f • STAFF REPORT AGENDA ITEM: Insurance Broker of Record for City of Atlantic Beach for Employee Benefits and Property /Casualty & Risk Management Services - RFP No. 12 -02 SUBMITTED BY: Susan Danhauser, Human Resources Director DATE: June 22, 2012 BACKGROUND: The Human Resources Director requested that an RFP be completed to investigate options for an insurance broker /consultant to consult and advise the City on all related insurance programs, market trends and strategic planning for the future. The firm will also solicit quotes for health, property/loss and workers comp insurance to obtain the most effective plans for the best costs. With the aging employee population, health care reform, rising costs for health and liability coverage and workers compensation, the City needs a progressive firm to address and strategize these ongoing issues. Most insurance carriers will not directly market and sell its products without the use of a broker. The City has been utilizing the services of two brokers for its insurance needs and the cost of these services has been added to the premium costs. Since commission and fee rates are negotiable and brokers offer a wide range of services, it was the intent to compare brokers to ensure that the City was getting the range of services that was needed and for a competitive price. The current broker for employee benefits is a small firm and does not have the resources to provide the range of services listed below. With the annual renewal for all insurance coverage effective October 2012 and January 2013, this brokerage firm will be providing the following: • analyzing the City's needs • providing expert advice and strategic planning • conducting benchmarking with similar cities • preparing a market analysis • compiling premium quotes from all major carriers for coverage and • advising the City staff on the viable choices available. Once the policy contracts have been approved, the firm will be responsible for regular review of claim history and trends, develop and assist in the implementation of a wellness program, resolution of any claim issues with • employees or citizens, maintain regulatory compliance, provide technical support and expertise, provide employee comp and benefits statements, and assist the Human Resources department with employee information and education, including safety. 1 AGENDA ITEM # 8C JULY 9, 2012 Requests for Proposals were advertised and six firms responded. Proposals were evaluated for the following criteria: market knowledge, access, client knowledge, depth and technical knowledge of staff, account management, scope of services, communication, performance and strategy. The highest possible score was 82. Below is the average score of each firm: 1. Harden & Associates 77.0 2. Gallagher Benefit Services 73.0 3. Brown & Brown/ PRIA 69.0 4. Green -Hazel 65.5 5. McKinley 65.0 6. Florida League of Cities 40.0 Presentations from the top two firms, Harden & Associates and Gallagher Benefits Services, were given to the committee and the City Manager on June 19 and June 20, 2012. Harden & Associates, located in Jacksonville, Florida had the best overall score and their presentation showcased the range of services that would be provided to the City. Positive business references verified the high service level and expertise provided by Harden and Associates. There will be 11 staff assigned to the City of Atlantic Beach's account to serve the City and all are located in the Jacksonville area. Some of this firm's client list includes the City of Fernandina Beach, City of Jacksonville, Jacksonville Transportation Authority, St. Johns River Waste Management District, and Jacksonville Housing Authority. Harden & Associates has developed strong, influential relationships and has received high recognition from the top health carriers serving North Florida, which will provide opportunity for obtaining the best prices. Additionally, they have access to the Florida insurance pools for property /casualty and risk management coverage. BUDGET: There are two options for payment of brokerage services. Commission -based is calculated on total premium. The insurance carrier pays the broker and that amount is added to the City's total premium due. A fee based agreement is a flat fee and it is paid directly to the broker from the City. Either arrangement includes the same range of services and will result in a slight decrease in city costs. Previously, all fees have been through commission and included in the premiums from the insurance carriers. The top two firms offered a 1 a � , t „ choice of pricing for the City. gg g4� Commission -Based Rates Harden Gallagher Medical/Employee Benefits 4 %* 6% P &L 10 %* 10% Workers Comp 9 %* 10% Straight Fee: Harden Gallagher 2 is AGENDA ITEM # 8C JULY 9, 2012 Medical/Employee Benefits $48,000* $50,000* P & L and Workers Comp $45,000* 10% of Premium ($46,400 based on FY13 est. premiums) * * Guaranteed for 3 years. Note: Per CIGNA (our current medical carrier), the current broker earns a 6% commission that was added to the City's total premium — approximately $60,000. Other commissions earned were included in the premiums for voluntary insurance that is no cost to the City. The current P & L broker earns 10% commission, approximately $42,000, which are added to the City's premiums. RECOMMENDATION: Award a contract to Harden & Associates to act as the City of Atlantic Beach's Broker of Record for employee benefits and property /casualty & risk management services and authorize the City Manager to sign the contract. ATTACHMENTS: 1. Proposal Scoring Sheet 2. Request for Proposal No. 12 -02 and Proposals are available for review from City Clerk REVIEWED BY CITY MANAGER: 3 Combined Evaluation Matrix RFP 12 -02 Each broker /consultant will be rated on the selection criteria listed below. Sample questions have been included as a guide in rating each criterion. Points will be totaled from all categories and compared against the maximum score of 82. Scoring: 0 = Unacceptable 2 = Does not meet most expectations 4 = Adequate 6 = Good 8 = Superior Gallagher PRIA Florida Harden & Benefit Brown & Greene- McKinley League Rating Criteria Associates Services Brown & Hazel Superior of Cities A. Market Knowledge • 7 7 7 6 6 4 Does the broker understand the market dynamics for both the benefits and property /casualty? Does the broker have market access to all necessary carriers? B. Access 8 6 5 8 2 4 Is the broker's team geographically accessible to us? Does the broker have secure email for communication? • C. Client Knowledge 7 8 8 5 7 8 Does the broker understand municipalities? Can the broker benchmark our cases and benefits with like organizations? Do they have a thorough understanding of our goals & objectives? D. Depth of Staff 8 8 6 6 7 8 Does the broker have enough team depth and experience to handle our accounts including claim resolution and employee issues? Can the broker shift resources if necessary to meet the nature of our account? Can the resources be available on site as needed? (Open Enrollment Meetings, Employee Meetings, etc) E. Technical Knowledge of Staff 8 8 8 7.5 7 8 Can the broker make us aware of changes in the marketplace that could impact our programs? Does the broker have technical expertise in risk management, claims analysis, health management, interpretation of coverage and overall insurance program structure Gy Z to manage our account. r— a Does the broker have the expertise to assist in compliance issues? Does the broker have the technical competency to deal with industry changes? o rn N � OC Gallagher PRIA Florida Harden & Benefit Brown & Greene- Mclinley League Rating Criteria Associates Services Brown & Hazel Superior of Cities F. Account Management 7 6 8 7 6 0 Does the broker have a specifically identified team of support staff? Do the team member have defined responsibilities? Does the model of account management meet our objectives? G. Scope of Services 8 8 8 7 8 0 Can the broker provide the broad list of services? Insurance program audit and review Insurance program specifications Verify all requested new and renewal policy terms Claims advocacy and management meetings Budget planning Benchmarking Health management competency Periodic claims management meetings Online research and compliance tools Employee communication capabilities H. Communication 8 7 6 7 7 0 Ability to listen Response time to client issues Proactive communication on new developments Explanation of technical materials Quality of written documents & communications Scheduled regular meetings on risk management 1. Performance 6 7 6 6 7 2 Meet deadlines Effectively explained their program and services Quality of RFQ submission Possess the financial stability to represent us J. Strategy 8 6 5 6 6 4 �C z Was a strategy included for our account ? Sub Total 75 71 67 65.5 63 38 c Preference is to select a single firm capable of providing all services w/o partnering. Add 2 2 2 2 0 2 2 TOTAL 77 73 69 65.5 65 40 ,' Note: Florida League of Cities submitted an incomplete proposal therefore it was only reviewed by the HR Director.