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Home My WebLink About52-Risk Management . CITY OF SAN BERroRDINO - REQUEST f:JR COUNCIL ACTION Fro~: i Victor Lorch Director of Riak Management Subject: A' t f C' t' b k ppo~ntmen 0 ~ y s ro er of record for fire insurance and property program. Dept: Date: March 26, 1992 Synopsis of Previous Council action: Recommended motion: That the firm of be selected to serve as the City's broker of record for the property and fire insurance program. -- 'L~ . S ignatu re Contact person: Fred Wi 1 5on. Vi ctor Lorch Phone: 5122/5308 Supporting data attached: Ward: FUNDING REQUIREMENTS: Amount: Source: (Acct. No.) 001-451-53550 IAcct. Oescriotion} Fire in 5 u ra nc e Finance: Council Notes: 75-0262 Agenda Item No "^tJd.-- "../ . CITY OF SAN BER~RDINO - REQUEST())R COUNCIL ~ON f ~ I STAFF REPORT,/ // / At the request of the Mayor, we were asked to explo ways of lowering the City's fire insurance premium. recall last year by consolidating the City's property pOlicie with several different companies under one blanket manuscript licy, we saved the City over $30,000 in premium. J ,/ This year, an RFP process was developed wit eleven brokers and agents participating in the process. Of th eleven brokers which responded, five were subsequently invited 0 the second round of the process which involved an interview onducted by a committee composed of the Risk Management Direct , the General Manager of the Water Department and the Assistan City Administrator. / The following criteria was used in~e evaluation process: / Premium savings / Types of coverages iniolved Municipality exp~et' e Types of service to City (e.g., loss prevention, valuation for ins ance purposes) Accessibility of roker for City'S needs / After review of all pr~p~~ls, it is recommended that the Mayor and Common Council apPoin~__ as broker for the City. / 1- 2. 3. 4. 5. 75.0264 . CITY OF $AN BERClRDINO - REQUEST O>R COUNCIL ACTION From: Victor Lorch Director of Risk Management Risk Management Subject: Appoi ntment of City I S broker of record for fire insurance an~' property program. Dept: DMe: March 26, 1992 Synopsis of' Previous Council action: Recommended motion: That the firm of Frank B. Hall, San Bernardino Office be selected to .serve as the City's broker of record for the property and fire insurance program. i ':, ./ / / I _- /.,.- /' , .1>1("-- u . ... ,;> /7 It .' tY{ ?lC~n Signature 1...... Contact person: Fred Wilson, Victor Lorch Phone: 5122/5308 Supporting data attached: Ward: FUNDING REQUIREMENTS: Amount: '$325.000.00 Source: (Acct. No.) 001-451-53550 (Acct. Descriotion) Fire insurance Finance: ~ ;::J . 0 , Council Notes: 75-0262 Agenda Item No 521. CI~Y OF SAN BER~RDINO - REQUEST (:bR COUNCIL ACTION STAFF REPORT At the request of the Mayor, we were asked to explore ways of lowering the City's fire insurance premium. You will recall last year by consolidating the City's property policies with several different companies under one blanket manuscript policy, we saved the city over $30,000 in premium. . This year, an RFP process was developed with eleven brokers and agents participating in the process. Of the eleven brokers which responded, five were subsequently invited to the second round of the process which'invo1ved an interview conducted by a committee composed of the Risk Management Director, the General Manager of the Water Department and the Assistant City Administrator. The following criteria was used in the evaluation process: 1. Premium savings 2. Types of coverages involved 3. Municipality expertise 4. Types of services to City (e.g., loss prevention, valuation for insurance purposes) 5. Accessibility of broker for City's needs This was reduced to three and Frank B. Hall, San Bernardino was chosen for the following reasons: 1. Hall ranks within the top 5 brokers internationally. 2.. Hall has the ability to access markets while a smaller broker would have to use an' .intermediary (wholesale broker) . Both the other two brokers had to utilize wholesale brokers. Hall's premium was 30% lower than the competition. 3. Risk control and loss control services are a part of the premium paid to Frank B. Hall. These were available from other brokers, but on a fee basis. 4. Hall has claims expertise to assist City in claim problems. 5. Hall will work with Risk Management to develop the best possible property insurance program for the City and Water Department. Risk Management recommends staying with a $5,000 deductible at present. Over the past 2 years, the City has experienced approximately $150,000 in property losses. We've recovered $135,000 of the $150,000 from insurance. With a soft property market projected for the next few years, it's not economically feasible to take on a larger deductible. After review of all proposals, .i t is recommended that the Mayor and Common Council appoint Frank B. Hall as broker for the City. 7"'_n~f>4 C o o ... .0 C o C o II> c::: I.LJ :><: o c::: CO .~ .... ... .~ '" ....- C> ....- C> ... ....- CC"'l II> ....-cen ....- cen en . ....- 0 . 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C CIl N.... ....- ::J ~ CCIl c::: ....- ::t: 0 "'3~ I.LJ '" ... ... II> 'C :><: ::t: ... ..Q u... ... 0 'C '1:10 c::: . ....-CIlC ...CIl.... CO CO ....-N... N3 CIl.... CIl c.,.. to .... .>< 3....-.... "'....- ... U C ~.,...CII 0'10"'<-> CIl '" ....-....CIl ....... ... ... ",:3 0:'" .~ LL u~ :E~ 0 I.LJ <..> :z: < c::: : II> :z: .... u... o :z: o II> .... c::: < c.. :E CO u o o March 27, 1992 Frri B. HIM . Co. 01 CaIlIomiII_ BroUn Southem Division 621 E. Cemegie Drive, Suite 205 San Bernardino, Califomia 92408 Victor Lorch, ARM Director of Risk Management City of San Bernardino 300 North "D" Street San Bernardino, CA 92418 Dear Vic.tor, Frank B. Hall & Co. sincerely appreciates the opportunity to present to your insurance committee our proposal and recommendations for your all risk property insurance excluding earthquake. It should be noted that this proposal also includes comprehensive and collision coverage for the City's trash trucks, street sweepers and fire trucks. It is understood that this all risk proposal does not include earthquake but, earthquake will be included prior to the. conclusion and binding of this coverage. Accordingly, the premium indication will not in any way reflect the eventual premium the City and Water Department will realize. We expect that our premium indication will be very competitive with all indications received. The services offered by Frank B. Hall & Co. should further separate us from the other brokers quoting. We feel by choosing Hall you will not only receive a cost effective program presented by a local firm but you also get the advantage of all of the resources of a major international insurance brokerage firm, It is hoped that all of the information contained in this proposal will be carefully reviewed by your committee. We feel that the advantages of Hall will become apparent. Sincerely, ,~~~ Kennen B. Staley Senior Vice President KBS/vjk 'encL cc: Fred Wilson /' Bernie Kersey Telephone (714) 381-3710' Facsimile (714) 383-11193 A Division of Frank B. Hall Insurance Brokers, Inc. C:lty of San. Bern.a.rdin.o an.d. Water Depa~en.t Presented by: Frank B. Hall & Co. 621 E. Carnegie Dr., Ste 205 San Bernardino, CA 92408 o o Note 0:0. Proposal. F01"'DlELt Because the City of San Bernardino and the Department. addressed some specific requests in letter of March 18, 1992, we have formatted presentation to address them, one by one. Water your our . o o 1.. _ Es-t-........-ted. p:rellDi"UDI. for p-u.:re property o%1l.y_ Values at Risk $189,000,000. Blanket Coverage All risk excluding earthquake including canprehensive and collision coverage for trash trucks, street sweepers and fire trucks. Deductibles* $ 5,000. All Claims Except $100,000. Flood and Vehicle Collision Premium $ 78,817. 'Rate $.0327 Property .175 Vehicles . o o 2. Bre-k ou:t of p:reDli"UJD for Wa.ter Depa.:rtDJ.e:nt a.:nd. C:lty b~sed. u.j:Jo:n -va.l.u.es su.b:ad.tted.. Water Department Premium $19,478. City Premium $59,339. Rate $.0327 Property .175 Vehicles . o o 3 . Use of e:xi.sti:n.g coV"e:ra.ges or your o~ prog:ra.D1. If your ~ prog:ra.D1, e~1I_1..... _by i:t. :l.s better for 1:he C:I."ty. Frank B. Hall & manuscript form. advantages: Co. will be. using our own designed The fOllowing are some .of the * Manuscript form specifically tailored to your risk. . * We can delete exclusion for underground water mains and piping. * One pOlicy incorporating all named insureds. * Includes comprehensive and collision coverage on designated vehicles. * Frank B. Hall manuscript form i.s specifically designed for municipal risk. * The other brokers submitting proposals cannot manuscript their own form. . o o 4. Cost of progrELD1 ~th ~:n.teed. 1:.h.ree yea.r rate a:n.d. COElt of prog:r&.D1 ~thO'U.t a. g'U.IElL:r&D.teed. rate. Wbat:lEl yo"U.r :reco""'''"'e:n.cia.1::lo:n. for the C:lty? . . A three year guaranteed rate is available.. at no additional cost. Frank B. Hall does not necessarily recommend this approach. In our current insurance market we are continuing to see reduced rates each renewal year. To lock an insured into a fixed three year rate would not be advantages should this "soft" market continue. Additionally all guaranteed rate programs leave an escape clause for the insurance carrier. They usually guarantee the rate will not increase over a stated percentage. They also are normally void if losses or the risk changes dramatically. . o o 5 _ Rstra Pla.:n? Retrospective plans are available for high valued property risks. The city and water department values certainly qualify this program for a retro plan. The advantage of a retro plan is that the insured participates in the risk taking instead of passing the entire risk onto the insurance company. Accordingly, if the loss experience is good in anyone policy year, some of the premium can be returned to the insured. The disadvantage is when losses are bad. If losses should be higher than expected the insurance carrier can come to the insured and bill them for additional premium. Accordingly, you share in the risk taking rather than passing the risk entirely onto the carrier. This additional premium or up swing could cause havoc with municipal budgets. . o 6 _ Use of ded:u.ctibl.es_ o Using the same program design as our original indication, we can adjust the premium with higher deductibles. The following is the premium indication with optional deductibles: Deductible 'Premium $ 10,000. All Claims 100,000. Collision $74,902. $ 25,000. All Claims 100,000. Collision $70,987. $100,000. All Claims $63,158. . o o "7 _ Co"'""'"e~t o~ brok.er se.&.- 'V .lees &v--.n-b1e to the C:lty_ Hall Qualifications and Services * Able to manuscript the coverage. * Only broker presenting with: Engineering Department Loss Control Department Property Claims Department Computer Program for Statement of Values Specialty Governmental Entity Unit * The only full resources international broker with offices in San Bernardino. * Our staff has been part of the San Bernardino community for several years. * Some of the City's premium dollars will remain in the local economy. * Hall's network of International resources cannot be duplicated. * Hall is currently the broker for the BICEP casualty program in which San Bernardino participates. ' * Hall has a specialty unit responsible for governmental and public sector business. * As a major international broker our clout with the insurance markets, is not easily duplicated. * Because of experience and knowledge of municipal clients we are'continuously aware of changes in the market place. * Our knowledge of your current property program leads us to believe their is room for substantial improvements and savings. * Hall can access the BICEP program to gain benefit of other cities premium. . . o o a _ All carriers to be rated A+ or better an.d adYW1l"tted to do b"U.sJ.:n.4asS in. C-,....o:rn.ia._ Frank B. Hall & Co. has a department in our New York office whose sole function is to monitor the financial stability of the insurance companies with whom we work. Not only do we consider the Best Guide Rating, ie., A+ XV, but we also conduct an independent analysis. No other broker presenting provides this additional safeguard for their clients. .