Village Manager s Office SUBJECT: Consideration of Resolutions 1) authorizing a three (3)-year agreement with Arthur J. Gallagher & Co. Itasca, Illinois, for insurance broker services, for the policy periods beginning May 1, 2015, May 1, 2016, and May 1, 2017 for a three-year total not-toexceed amount of $73,500; and 2) authorizing $263,442 for the Village s May 1, 2015 through May 1, 2016 workers compensation and property/casualty insurance program, plus a three percent (3%) contingency, for a not to exceed amount of $271,345 AGENDA ITEM: 9.b.ii and 9.b.iii MEETING DATE: April 21, 2015 VILLAGE BOARD REPORT TO: Village President and Board of Trustees FROM: Sarah Schillerstrom, Human Resources Director, (847) 904-4538 THROUGH: Todd Hileman, Village Manager PURPOSE AND ACTION REQUESTED: Staff requests Village Board consideration of a Resolution authorizing a three (3)-year agreement with Arthur J. Gallagher & Co. Itasca, Illinois, for insurance broker services for the Village s workers compensation and property/casualty insurance program for the policy periods beginning May 1, 2015, May 1, 2016, and May 1, 2017 in the amount of $73,500 ($24,500 annually), and a Resolution authorizing $263,442 for the Village s May 1, 2015 through May 1, 2016 workers compensation and property/casualty insurance program, plus a three percent (3%) contingency, for a not to exceed amount of $271,345. BACKGROUND AND DISCUSSION: In January 2015, the Village engaged in a request for qualifications (RFQ #215006) process for workers compensation and property/casualty insurance broker selection for the policy periods beginning May 1, 2015, May 1, 2016, and May 1, 2017. Arthur J. Gallagher & Co. and Mesirow Insurance Services (incumbent broker), responded to the RFQ. Staff reviewed the RFQ responses and determined both firms met the qualifications to participate in the RFP process (RFP #215015). 1
Gallagher and Mesirow submitted their requests for which carriers they would like to approach for pricing and coverage, staff then made the market assignments. The purpose of assigning brokers to particular carriers is to avoid bidding against ourselves to ensure competitive pricing. Using their respective market assignments, Gallagher and Mesirow obtained quotations for the Village s May 1, 2015 through May 1, 2016 policy period. The insurance market for worker s compensation and social worker liability coverage is very limited, therefore staff requested Mesirow obtain those quotes, which were applied to both proposals. The village hired Mike Nugent, of Nugent Consulting Inc., to assist staff in evaluating the proposals. The proposals were evaluated on pricing and scope of coverage for all lines of coverage (except workers compensation and professional liability for the Village s police social worker), broker fees, service delivery approach, and value-added services, including risk management/loss control services available through the broker relationship. Both firms offered a variety of coverage structures, of those the most cost competitive option was evaluated from each firm. Arthur J. Gallagher provided the most competitive proposal in terms of premium costs and coverage. The proposal from Gallagher for the 2015/2016 plan year was $7,142 less than Mesirow s most competitive proposal. Both Gallagher and Mesirow proposed annual brokerage fees of $24,500 annually, therefore the cost difference was solely based on the coverage offered. The most cost competitive proposals from Mesirow and Gallagher are compared in Table 1. The notable coverage differences between the proposals include aggregate limits, sewer backup coverage and flood insurance. The village s current general liability coverage would allow for six (6) $2 million claims; the Mesirow proposal results in a reduction of coverage by only allowing three (3) $2 million claims, the Gallagher proposal would maintain the current coverage. The coverage proposed by Gallagher for law enforcement and public officials liability would also cover more high cost claims than the Mesirow proposal. Additionally, the Gallagher proposal offers more comprehensive coverage for sewer backup claims. The current coverage for sewer back up claims will cover one (1) $2 million claim, the Mesirow proposal increases this coverage to three (3) $2 million claims, and the Gallagher proposal increases it even further and would cover six (6) $2 million claims. The village also owns property (lift station, Fire Station 13, and a telecommunications monopole) in Flood Zone A and has a current coverage limit of $500,000; the Mesirow proposal eliminates this coverage, while the Gallagher proposal increases it to $1 million. TABLE 1 Material Coverage Benefit Differences Current Coverage Mesirow Gallagher General Liability General Liability aggregate limit $2M per claim $2M per claim $2M per claim $12M Aggregate $6M Aggregate $12M Aggregate Self-insured retention per occurrence $200,000 $200,000 $200,000 Law Enforcement Aggregate Limit $2M per claim $2M per claim $2M per claim $12M Aggregate $6M Aggregate $12M Aggregate Public Officials Aggregate Limit $3M per claim $3M per claim $2M per claim $5M Aggregate $5M Aggregate $12M Aggregate Sewer Backup Aggregate Limit $2M per claim $2M per claim $2M per claim $2M Aggregate $6M Aggregate $12M Aggregate 2
Employment Practice Liability Aggregate Limit $3M per claim $5M Aggregate $3M per claim $5M Aggregate $2M per claim $12M Aggregate Property Insurance Flood Limit $25M $5M $25M Flood Deductible $100,000 $100,000 $100,000 Flood Zone A Property Coverage $500,000 None $1,000,000 The village is self-insured for general liability claims up to $200,000 per claim, which means the village will pay the first $200,000 of any claim. However, the increase in the aggregate limits provides more coverage in the event the village receives multiple high valued claims. Based on the differences in coverage benefits for the general liability package, property insurance, crime insurance, and broker fee, and the reduction in premium, staff recommends awarding the three-year agreement for insurance broker services to Gallagher. Gallagher s premium proposal for the 2015/2016 policy year results in a reduction of $12,318 compared to the premiums paid for the 2014/2015 policy year. A summary of each broker s proposed package for each line of coverage is shown below in Table 2. TABLE 2 2015 2016 Policy Year Proposals Coverage Evaluated in RFP Selection Process Expiring Premium (2014-2015) Gallagher Proposal (2015-2016) Mesirow Proposal (2015-2016) Property $71,669 $54,679 $58,594 Liability $114,799 $107,075 $114,159 Crime $2,328 $6,185 $2,328 Subtotal Evaluated in RFP Selection Process $188,796 $167,939 $175,081 Coverage Not Evaluated in RFP Selection Process Expiring Premium (2014-2015) 2015-2016 Quote (will be applied to selected broker) Excess Workers Comp $85,594 $94,131 $94,131 Professional Liability $1,370 $1,372 $1,372 Police Social Worker Subtotal Not Evaluated in RFP Selection Process $86,964 $95,503 $95,503 PREMIUM TOTAL $275,760 $263,442 $270,584 Broker Fee 24,500 24,500 24,500 2015-2016 Quote (will be applied to selected broker) TOTAL Costs $300,260 $287,942 $295,084 3
BUDGET: Staff is requesting Village Board authority for contingency as a precautionary measure, but the contingency request is not included in the budget table below. Insurance and Risk Fund Budget Request Property Casualty Premiums 63015335-526030 $167,939 Workers Comp Premiums 63015335-526035 $94,131 Police Social Worker Premiums 63015335-526030 $1,372 Brokerage Fees 63015335-521290 $24,500 Total $287,942 RECOMMENDATION: Staff recommends that the Village Board approve a Resolution authorizing a three (3)-year agreement with Arthur J. Gallagher & Co. Itasca, Illinois, for insurance broker services for the Village s workers compensation and property/casualty insurance program for the policy periods May 1, 2015, May 1, 2016, and May 1, 2017 in a three-year amount not to exceed $73,500 ($24,500 annually), and a Resolution authorizing expenditure of $263,442 for the Village s May 1, 2015 through May 1, 2016 workers compensation and property/casualty insurance program, plus a three (3) percent contingency, for a total expenditure of $271,345. ATTACHMENTS: 1. Resolution Gallagher Three-Year Agreement for brokerage services 2. Resolution 2015/2016 Premium Expenditure 3. Gallagher Proposed 2015-2016 Insurance Program Structure Overview 4
Attachment 1 5
RESOLUTION NO. A RESOLUTION AUTHORIZING A THREE-YEAR AGREEMENT WITH ARTHUR J. GALLAGHER & CO. FOR WORKERS COMPENSATION AND PROPERTY/CASUALTY INSURANCE BROKER SERVICES. WHEREAS, the Village of Glenview (the Village ) is a home rule municipality located in Cook County, Illinois; WHEREAS, the Village issued request for proposals no. 215015 for workers compensation and property/casualty insurance broker services; WHEREAS, Arthur J. Gallagher & Co. ( Gallagher ) responded to said request for proposals with the lowest priced, responsive proposal; WHEREAS, the Village determined that it is in the public interest to contract with Mesirow for insurance broker services for three (3) policy periods, beginning May 1, 2015, May 1, 2016, and May 1, 2017; and WHEREAS, the Village will compensate Gallagher in the amount of $24,500 in each of the three (3) contract periods and a total not-to-exceed amount of $73,500. NOW, THEREFORE, BE IT RESOLVED, by the President and Board of Trustees of the Village of Glenview, Illinois, as follows: That the Village President and Village Manager are hereby authorized to execute all necessary documents to execute a three (3) year agreement with Gallagher for workers compensation and property/casualty insurance broker services. PASSED THIS 21 st day of April, 2015. AYES: NAYS: ABSENT: APPROVED by me this 21 st day of April, 2015. James Patterson, President Village of Glenview, Cook County, Illinois Todd Hileman, Village Clerk Village of Glenview, Cook County, Illinois 6
Attachment 2 7
RESOLUTION NO. A RESOLUTION AUTHORIZING EXPENDITURE OF FY 2015 FUNDS FOR WORKERS COMPENSATION AND LIABILITY PACKAGE INSURANCE, FOR THE POLICY YEAR MAY 1, 2015 THROUGH MAY 1, 2016. WHEREAS, the Village of Glenview (the Village ) is a home rule municipality located in Cook County, Illinois; WHEREAS, the Village is entering into a contract with Arthur J. Gallagher & Co. ( Gallagher ) for insurance broker services as recommended by Village staff for the period of three (3) policy terms, beginning May 1, 2015; WHEREAS, Gallagher has procured workers compensation insurance and property and casualty insurance for the benefit of the Village, with premiums for the policy period beginning May 1, 2015 and ending May 1, 2015, in the amount of $263,442. NOW, THEREFORE, BE IT RESOLVED, by the President and Board of Trustees of the Village of Glenview, Illinois, as follows: That the Village President and Village Manager are hereby authorized to execute all necessary documents to authorize expenditure of funds in the amount of $263,442 for the Village s liability insurance package renewal (policy year May 1, 2015 through May 1, 2016) plus a three percent (3%) contingency, for a total amount not to exceed $271,345. PASSED THIS 21 st day of April, 2015. AYES: NAYS: ABSENT: APPROVED by me this 21 st day of April, 2015. James Patterson, President Village of Glenview, Cook County, Illinois Todd Hileman, Village Clerk Village of Glenview, Cook County, Illinois 8
Attachment 3 9
Village of Glenview Hartford/Berkley Insurance Program 2015-2016 Sublimits: Sexual Abuse $2,000,000 Each Sexual Abuse Act $2,000,000 Aggregate Retro 5/1/07 **Defense is inside the limit for Sexual Abuse Sewage $2,000,000 Each Sewage Occurrence Sewage Aggregate Limit Included in G.L. Policy Aggregate Limit $12MM Agg $2MM Berkley $10 Million Excess Limit Help Pool/Genesis $2MM Each Accident Berkley Self-Insured Retention $200,000 $12MM Agg $2MM Each Claim Berkley $131,643,455 Building & PP & EDP Limit Hartford Sublimits: Autos ACV $10,126,392 Mobile Equip. $1,199,736 Misc. Equip. Included In Total Business Income $5,000,000 Business Income Dependent Property $2,500,000 $100,000,000 Limit Hartford $1,000,000 Each Accident $1,000,000 Physical Damage Aggregate Includes Emergency Vehicles on Replacement Cost Basis Berkley $2,500,000 Travelers $100,000 $100,000 SIR Deductible $5,000 Ded. $25,000 Ded. $2,000,000 Safety National Excess $500,000 SIR All Other $600,000 Police & Fire General Liability & Law Enforcement & EMT Liability (Defense Outside Limit) Automobile Liability (Defense Outside Limit) Public Officials E&O, EPLI, EBLI (Defense Inside Limit No Sublimit) Claims Made: 5/1/2005 Excess Property & Auto/Physical Damage at Scheduled Premises Boiler & Machinery Over the Road Scheduled (Auto/Physical Damage) Crime (Incl. Money & Securities $1,000,000 Sublimit) Workers Comp Employers Liability