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{:JTYOF SAN BERNARDINO - REQUEST FOR COUNCIL ACTION
From:
EDWARD RAYA
Subject:
RESOLUTION OF THE CITY OF
SAN BERNARDINO
AUTHORIZING THE SELECI'ION
OF AONRISK SERVICES AS THE
CITY'S PROPERTY INSURANCE
BROKER
Dept:
RISK MANAGEMENT
ORIGINAL
Date:
APRIL 21, 1997
Synopsis of Previous Council Action:
Recommended Motion:
1. Authorize the selection of AON Risk Services as tlie City of San Bernardino's property
insurance broker for a term of two years.
2. Authorize the renewal of the property insurance for a term of May I, 1997 through April
30, 1998 at a cost of $206,534.
3. Adopt Resolution.
~~~~O~
Signa .
Contact person:
Edward Raya
Phone:
384-5103
Supporting data attached: Yes
Ward:
FUNDING REQUIREMENTS:
Amount: $206.534
Source: (Acct. No.) 629-453-5161
(Acct. Description) Insurance Premiums
Finance: .
Council Notes:
Res 97- /!N
r
Agenda Item No.~ -.t.
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: <;::I'EY OF'SAN BERNARDINO - REQUEST FOR COUNCIL ACTION
STAFF REPORT
The City of San Bernardino is in the fifth year of a five year agreement with AON Risk Services
to provide property insurance coverage. The coverage expires April 30, 1997.
In order to evaluate the City's property insurance program, Request for Proposals were solicited.
The proposals were sent to nine brokerage firms. The following five firms submitted responses:
AON Risk Services, San Bernardino
Caldwell and Mooreland Insurance Services, San Bernardino
North American Insurance Agency, San Bernardino
Willis Corroon, Santa Ana
Robert Driver, Newport Beach
The proposals were evaluated by the Risk Management Division and all five firms were invited
to participate in interviews. The interviews were conducted by a panel, consisting of the City's
Purchasing 'Manager, the Safety Program Manager for the Water Department, and the Risk
Manager for the City of Santa Ana. The panel rated the incumbent broker, AON Risk Services,
which is San Bernardino based, as the best qualified.
AON Risk Services has now provided a firm quote for renewing the City's coverage with the
same terms, conditions, and limits as last year. The cost for the coverage is $206,534. This
premium represents a 37% ($125,676) reduction from the previous fiscal year. This reduction
is primarily due to favorable changes in the cost of earthquake coverage.
In addition to the reduced premium, AON Risk Services has agreed to provide the City with an
appraisal of all it's properties, at no cost to the City. Staff estimates that an appraisal of this
scope would have cost the City approximately $10,000.
Staff recommends the selection of AON Risk Services as the City's property insurance broker
for a two-year term, and the renewal of the City's property insurance coverage at a cost of
$206,534.
Recommendations:
1. Authorize the selection of AON Risk Services as the City of San Bernardino's property
insurance broker for a term of two years.
2. Authorize the renewal of the property insurance for a term of May 1, 1997 through
April 30, 1998 at a cost of $206,534.
3. Adopt Resolution.
APP 11 '37 13:56 AO'~ 58
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City of San Bernardino
Property Insurance Program
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&11 Risk Servicf:!
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1 AGREEMENT
2 THIS AGREEMENT is made and entered into this 15th day of April
3 1997, by and between the City of San Bernardino, a municipal
4 corporation, hereinafter referred to as "City," and AON Risk
5 Services, San Bernardino, hereinafter referred to as "Broker."
6 WHEREAS, CITY desires to obtain professional insurance
7 brokerage service on a contract basis; and
8 WHEREAS, after a selection process Broker has been selected by
9 the city and that Broker shall be AON Risk Services, San
10 Bernardino; and
11 WHEREAS Broker has experience and knowledge in performing
12 insurance brokerage services.
13 Now, therefore, for and in consideration of the mutual
14 promises, covenants and conditions herein contained, the parties
15 hereto agree as follows:
16 Under the direction of the city's Risk Manager, Broker shall
17 provide to City professional insurance brokerage services according
18 to the terms and conditions of this Agreement.
19 1. Aar....Dt.
20 city does hereby contract with Broker to provide professional
21 insurance brokerage services as hereinafter provided for a period
22 of five (5) years, commencing on the 1st of May 1997, and
23 erminating on April 30, 1999. Broker hereby accepts said contract
24 nd agrees to perform all work and services in accordance with the
25 erms and conditions hereof. Broker is hereby appointed as City's
26 xclusive Broker of Record for the 2 year period for all forms of
27 roperty Insurance.
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1 2. Service. to he Derformed.
2 A. Broker shall obtain insurance quotations on all property
3 insurance items maintained by City as of April 15, 1997, as well as
4 any insurance requested for consideration in city's request for
5 proposal for insurance brokerage services, to which Broker
6 responded.
7 B. Whenever m3.rket conditions permit, Broker shall obtain a
8 least two quotations on each separate insurance item or layer of
9 insurance.
10 C. Broker shall submit firm quotations to city's Risk
11 Manager at least thirty (30) days prior to expiration of existing
12 insurance, provided, however, that City's Risk Manager may waive
13 such 30 day notice in the event Broker can demonstrate to the
14 satisfaction of city's Risk Manager that there exists extenuating
15 circumstances which preclude or make undesirable such 30 day
16 notice.
17 D. Broker shall make a good faith effort to give notice to
18 city's Risk Manager of all favorable or unfavorable market
19 developments which might affect city's Risk Manager. Annually, on
20 March 1st, the Broker will provide a written assessment of policie
21 in force and include recommendations for improved risk coverage at
22 the lower price to the City. Annually, no later than November 1s
23 of each year, Broker will provide, in writing, Broker's best guess
24 estimates for the renewal premium costs of all City's insurance
25 policies to provide guidance to city for future budgeting purposes.
26 E. It is understood that, from time to time, Broker shall b
27 requested by City to obtain insurance quotations on certain items
28 not contained in section 2A, above.
April 15, 1997
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1 F. At the request of city's Risk Manager, Broker shall
2 include said Risk Manager in negotiations with underwriters
3 involving placement of all of the City's insurance programs. It i
4 intended that Broker will utilize insurers that will have a Best
5 rating of A, as well as any acceptable financial category such as
6 7 or higher. Any exceptions require the approval of the Ris
7 Manager. For all insurance quotations, Broker will apprise the
8 Risk Manager of the company's Best rating.
9 G. It is agreed and understood that the Broker account team
10 for the City of San Bernardino will consist of Kennen B. Staley,
11 Senior Vice-President.
12 H. It is the team responsibility, under the direction and
13 control of the officer in charge, to perform the following
14 functions:
15 1. Continually analyze the City of San Bernardino exposures
16 and recommend coverages consistent with these exposures, to provid
17 the highest level of coverage at the least possible cost to the
18 .city.
19 2. Oversee and coordinate all relevant services performed b
20 AON Risk Services, underwriters or service agencies arranged by th
21 team on behalf of the city.
22 3. Be available for advice and information as requested by
23 the City.
24 4. Check and bill regularly, deposit, and audit premiums.
25 If premiums are to be allocated by department or program, these
26 allocations will, at the request of the City, be performed by the
27 account service team.
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5. Collect the data necessary, and prepare professional
quality insurance proposal submission packages, for the proper
marketing of the various coverages.
6. Perform the administrative and clerical services
relative to account management, such as certificate issuance,
coverage descriptions and policy changes. By October 10th of each
year, Broker will provide city with a complete insurance summary,
including coverages for Economic Development Agency. Broker will
provide City with a complete insurance summary, including coverage
for Economic Development Agency. Broker will provide City with an
updated insurance summary within thirty days of any change in the
latest insurance summary.
7. Respond to any extraordinary needs of the City, as
necessary.
I. It is agreed and understood that the Broker account team
shall meet with City'S Risk Manager no less often than quarterly,
commencing in the third quarter of 1997. Any change in the accoun
team format will require approval by the City'S Risk Manager.
3 . Work to be Derf01'llea bv ci tv.
city shall cooperate with Broker by timely providing all
information necessary for Broker to obtain insurance quotations.
4. Bx~ra Serviaes.
It is agreed that Broker will arrange for a property
appraisal, by a certified appraiser, of all City, Water
Department, and Economic Development Agency properties which wil
be completed by Novemeber 1, 1997.
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5. Broker's ~..s and Pavment.
City shall compensate Broker annually for insurance brokeraqe
services pursuant to this Aqreement as follows:
A. For the performance of all services contemplated under
this Aqreement, includinq but not limited to the marketinq and
placement of all insurance or bond coveraqe contemplated under thi
Aqreement, Broker shall be paid by commissions from carrier under
this Aqreement.
B. The city is presently a member of BICEP, an insurance
JPA, which provides qeneral, law enforcement, automobile, public
officials, and personal injury liability coveraqe at $25,000,000
excess of $1,000,000. Should the City request Broker to market
coveraqe for these exposures excess of the BICEP proqram, Broker
shall be paid from commissions from insurance carriers.
C. On matters in which it is illeqal, or is not in the best
interest of the City, for a line of coveraqe to be issued net of
commission, Broker will neqotiate the lowest commission possib~e
and shall make full disclosure of any and all commissions to City.
No coveraqe shall be issued inclusive of commission without prior
approval of the Risk Manaqer.
7. Termination.
Either party may terminate this aqreement as of May 1st of
each year by qivinq the other party notice on or before March 1st
precedinq the May 1st anniversary.
8. Aaen4aen't.
The terms of this Aqreement can only be amended by written
aqreement between the parties hereto.
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9. Assi<mlllent.
Neither City nor Broker shall assign or transfer its interest
in this Aqreement without written consent of the other.
10. ComD1iance with Laws.
In the performance of this Aqreement, Broker shall abide by
and conform to any and all applicable laws of the United states,
state of California; and ordinances, requlations, and policies of
the city of San Bernardino.
11. PrOfessional Liabilitv Znsurance.
Broker shall maintain throuqhout the term of this Aqreement
professional liability errors and omissions insurance with coveraq
limits in amounts not less than $5,000,000, Broker shall furnish t
City a certificate issued by Broker's professional liability
insurance carrier, showinq that the above mentioned insurance has
been issued and is in full force and effect; and providinq thirty
(30) days' written notice to the Risk Manaqer of City prior to any
cancellation, termination, non-renewal, or reduction of said
insurance.
12. Ho14 Harmless.
Broker aqrees to defend, indemnify, and hold harmless the
City, its officials, employees, representatives, and volunteers
from and aqainst any and all claims, demands, defense costs,
liability, or consequential damaqes of any kind or nature arisinq
out of or in connection with the Broker's performance, or failure
to perform, under the terms of this Aqreement.
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13. CO.Dl.~. Aar....D~.
This Agreement shall be the entire Aqreement between the
3 parties and shall supersede any prior written or oral cOlDlllunicatio
4 between parties.
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ATTEST:
CITY OF SAN BERNARDINO
Municipal Corporation of
the state of California
Rachel Clark, City Clerk
Tom Minor, Mayor
BROKER:
By:
AON Risk Services
San Bernardino
Approved as to form
and leqal content:
JAMES F. PENMAN
Ci~~Y
By: ?~
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