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CITiY OF SAN BERNARDINO - REQUEST FOR COUNCIL ACTION
From: EDWARD S. RAYA Subj ect: RENEWAL OF PROPERTY
INSURANCE
Dept: HUMAN RESOURCES 0A
Date: MAY 11, 1999
Synopsis of Previous Council Action:
In April of 1997 the Risk Management Division solicited Request For Proposals for the placement of the City's
property insurance coverage. As a result of this process the City selected AON Risk Services as its broker for a
two-year term.
Recommended Motion:
1. Adopt Resolution.
2. Authorize the extension of the contract with AON Risk Services for a period of one year and that they
be authorized to place the City's property insurance coverage at a cost of$169,796 for the 1999-2000
policy period.
Signature
Contact Person: Edward S. Raya Phone: 384-5161
Supporting data attached: Yes Ward:
FUNDING REQUIREMENTS: Amount: $169,796
Source: (Acct. No.) 629-453-5161
(Acct. Descri ion Insurance Premiums
Finance:
Council Notes:
Agenda Item No. OR ;...__
CITY OF SAN BERNARDINO - REQUEST FOR COUNCIL ACTION
STAFF REPORT
SUBJECT:
City of San Bernardino Property Insurance Coverage
BACKGROUND:
In April of 1997 the Risk Management Division solicited Request For Proposals for the placement of
the City's property insurance coverage. As a result of this process the City selected AON Risk Services
as its broker for a two-year term. AON Risk Services has been successful in reducing the city's
premiums and has provided excellent claim service. For this reason staff is recommending that the
contract with AON Risk Service be extended for one additional year through April 30, 2000. It is
anticipated that a Request For Proposal will be issued for the placement of this coverage in the next
fiscal year(2000—2001).
This insurance provides coverage for all of the City's structures and vehicles subject to a $5,000 per
claim deductible. The policies provide coverage against catastrophic loss with a policy limit of
$92,000,000. This limit includes a $75,000,000 sub-limit for Earthquake and Flood damage. The City
has collected over $110,000 in covered claims in the past two years. The Water Department purchases
their property insurance coverage in conjunction with the City and they too will be requesting an
extension to the contract through April 30, 2000. At that time the City and the Water Department will
be issuing a Request For Proposal.
FINANCIAL IMPACT:
AON Risk Service, which is the largest insurance brokerage firm in the world, has through their local
representative been successful in reducing the City of San Bernardino's premium for the past three
years. The premium for 1997 was $206,534, in 1998 it was $200,761 and the proposed premium for
the current policy year (May 1, 1999 to April 30, 2000) will be $169,796, a 15% decrease in cost to the
City.
RECOMMENDATIONS:
1. Adopt Resolution
2. Staff is recomending that the contract with AON Risk Service be extended for an additional year
and that they be authorized to place the City's property insurance coverage at a cost of$169,796
for the 1999-2000 policy period.
1 Resolution No.
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3 RESOLUTION OF THE CITY OF SAN BERNARDINO AUTHORIZING THE
EXECUTION OF AN AGREEMENT F RISK
OR A PERIOD OF ONE PROVIDE
4 PROPERTY INSURANCE BROKERAGE SERVICES
5 BE IT RESOLVED BY THE MAYOR AND COMMON OF THE CITY OF SAN
6 BERNARDINO AS FOLLOWS:
7 SECTION 1: The Mayor of the City of San Bernardino is hereby authorized and
8 directed to execute on behalf of said City an Agreement with AON Risk Services to
9 provide property insurance brokerage coverage, a copy of which is attached hereto,
10 marked Exhibit "A" and incorporated herein by reference as fully as though set forth at
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length.
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SECTION 2: The authorization to execute the above mentioned agreement is
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14 rescinded if the parties to the agreement fail to sign it within sixty (60) days of the
15 passage of this resolution.
16 1 HEREBY CERTIFY that the foregoing Resolution was duly adopted by the
17 Common Council of the City of San Bernardino at a meeting thereof,
18 held on the day of , 1999, by the following vote,
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to wit:
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1 RESOLUTION OF THE CITY OF SAN BERNARDINO AUTHORIZING THE
EXECUTION OF AN AGREEMENT WITH AON RISK SERVICES TO PROVIDE
2 PROPERTY INSURANCE BROKERAGE SERVICES FOR A PERIOD OF ONE YEAR.
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COUNCILMEMBERS: AYES NAYES ABSTAIN ABSENT
4 ESTRADA
5 LIEN
6 MCGINNIS
7 SCHNETZ
8 DEVLIN
9 ANDERSON
MILLER
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12 Rachel Clark, City Clerk
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14 The foregoing resolution is hereby approved this of
15 11999.
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18 Judith Valles, Mayor
City of San Bernardino
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20 Approved as to form and
21 Legal content:
22 JAMES F. PENMAN,
23 City Attorney
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By:
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1999-132 r
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AGREEMENT
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31 THIS AGREEMENT is made and entered into this seventh day of June, 1999, by
41 and between the City of San Bernardino, a municipal corporation, hereinafter referred to
51 as "City," and AON Risk Services, San Bernardino, hereinafter referred to as "Broker."
6 WHEREAS, after a selection process, Broker has been selected by the City and
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that Broker shall be AON Risk Services, San Bernardino; and,
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9 WHEREAS, Broker has experience and knowledge in performing insurance
10 brokerage services.
11 Now, therefore, for and in consideration of the mutual promises, covenants and
12 conditions herein contained, the parties hereto agree as follows:
13 Under the direction of the City's Director of Human Resources, Broker shall
14 provide the City professional insurance brokerage services according to the terms and
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conditions of this Agreement.
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1. Agreement.
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18, City does hereby contract with Broker to provide professional insurance
19 brokerage services as hereinafter provided for a period of one (1) year, commending on
20 the first day of May 1999, and terminating on April 30, 2000, Broker hereby accepts said
21 contract and agrees to perform all work and services in accordance with the terms and
22� conditions hereof. Broker is hereby appointed as City's exclusive Broker of Record for
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the one (1) year period for all forms of Property Insurance.
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25 2• Services to be Performed.
26 A. Broker shall obtain insurance quotations on all property insurance
27 items maintained by City as of April 30, 1999, as well as any insurance requested for
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1999-132
1 consideration in City's request for proposal for insurance brokerage services, to which
2 Broker responded.
3)
B. Whenever market conditions permit, Broker shall obtain at least two
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(2) quotations on each separate insurance item or layer of insurance.
6 C. Broker shall submit firm quotations to City's Director of Human
7 Resources at least thirty (30) days prior to expiration of existing insurance, provided
8 however, that City's Director of Human Resources may waive such thirty (30) day notice
9 in the event Broker can demonstrate to the satisfaction of City's Director of Human
10 Resources that there exists extenuating circumstances, which preclude or make
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undesirable such thirty (30) day notice.
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13 D. Broker shall make a good faith effort to give notice to City's Director
14 of Human Resources of all favorable or unfavorable market developments which might
15 affect City's Director of Human Resources. Annually, on March 1, the Broker-�Iwill
16 provide a written assessment of policies in force and include recommendations for
17 improved risk coverage at the lower price to the City. Annually, no later than November
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1 of each year, Broker will provide in writing, Broker's best guess estimates for the
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20 renewal premium costs of all City's insurance.
21 E. It is understood that from time to time, Broker shall be requested by
22 City to obtain insurance quotations on certain items not contained in Section 2, A,
23 above.
24 F. At the request of City's Director of Human Resources, Broker shall
25 include said Director of Human Resources in negotiations with underwriters involving
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placement of all of the City's insurance programs. It is intended that Broker will utilize
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1999-1-12
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1 i insurers that will have a Best rating of A, a well as any acceptable financial category
2 such as 7 or higher. Any exceptions require the approval of the Director of Human
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Resources. For all insurance quotations, Broker will apprise the Director of Human
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5 Resources of the company's Best rating
6 G. It is agreed and understood that the Broker account team for the
7 City of San Bernardino will consist of Kennen B. Staley, Senior Vice-President.
8 H. It is the team responsibility, under the direction and control of the
9 officer in charge, to perform the following functions:
10 1) Continually analyze the City of San Bernardino exposures
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and recommend coverages consistent with these exposures to provide the highest level
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13 of coverage at the least possible cost to the City.
14 2) Oversee and coordinate all relevant services performed by
15 AON Risk Services, underwriters or service agencies arranged by the team on behalf of
16 the City.
17 3) Be available for advice and information as requested by the
18 City.
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4) Check and bill regularly, deposit and audit premiums. If
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21 premiums are to be allocated by department or program, these allocations will, at the
22 request of the City, be performed by the account service team.
23 5) Collect the data necessary and prepare professional qualify
24 insurance proposal submission packages for the proper marketing of the various
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coverages.
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1999-132
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1 6) Perform the administrative and clerical services relative to
2 account management, such as certificate issuance, coverage descriptions and policy
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changes. By October 10 of each year, Broker will provide City with a complete
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5 insurance summary, including coverages for Economic Development Agency. Broker
6 will provide City with an updated insurance summary within thirty (30) days of any
7 change in the latest insurance summary.
8 7) Respond to any extraordinary needs of the City, as
9 necessary.
10 I. It is agreed and understood that the Broker account team shall
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meet with City's Director of Human Resources no less often than quarterly,
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13 commencing in the third quarter of 1999. Any change in the account team format will
14 require approval by the City's Director of Human Resources.
15 3. Work to be Performed by City.
16 City shall cooperate with Broker by timely providing all information
17 necessary for Broker to obtain insurance quotations.
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4. Broker's Fees and Payment.
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City shall compensate Broker annually for insurance brokerage services
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21 pursuant to this Agreement as follows:
22 A. For the performance of all services contemplated under this
23 Agreement, including but not limited to, the marketing and placement of all insurance or
24 bond coverage contemplated under this Agreement.
25 B. The City is presently a member of BICEP, an insurance JPA, which
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provides general, law enforcement, automobile, public officials and personal injury
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1999-132
I liability coverage at $25 million excess of $1 million. Should the City request Broker to
2, market coverage for these exposures excess of the BICEP program, Broker shall be
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paid from commissions from insurance carriers.
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C. On matters in which it is illegal or is not in the best interest of the
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6 City for a line of coverage to be issues net of commission, Broker will negotiate the
7 lowest commission possible and shall make full disclosure of any and all commissions
8 to City. No coverage shall be issues inclusive of commission without prior approval of
9 the Director of Human Resources.
10 5. Termination.
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This agreement shall terminate on April 30, 2000, unless the parties agree
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13 in writing to extend this agreement.
14 6. Amendment.
15 The terms of this Agreement can only be amended by written agreement
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16 between the parties hereto.
17 6. Assignment.
18 Neither City nor Broker shall assign or transfer is interest in this
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Agreement without written consent of the other.
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21 7. Compliance with Laws.
22 In the performance of this Agreement, Broker shall abide by and conform
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23 to any and all applicable laws of the United States, State of California and ordinances,
24 regulations and policies of the City of San Bernardino. `
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1999-132
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1 j 9. Professional Liability Insurance.
2 i Broker shall maintain throughout the term of this Agreement professional
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i liability of errors and omissions insurance with coverage limits in amounts not less than
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5 $5 million; Broker shall furnish to City a certificate issued by Brokers professional
6` liability insurance carrier, showing that the above-mentioned insurance has been issued
71 and is in full force and effect; and, providing thirty (30) day's written notice to the
8 Director of Human Resources of City prior to any cancellation, termination, non-renewal
9 or reduction of said insurance.
10 10. Hold Harmless.
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Broker agrees to defend, indemnify and hold harmless the City, its
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131 officials, employees, representatives and volunteers from and against any and all
14 claims, demands, defense costs, liability or consequential damages of any kind or
15 nature arising out of or in connection with the Broker's performance or failure to perform
16 under the terms of this Agreement.
17 1 11. Complete Agreement.
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18i This agreement shall be the entire Agreement between the parties and
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shall supersede any prior written or oral communication between parties.
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1999-132
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1 ATTEST: CITY OF SAN BERNARDINO
2 Municipal Corporation of the
State of California
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5 Rach I Clark, City Clerk J ith a es, Mayor
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8 BROKER
9 Kennen B. Staley
Senior Vice President
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By:
12 AON Risk Services
San Bernardino
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14 Approved as to form
And legal content:
15
JAMES F. PENMAN
16 City Attorney
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By e,, ��
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_ C I T Y O F
- an bernardino
R A C H E L C L A R K
C I T Y C L E R K
June 9, 1999
Mr. Ken Staley, Senior Vice President
AON Risk Services
611 Anton Boulevard, Suite#1000
Costa Mesa, CA 92626
Dear Mr. Staley:
At the Mayor and Common Council meeting of June 7, 1999, the City of San Bernardino
adopted Resolution 1999-132 authorizing an agreement to provide property insurance
brokerage services for a period of one year.
Enclosed is one (1) original agreement. Please sign in the appropriate locations and
return the original agreement to the City Clerk's Office, ATTN: Melanie Miller, P.O.
Box 1318, San Bernardino, CA, 92418 as soon as possible.
Please retain a copy of the agreement for your files.
Please be advised that said resolution will be null and void if it is not executed within
sixty (60) days—August 6, 1999.
If you have any questions, please do not hesitate to contact me at(909) 384-5002.
Sincerely,
Rachel Clark
City Clerk
l��G�CZLtu �G i�G�G'
By: Melanie Miller
Senior Secretary
Enclosures
P . O . B O X 1 3 1 8 S A N B E R N A R D I N O C A 9 2 4 0 2
t
3 0 0 N O R T H 0 S T R E E T S A N B E A R N A R 0 1 N 0
C A L I F O R N I A 9 2 4 1 8 - 0 0 0 1 ( 8 0 8 ) 3 8 4 - 5 0 0 2
( 8 0 8 ) 3 8 4 - 5 1 0 2 F A X - ( 8 0 8 ) 3 8 4 - S 1 5 8
T D D / T T V ( 9 0 9 ) 3 8 4 - S 5 4 0