07-23-12 RFP Agenda Item AGENDA TTEM # 8A
JULY 23, 2012
CITY OF ATLANTIC BEACH
CITY COMMISSION MEETING
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
RE- SUBMITED July 12, 2012
REQUEST THAT RECOMMENDATION BE APPROVED AT JULY
23, 2012 MEETING DUE TO TIME CONSTRAINTS FOR OBTAINING
QUOTES FOR UPCOMING PLAN YEAR OF
PROPERTY /CASUALTY INSURANCES (10/01/12)
BACKGROUND: RFP No. 12 -02 for insurance brokerage services was
completed by the City of Atlantic Beach. Six firms responded. The proposals
were evaluated and ranked by the committee on the following service related
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, I- Iarden & Associates and Gallagher
Benefits Services, were given to the committee and the City Manager on June 19
and June 20, 2012. During these presentations, insurance brokerage fees were
discussed with the firms. The staff recommendation of Harden & Associates was
based on their proposal score (77.0) and the fee schedule offered to the City.
Attached is a letter of clarification from Mr. Ceree I- Iarden, Chief Executive
Officer of Harden & Associates, regarding Mr. Paul Harden.
Using the projected premiums for the upcoming year, the current broker
commission rates, and the proposed fixed fee rate as basis in the calculation, the
cost savings is in excess of $16,000 per year. Although other firms proposed
lower fees, they were not comparable with Ilarden & Associates for brokerage
services offered, access to insurance pools, depth of local staff, and did not offer a
three year rate guarantee.
1
AGENDA ITEM # 8A
JULY 23, 2012
The following is based on estimated premiums for upcoming plan year:
Current Brokers Harden & Assoc.
Est. Commission
Premium Rate Fixed Fee Savings
Medical —$1,056,000 6% $63,360 $48,000 $15,360
P & L — $464,000 10% $46,400 $45,000 $ 1,400
Total $109,760 $93,000 $16,760
The use of a local firm is imperative to achieve the service level that is strongly
preferred. Our employees often have questions or claim issues. Having a local
staff readily available will enable the employees to have their issues resolved
quickly and with the least amount of frustration. Additionally, a local firm that is
accessible to the Human Resources department is vital to the administration of the
claims, billings, and resolution of issues. Local and regional benchmarking
conducted by a firm with clients in the surrounding area is optimal.
BUDGET: Fee rate payment for brokerage service is recommended by the staff.
The fee is guaranteed for three years and would not fluctuate due to increases in
premiums. In 2014, healthcare reform will potentially increase the need for
additional brokerage services. That, coupled with the continued rising cost of
health and P & L insurance, the fee based payment for brokerage services will
eliminate the City's exposure to any increase for the next three years. The fee
rate is guaranteed and all services are included.
Fee Rates for Top 2 Ranked Firms
Harden Gallagher
Medical/Employee Benefits $48,000 * $50,000
P & L $45,000 * $46,400
* Guaranteed for 3 years.
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 to
include the above noted fee agreement.
ATTACHMENTS: 1. Proposal Scoring Sheet titled Combined Evaluation
Matrix RFP -12 -02 with rates noted, Letter of
clarification from Mr. Ceree Harden.
2. Request for Proposal No. 12 -02 and Proposals are
available for review from City Clerk
REVIEWED BY CITY
MANAGER:
2
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 - Mclanley League
Associates Services Brown & Hazel Superior of Cities
Rating Criteria
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 z
to manage our account. C7
Does the broker have the expertise to assist in compliance issues? _ _ _ ,.i
Does the broker have the technical competency to deal with industry changes? Iz
4
N
00
Gallagher PRIA Florida
Harden & Benefit Brown & Greene- McKinley League
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
I. 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
n
J. Strategy 8 6 5 6 6 4 z
rd
Was a strategy included for our account ?
Sub Total 75 71 67 65.5 63 _ 38
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
Gallagher PRIA Florida
M
Harden & Benefit Brown & G reene c IGnle y League
Associates Services Brown & Hazel Superior of Cities
Please Note: Rates were considered from the top 2 firms when making this recommendation. L_
Rates were not a criteria in the ranking since the RFP was for brokerage services not a request for bid.
Commission Rates - as a % of total premium
Medical 4% 6% i 3% - 6% 4.0% 3% not disclosed
P & L 10% 10% 10% 8 - 15% not disclosed not disclosed
Workers Comp 9% not disclosed
Fee
Medical $48,000 $50,000
P & L and Workers Comp $45,000 ^' $46,400 •
based on
FY'13 est.
premiums
' Note: Florida League of Cities submitted an incomplete proposal therefore it was only reviewed by the HR Director,
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July 12.2C1J
Mr. Jim Hanson
C/Y/mana;:jex
0kyuiAtlantic Beach
BOO Seminole Road
Atlantic Beach, [L32233
Re: Clarification oi Pn0 ( AP Hwaenra|x|ipnsh 12-02>
Dear Mr, [Janson,
Thank you for conu|demn0 nurfi/m oz support tho ineumone. / management and employee
benefits objectives uf the City ofAJ|mrh*Beach
| understand there was some nonk/sinn with 'e@u/d to the relationship of Paul M. Harden to our
twin. Aomn discussed, Paid N1 Harden is neither an employee nor prinopa|m1 our firm, nor has
he ever served in such capacity For the record Pau| M Naruem is engaged in the practice of law
unafa|iakad with Harden
I oan assure you Vial Harden will serve dJtifully as your advoca:e air all trotters entros':.ed to us
and that wy will appropriately :veld vo�
Please or.> not hesitate to call if caT, daily or elaborate on any issues of ooricern lo you or any
r.onxr|mak`oe'
'~ Sincerely,
l > / ='
`~
M Uaoem,!U
Chief Executive Officer
MCHicah
c:c SuoaoVm�ha�wx
Director of Human ReS*mces
601miv°»mw 1W0 32202 owrw/ror 004 614 1102 wumeownphcmo^
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