Reinsurance Broker Request for Proposals I. INTRODUCTION

Transcription

1 Reinsurance Broker Request for Proposals I. INTRODUCTION A. BACKGROUND The Special Districts Association of Oregon (SDAO) is a non-profit association of nearly 950 special district units of local governments throughout Oregon. SDAO was established in 1977 to pursue the common interests and concerns of special districts and provides a broad range of support services to member districts throughout the state. In 1985, the Board of Directors established the Special Districts Insurance Services (SDIS) Trust in response to very difficult market conditions confronting local governments in their efforts to secure insurance coverages that were broad and affordable. Through the Trust, SDAO offers coverages that are comprehensive and competitively priced when compared to commercial insurance markets. SDIS s objective is to meet members insurance needs with a stable program for the long term that is financially sound. Approximately 920 districts participate in the property/casualty program and 560 in the workers compensation program. Beginning in July 2006, SDAO entered into a partnership with the Oregon School Boards Association (OSBA) to merge SDIS school district members with OSBA members to create a new property and liability trust called the Property and Casualty Coverage for Education Trust (PACE). OSBA is the owner of PACE. SDAO has a contract to manage the insurance operations of SDIS and PACE, including the selection and management of its reinsurance broker. Currently, PACE has approximately 300 member school districts, community colleges, education services districts and charter schools. B. PURPOSE Our primary goal and selection criteria when choosing a broker will be to find the best company to place our reinsurance. We are looking for access to markets and the ability to find and/or create market opportunities. Our decision will be made on the basis of: Proven ability to provide SDIS and PACE with multiple reinsurance options. Quality of direct and written communications with staff, reinsurers and the Board of Trustees. Proven assistance in resolving claim disputes with reinsurers. 1 P a g e

2 Ability to understand the Trust s coverage documents and make sure there are no gaps in coverage with reinsurance agreements. Elimination of conflicts of interest when using wholesalers and when acting as a retail broker for SDIS and PACE members. Cost of providing reinsurance brokerage services. Selected applicants will meet with a selection committee composed of trustees and staff. The selection committee will make a recommendation to the Board of Trustees based on the outcome of this process. C. CURRENT REINSURANCE COVERAGES SDIS Property/Casualty Program January Renewal Coverage Per Occurrence SIR Aggregate Stop Loss Carrier Limit Liability $1,000,000 None Genesis Up to $10 million per member Property $500,000 $1.5 million Layered (Exhibit A) $300 million per occurrence flood and quake included Equipment Breakdown $25,000 None CNA $100 million per occurrence Crime $0 None Travelers Optional Limits Terrorism $10,000 $100 million Lloyds $100 million per occurrence TULIP $1,000 None One Beacon $1,000,000 per occurrence SDIS Workers Compensation Program July Renewal Coverage Per Occurrence Aggregate Carrier Limit SIR Stop Loss Workers Comp. $1 million None Midwest Employers Statutory Employers Liability Same as above None Midwest Employers $3 million PACE Property/Casualty Program July Renewal Coverage Per Occurrence Aggregate Carrier Limit SIR Stop Loss Liability $750,000 None Genesis $10 million per member Property $250,000 $5,000,000 Layered (Exhibit A) $400 million per occurrence quake and flood included Equipment Breakdown $10,000 None CNA $100 million per occurrence Crime $0 None AIG Optional Limits Cyber $100,000 None AIG $1,000,000 per member Terrorism $250,000 None Ironshore $100 million per occurrence TULIP $1,000 None One Beacon $1,000,000 per occurrence 2 P a g e

3 II. PROPOSAL CONTENT The proposal submitted in response to this RFP must contain the information required below. Brevity is preferred. If you intend to use any subcontractors in fulfillment of services, information should be furnished for both your firm and the subcontractors where appropriate. A. QUALIFICATIONS, RELATED EXPERIENCE AND REFERENCES 1. Furnish background information about your firm. 2. Describe your firm s experience and qualifications for providing the required services to SDIS and PACE. Specifically highlight those qualifications that distinguish you from your competitors. The focus should be on recent experience within the last five (5) years that is relevant to the scope of work outlined in this RFP. B. SERVICE TEAM Identify the person or persons who will be assigned to work with SDAO. Provide details of their experience working with public entities and pools similar to SDIS and PACE, with particular reference to brokering of reinsurance. Qualified applicants should have at least 10 years experience in the public insurance pooling sector. C. SERVICES PROVIDED Following is an outline of the services we would expect the broker to provide. Please respond with your ability to meet these requirements and provide examples of how you have been successful in providing these services to other pools or public entity clients you represent. 1. Describe the process and strategies you would implement for obtaining and managing reinsurance coverage for the SDIS Property Casualty Program, SDIS Workers Compensation Program, and the PACE Property Casualty Program. Attached (Exhibit A) is a summary of the current reinsurance structure. In your answer please provide written examples and address the following requirements: Attend a pre-renewal meeting with SDAO staff to identify renewal strategies and any issues that need to be addressed. Provide a timeline for obtaining specification information and delivery of proposals. 3 P a g e

4 Provide detailed reinsurance specifications to SDAO staff for review and approval prior to submitting to reinsurance markets. List the insurance carriers you would normally approach that would be interested in SDIS and PACE. Explain how you access these carriers, either directly, through wholesalers, or other intermediaries. Arrange meetings with reinsurers and SDAO staff to discuss the programs and renewal strategies. Identify gaps in coverage between reinsurance coverage and the Pools coverage documents. Provide a detailed written recommendation for program selection, including an in-depth rational. Include a sample copy of your presentation materials that you have used for other clients. Evaluate the financial stability of recommended reinsurers. Attend at least three board meetings in Oregon to present your recommendations. Provide in a timely manner copies of all insurance policies. Work with SDAO staff to make sure all reinsurance requirements have been met, including any regular claims and/or underwriting reporting requirements. Facilitate a separate annual reinsurance and risk management planning meeting for both SDIS and PACE. 2. Describe how you can assist members and/or their agents with placement of specialized coverage not available through SDIS or PACE. Take into account that the independent agent requesting assistance on behalf of their client will likely expect a commission payment. 3. Explain how you resolve claims disputes with reinsurers. Give examples of how you have resolved disputes for your other pool or public entity clients. 4. Describe your experience with reviewing manuscript coverage documents and assisting with identifying areas of concern, or where the documents can be improved. Give examples of the work you have done in this area for other clients. 4 P a g e

5 5. Provide back-office support to work with SDAO on a regular basis (sometimes daily) to handle the day-to-day details. Describe who will provide this support and from which office. D. COMPENSATION Outline the compensation arrangements that your firm would expect for the services outlined above. Limit your proposal to the above items and do not add in extra for value added or consulting services. Provide a separate compensation number for SDIS and a separate number for PACE. E. CONFLICTS OF INTEREST 1. If you use wholesalers, please explain in what capacity and what compensation arrangements you have with wholesalers, MGAs, or intermediaries. Describe any relationships you have with wholesalers, MGAs or intermediaries owned by your company and how you handle any disclosure and/or conflict of interest issues when using these companies. 2. SDIS and PACE require their members to have an independent broker. As a result, most of the large brokerage companies currently have retail clients that are PACE and SDIS members. If your company was the reinsurance broker for SDIS and PACE, how would you resolve any perceived or actual conflicts of interest if your company was also the retail broker for individual SDIS and PACE members? 3. Does your company or its subsidiaries have any sponsored public entity programs or managing agent programs that compete or could potentially compete with SDIS or PACE? If the answer is yes, how would you guarantee that these programs would not compete with SDIS and PACE in the state of Oregon? F. CONFIDENTIALITY OF INFORMATION Describe how you would handle confidentiality of SDIS and PACE records when potentially competing against other independent retail brokers. Example: As the broker for SDIS and PACE, you would have access to all of the Trust s underwriting information, including access to information about members that are not represented by you as a retail broker. How would you guarantee that you would not use this information to solicit retail business that is with another competing broker? What firewalls would you establish between your employees that are retail agents and those that represent the Trusts? 5 P a g e

6 A. RFP AND EVALUATION SCHEDULE III. SCHEDULE AND SUBMITTAL Issuance of RFP: March 28, 2018 Deadline to Submit Written Questions About April 20, 2018, 5:00 p.m. (PDT) the RFP: Proposal Due Date: May 1, 2018, 5:00 p.m. (PDT) Evaluation of Proposals, Finalists Selected: May 7, 2018 Finalist Interviews (if needed): May 14-18, 2018 Anticipated Contract Award: June 15, 2018 Commencement of Contract: August 1, 2018 B. CONTACT PERSON C. WRITTEN QUESTIONS Frank Stratton SDAO Executive Director If proposers have questions about the RFP, they are encouraged to submit them as soon as possible, but no later than 5:00 p.m. (PDT) on April 20, Questions must be e- mailed to the contact person above. SDAO will not be obligated to answer any questions received after the deadline, or any questions submitted in a manner other than as instructed above. D. PROPOSAL SUBMITTAL 1. General Proposals must be received by 5:00 p.m. (PDT) on May 1, Any proposal received after this date and time will not be considered. Delivery of proposals by the specified deadline is the sole responsibility of the Proposer. SDAO will not be responsible for, nor accept as a valid excuse, any delay in the method of delivery used by the Proposer except where it can be established that SDAO was the sole cause of the late receipt. 6 P a g e

7 2. Method of Submittal The proposal must be submitted in electronic form in an to the SDAO contact person listed in III. B. with Reinsurance Brokerage Services RFP in the subject line. 3. Interviews If interviews of finalists are needed, they will be in-person and will occur May 14-18, A. ORAL COMMUNICATIONS IV. GENERAL INSTRUCTIONS Any oral communication by SDAO s contact person(s) or designee concerning this RFP is not binding and shall in no way modify the RFP or the obligations of SDAO, a proposer or selected firm(s). B. CHANGES TO RFP If it is necessary to make material changes to the RFP, SDAO will issue a written RFP addendum. All such addenda issued shall become part of the RFP. SDAO will written RFP addenda to all recipients of record of the original RFP and post such addenda on the SDAO website ( Recipients of record are those parties to whom SDAO directly sent a copy of the RFP. It is the responsibility of each proposer to ensure they have all addenda SDAO has issued. This may be done going to the website listed above prior to the proposal submittal deadline. C. AUTHORIZATION TO DO BUSINESS The Proposer must be authorized to do business in the state of Oregon and in the local jurisdiction in which it is located or where the work will be performed. No Proposer is authorized to approach insurance markets regarding this RFP. D. PRE-CONTRACTUAL EXPENSES SDAO shall not be liable for pre-contractual expenses incurred by a proposer in the preparation of its proposal and proposers shall not include any such expenses in their offers. Pre-contractual expenses are defined as expenses incurred by the Proposer to: (1) prepare and submit its proposal to SDAO; (2) negotiate with SDAO on any matters 7 P a g e

8 related to this RFP; and (3) any other expenses incurred by the Proposer prior to the date of award, if any. Issuance of this RFP and receipt of proposals does not commit SDAO to award a contract. SDAO reserves the right to postpone the award for its own convenience, to accept or reject any or all proposals received in response to this RFP, to negotiate with more than one proposer simultaneously, or to cancel all or part of this RFP. E. DISPOSITION OF PROPOSALS All materials submitted in response to this RFP become the property of SDAO, except for information identified by the Proposer as being proprietary. A blanket statement that all contents of the proposal are proprietary will not be honored by SDAO. F. WRITTEN AGREEMENT The Proposer selected for contract award through this RFP shall be required to enter into a written agreement with SDAO governing the provision of professional services to SDAO members and other eligible entities. The agreement will include pertinent terms and conditions set forth in this RFP and will reflect the Proposer s offer or the outcome of contract negotiations. It is anticipated that the Proposer may enter into separate agreements with subcontractors to fulfill the terms of this contract. SDAO will not be a party to those separate agreements, nor in any fashion a guarantor or indemnitor of them. G. TERM OF CONTRACT If a contract is awarded through this RFP, it will be effective upon full execution of the agreement, which SDAO expects to be in July 2018 for an August 2018 effective date. The term of the agreement will be for five years, unless terminated earlier under the terms of the agreement. No agreement with SDAO shall be in effect until a contract has been approved by the SDAO Board of Trustees or designee, and has been signed by both parties. 8 P a g e

9 SDAO REINSURANCE BROKER REQUEST FOR PROPOSALS EXHIBIT A SDIS PROPERTY PROGRAM Reinsurance Attachment The below retentions are as per expiring for the All Risk Property Program placement. The Equipment Breakdown and Terrorism placements are separate and are not included in the below retentions. $1,000,000 per occurrence as respects loss or damage due to Earth Movement $1,000,000 per occurrence as respects loss or damage due to Flood Service Interruption: 24 hours waiting period The All Other Perils deductible is: As respects all other insured loss or damage, a $500,000 per occurrence and $1,500,000 annual aggregate deductible shall apply. Only the amount of loss in excess of $100,000 and less than $500,000 shall apply to the erosion of the annual aggregate. For each insured loss or damage occurring after the exhaustion of the $1,500,000 annual aggregate, a $100,000 per occurrence deductible shall apply. Flood and Earth Movement (each as defined in the policy form) insured losses do not apply to the erosion of the annual aggregate. Type Automobiles including but not limited to Light, Medium, and Heavy Trucks, Trailers, Tractor Trailers, and Vans. Automobiles are considered any vehicle licensed for road use Renewal Values $ 530,256,118 Increased Sublimit Schedule (at policy inception) $ 20,349,000 Inland Marine Schedule $ 167,903,987 Buildings $ 3,307,438,606 Contents including EDP Equipment $ 434,710,396 Total $ 4,460,658,107 9 P a g e

10 5% $300M $200M SDIS Trust Program Structure 32% 20% 12.50% 10% Company Arch Insurance Company Lloyds Syndicate 4444 (Canopius) Continental Casualty Company Starr Surplus Lines Insurance Company Hallmark Specialty Insurance Company Novae 2007 Syndicate Ironshore Indemnity Company Inc. (III) AM Best Rating A+ XV A XV A XV A XV A- IX A XV A XIV National Union Fire Insurance Company of Pit A XV Lloyds of London Fair American Select Insurance Company RSUI Indemnity Company Westport Insurance Corporation A XV A+ XV A+ XIII A+ XV 10% 15% 10% $100M Equipment Breakdown Terrorism 10% $50M 7.5% 40% 12.5% 100% 100% 35% Program Deductibles Member Deductibles Program Deductible Member Deductible Program Deductible Member Deductible General Policy Limits: $300,000,000 Flood Limits: $300,000, Year Flood: $50,000,000 Earth Movement: $300,000,000 General Policy Deductible $500,000 per occurrence and $1,500,000 in the annual aggregate. Only the amount of loss in excess of $100,000 and less than $500,000 shall contribute to the erosion of the annual aggregate. o Flood Deductible $1,000,000 per occurrence Earth Movement Deductible $1,000,000 per occurrence 10 P a g e

11 SDIS LIABILITY PROGRAM General Liability and Auto Liability Reinsurance Terms and Conditions» Total limit of liability for combined Coverage A,B,C of up to $10,000,000 per occurrence or wrongful act, including sublimits, per member.» Currently there is no per member annual aggregate limit. There is a $40 million per occurrence limit for all members involved in a single occurrence.» Supplementary Payments are not included in the per occurrence or aggregate limits.» 100% of the net loss each occurrence or wrongful act in excess of the Trust retention of $1,000,000, as respects each member s coverage.» The Trust retention is inclusive of member deductibles.» Tort arising under the Oregon Tort Actions Against Public Bodies Act (Coverage A), Federal Acts Liability (Coverage B), and Other Jurisdictions Liability (Coverage C).» Defense costs in Additional to Retention - In addition to the Reinsurer s limit for net loss, reinsurer will pay a share of the Trust s adjustment expenses proportional to its share of net loss.» Prior Acts coverage for wrongful acts with a retroactive date of July 1, 2005 or later as noted in the submission.» Payment Terms: Payment due 90 days from inception.» 10% Margin clause to allow for growth.» All reinsurance is net and not subject to commission.» Reduction or reversal in judgments apply proportionately to reinsurer and SDIS.» Appeals or defense excess of the $1mm retention resulting in no Net Loss are shared proportionately with the reinsurer and SDIS.» Effective 2015, Genesis reinsurance contains a cyber exclusion which was negotiated to better mirror the coverage in the SDIS coverage document. 11 P a g e

12 SDIS WORKERS COMPENSATION PROGRAM o Retained Limit Each Accident: $1,000,000 o Retained Limit Disease ea. Emp. $1,000,000 o Part One Excess Workers Compensation Insurance o Limit of Liability Each Accident: Statutory o Limit of Liability Disease each. Emp: Statutory o Part Two Excess Employers Liability Insurance o Limit of Liability Each Accident: $3,000,000 o Limit of Liability Disease each Emp.: $3,000,000 o Limit of Liability Aggregate: $3,000,000 o Endorsements Same as Expiring with the exception of Longshoreman s and Maritime coverage which is not included but is available at no charge should the exposure be presented to the Pool. 12 P a g e

13 PACE PROPERTY PROGRAM PACE PROGRAM DEDUCTIBLES: Earth Movement As respects earth movement loss or damage, a $500,000 per occurrence deductible shall apply to all locations and coverages affected combined Flood As respects all flood loss or damage, the deductible shall be $250,000 per occurrence as respects all locations and coverages affected combined. All other perils deductible The Maintenance Deductible of $250,000 shall apply per occurrence for each loss occurring upon exhaustion of the annual aggregate retention as follows: The annual aggregate retention shall be $5,000,000 per occurrence and $5,000,000 in the annual aggregate as respects all other loss or damage insured. Only the amount of insured loss excess of the Maintenance Deductible and less than $5,000,000 per occurrence shall apply to the erosion of the annual aggregate. Earth Movement and Flood losses do not contribute to the erosion of the annual aggregate. Loss adjustment expenses within the annual aggregate retention count towards the erosion of the annual aggregate when the total sum insured under the occurrence plus loss adjustment expenses incurred eclipses the Maintenance Deductible Property Contents EDP Total TIV Property TIV Inland Marine TIV Auto TIV Increased Sublimits $15,484,061,680 $1,971,138,680 incl. in contents $17,455,200,360 $37,765,564 $220,301,286 $1,560,000 Total $17,714,827, P a g e

14 5% $400M PACE Structure Chart 100% $350M 10% 5% 12.5% 34.5% $300M $250M $200M 5% 10% 12.5% 14.5% 8% 30% 5% 10% $100M 10% 10% 19.5% $50M 7.5% 10% 12.5% $25M 60% 10% 20% Program Deductibles Member Deductibles General Limits: $400,000,000 Flood Limits: $400,000, Year Flood Limits: $100,000,000 Earth Movement Limits: $400,000,000 General Deductibles: $5,000,000 per occurrence and in the annual aggregate. Only the amount of loss in excess of $250,000 and less than $5,000,000 shall contribute to the erosion of the annual aggregate. A $250,000 deductible shall apply to each loss occurring after erosion of the annual aggregate. Flood Deductible: $250,000 per occurrence Earth Movement Deductible: $500,000 per occurrence 14 P a g e