HomeMy WebLinkAbout17-Risk Management
CITY'OF SAN BERtliRDINO - REQUEST ~R COUNCIL ACTION
From: Victor Lorch
Subject: Agreement wi th Frank B. Hall,
property insurance broker for
City
Dept: R1Sk Management
Date: April 13, 1992
Synopsis of Previous Council action:
On April 6, 1992, Council adopted motion item #52, to appoint Frank B.
Hall as the City's broker of record for the property insurance program.
Part of the motion included Risk Management and City Attorney's office
prepare a written Agreement.
Agreement attached.
Recommended motion:
Adopt resolution.
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Contlct penon:
Victor Lorch
Phone: 5308
Supporting dl" Ittached:
Ward:
FUNDING REOUIREMENTS:
Amount: $300.000.00
Source: (ACCT. NO.) 001-451-53550
(ACCT. DESCRIPTION)
Property insurance premium
Flnencl: ~ ~
Council Note.:
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CITY.OF SAN BERraRDINO - REQUEST ~R 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 involved 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, it is recommended that the Mayor and
Common Council appoint Frank B. Hall as broker for the city.
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RESOLUTION NO.
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RESOLUTION OF THE CITY OF SAN BERNARDINO AUTHORIZING THE
EXECUTION OF AN AGREEMENT WITH FRANK B. HALL, SAN BERNARDINO TO BE
THE PROPERTY INSURANCE BROKER FOR SAID CITY
BE IT RESOLVED BY THE MAYOR AND COMMON COUNCIL OF THE CITY
OF SAN BERNARDINO AS FOLLOWS:
SECTION 1.
The Mayor of the City of San Bernardino is
hereby authorized and directed to execute on behalf of said City
8 an agreement with Frank B. Hall, San Bernardino, to be the
property insurance broker for said City, a copy of which is
attached hereto marked Exhibit" A" and incorporated herein by
reference as fully as though set forth at length.
SECTION 2.
The authorization to execute the above
referenced agreement is rescinded if the parties to the agreement
fail to execute it within sixty (60) days of the passage of this
resolution.
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RESOLUTION OF THE CITY OF SAN BERNARDINO AUTHORIZING THE
EXECUTION OF AN AGREEMENT WITH FRANK B. HALL, SAN BERNARDINO TO BE
THE PROPERTY INSURANCE BROKER FOR SAID CITY
I HEREBY CERTIFY that the foregoing resolution was duly
adopted by the Mayor and Common Council of the City of San
Bernardino at a meeting thereof, held on the
day of , 1992, by the following vote, to wit:
Council Members:
AYES
NAYS
ABSTAIN
ABSENT
ESTRADA
REILLY
HERNANDEZ
MAUDSLEY
MINOR
POPE-LUDLAM
MILLER
City Clerk
The foregoing resolution is hereby approved this
day
of
, 1992.
W. R. HOlcomb, Mayor
City of San Bernardino
Approved as to
form and legal content:
JAMES F. PENMAN,
City Attorney
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AGREEMENT
THIS AGREEMENT is made and entered into this 20th day of April
1992, by and between the city of San Bernardino, a municipal
corporation, hereinafter referred to as "City," and Frank B. Hall,
San Bernardino, hereinafter referred to as "Broker."
WHEREAS, CITY desires to obtain professional insurance
brokerage service on a contract basis; and
WHEREAS, after a selection process, Broker has been selected
by the City and that Broker shall be Frank B. Hall, San Bernardino;
and
WHEREAS Broker has experience and knowledge in performing
insurance brokerage services.
Now, therefore, for and in consideration of the mutual
promises, covenants and conditions herein contained, the parties
hereto agree as follows:
Under the direction of the City'S Risk Manager, Broker shall
provide to City professional insurance- brokerage services according
to the terms and conditions of this Agreement.
1. Aareement.
city does hereby contract with Broker to provide professional
insurance brokerage services as hereinafter provided for a period
of five (5) years, commencing on the 1st of May 1992, and
terminating on April 30, 1997. Broker hereby accepts said contract
and agrees to perform all work and services in accordance with the
terms and conditions hereof. Broker is hereby appointed as City's
exclusive Broker of Record for the 5 year period for all forms of
April 13, 1992
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insurance and bonds required by City with the exception of general
benefits (such as life insurance, health ,insurance, dental
insurance, and long-term disability insurance)'.
2. Services to be oerformed.
A. Broker shall obtain insurance quotations exclusive of
commissions or fees where possible on all insurance items
maintained by City as of April 1, 1992, as well as any insurance
requested for consideration in city's request for proposal for
insurance brokerage services, to which Broker responded.
B. Whenever market conditions permit, Broker shall obtain at
least two quotations on each separate insurance item or layer of
insurance.
C. Broker shall submi t firm quotations to ci ty' s Risk
Manager at least thirty (30) days prior to expiration of existing
insurance, provided, however, that City's Risk Manager may waive
such 30 day notice in the event Broker can demonstrate to the
satisfaction of City's Risk Manager that there exists extenuating
circumstances which preclude or make undesirable such 30 day
notice.
D. Broker shall make a good faith effort to give notice to
City's Risk Manager of all favorable or unfavorable market
developments which might affect City's access to insurance at
prices deemed affordable by City's Risk Manager. Annually, on
March 1st, the Broker will provide a written assessment of policies
in force and include recommendations for improved risk coverage at
the lowest price to the City. Annually, no later than November 1st
April 13, 1992
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of each year, Broker will provide, in writing, Broker's best guess
estimates for the renewal premium costs of all City's insurance
policies to provide guidance to city for future.budgeting purposes.
E. It is understood that, from time to time, Broker shall be
requested by city to obtain insurance quotations on certain items
not contained in section 2A, above.
F. At the request of City's Risk Manager, Broker shall
include said Risk Manager in negotiations with underwriters
involving placement of all of the City's insurance programs. It is
intended that Broker will utilize insurers that will have a Best
rating of A, as well as any acceptable financial category such as
7 or higher. Any exceptions need approval of the Risk Manager.
For all insurance quotations, Broker will apprise the Risk Manager
of company's Best rating.
G. It is agreed and understood that the Broker account team
for the city of San Bernardino will consist of Kennen B. Staley,
Senior Vice-President as Account Coordinator and Donald Staufer,
Vice-President as Account Executive.
H. It is the team responsibility, under the direction and
control of the officer in charge, to perform the fOllowing
functions:
1. Continually analyze the city of San Bernardino exposures
and recommend coverages consistent with these.exposures, to provide
the highest level of coverage at the least possible cost to the
City.
2. Oversee and coordinate all relevant services performed by
April 13, 1992
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Frank B. Hall, underwriters or service agencies arranged by the
team on behalf of the City.
3. Be available for advice and informa~ion as requested by
the city.
4. Check and bill regular, deposit, and audit premiums. If
premiums are to be allocated by department or program, these
allocations will, at the request of the City, be performed by the
account service team.
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 lOth of each year,
Broker will provide City with a complete insurance summary,
including coverages 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.
8. Broker will update the values annually for a property
coverage locations, utilizing the Frank B. Hall schedules.
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 1992. Any change in the account
team format will require approval by the City's Risk Manager.
April 13, 1992
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J. Broker will endeavor that all proposed coverages provided
by the insurance submitted by Broker shall be equal to, or better
than the coverage being provided in April" of 1992, in all
instances, to the City of San Bernardino during the term of this
Agreement. Broker shall further be responsible to assure all
insurance issued that deals with the San Bernardino Economic
Development Agency and other agencies including boards,
commissions, and other authorities associated with the city.
K. Broker shall, if requested by City, assist in the
development of, and provide industry standards for cost allocation
programs.
L. Broker activity action plans on behalf of the City, for
each service year, will be developed by the Broker and submitted
for review and approval by the city's Risk Manager no later than
the 30th of November of the affected service year.
3. Work to be performed bv citv.
City shall cooperate with Broker by timely providing all
information necessary for Broker to obtain insurance quotations.
4. Extra services.
It is understood and agreed that any approved services
provided by Broker, other than those services specified in Section
2 hereinabove, must have prior approval of the Risk Manager and
shall be at a rate agreed upon by the parties.
5. Enaineerina services. .
A. Broker will conduct a property survey on all locations in
order to determine replacement values {on a basis acceptable to
April 13, 1992
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insurance underwriters). This survey will be completed on or
before November 30, 1992.
B. On all locations, engineering services will be made
annually to update the values of said locations.
C. Twice during each service year, at a time mutually agreed
upon with City and Broker, Broker will provide complete,
professional property loss prevention engineering services and
shall render appropriate written reports. Also, Broker's property
loss control engineer(s) shall accompany any insurance company
representatives, while such representatives are inspecting city's
premises, to act in the best interests of the city.
C. Broker will furnish engineering services on all current
facilities as well as review preliminary plans and specifications
on new capital additions, within the fee structure.
E. In the event city contracts any new project in the City
requiring individual property loss engineering services, Broker
shall perform said services without additional charge.
F. Broker will, on an annual basis, perform property loss
engineering services relative to the City's major electronic data
processing operations (as identified by the Risk Manager).
G. Broker will complete a City-wide survey relative to
boiler and machinery insurance within a time frame mutually agreed
upon by the parties.
H. Broker will provide recommendation for risk coverage, at
the lowest cost to the City, when the boiler and machinery survey
is completed.
April 13, 1992
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1. Broker assures City that the quality of engineer in
services will be equal to or better than currently provided.
Special emphasis will be given to coordinating all engineerin
services through the Risk Manager.
J. Broker assures all engineering will be professionall
coordinated by Frank B. Hall staff.
6. Broker's fees and paYment.
city shall compensate Broker annually for insurance brokerage
services pursuant to this Agreement as follows;
A. For the performance of all services contemplated under
this Agreement, including but not limited to the marketing and
placement of all insurance or bond coverage contemplated under this
Agreement, Broker shall be paid by commissions from carrier for
first service year under this Agreement. The second through fifth
year commission structure will be reviewed 90 days prior to the
anniversary date of the policy.
B. The city is presently a member of BICEP, an insurance
JPA, which provides general, law enforcement, automobile, public
officials, and personal injury liability coverage at $25,000,000
excess of $1,000,000. Should the city request Broker to market
coverage for these exposures excess of the BICEP program, Broker
shall be paid from commissions from insurance carriers.
C. On matters in which it is illegal, or is not in the best
interest of the City, for a line of coverage to be issued net of
commission, Broker will negotiate the lowest commission possible
and shall make full disclosure of any and all commissions to city.
April 13, 1992
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No coverage shall be issued inclusive of commission without prior
approval of the Risk Manager.
7. Termination.
Either party may terminate this agreement as of May 1st of
each year by giving the other party notice on or before March 1st
preceding the May 1st anniversary.
8. Amendment.
The terms of this Agreement can only be amended by written
agreement between the parties hereto.
9. Assianment.
Neither City nor Broker shall assign or transfer its interest
in this Agreement without the written consent of the other,
10. ComDliance with laws.
In the performance of this Agreement, Broker shall abide by
and conform to any and all applicable .laws of the United states,
State of California; and ordinances, regulations, and policies of
the city of San Bernardino.
11. Professional liabilitv insurance.
Broker shall maintain throughout the term of this Agreement
professional liability errors and omissions insurance with coverage
limits in amounts not less than $5,000,000, Broker shall furnish to
City a certificate issued by Broker's professional liability
insurance carrier, showing that the above mentioned insurance has
been issued and is in full force and effect; and providing thirty
(30) days' written notice to the Risk Manager of City prior to any
cancellation, termination, non-renewal, or reduction of said
April 13, 1992
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insurance.
12. Hold Harmless.
Broker agrees to defend, indemnify, and. hold harmless the
City, its officials, employees, representatives, and volunteers
from and against any and all claims, demands, defense costs,
liability, or consequential damages of any kind or nature arising
out of or in connection with the Broker's performance, or failure
to perform, under the terms of this Agreement.
13. Comolete Aareement.
This Agreement shall be the entire Agreement between the
parties and shall supersede any prior written or oral communication
between the parties.
ATTEST:
CITY OF SAN BERNARDINO
Municipal Corporation of
the State of California
Rachel Krasney, City Clerk
w. R. Holcomb, Mayor
BROKER:
By:
Frank B. Hall
San Bernardino
Approved as to form
and legal content:
JAMES F. PENMAN
City Attorney
By: ~;.'2~
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April 13, 1992
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