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HomeMy WebLinkAbout96-274 Resolution No. 96-274 RESOLUTION ACCEPTING THE PROPOSAL OF MESIROW FINANCIAL FOR LIMITED SELF-INSURANCE PROGRAM BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF ELGIN, ILLINOIS, that Richard B. Helwig, City Manager, be and is hereby authorized and directed to accept the proposal on behalf of the City of Elgin of Mesirow Financial for the city's limited self-insurance program for the period October 1, 1996 through September 30, 1997, a copy of which is attached hereto and made a part hereof by reference. s/ Kevin Kelly Kevin Kelly, Mayor Presented: September 25, 1996 Adopted: September 25, 1996 Omnibus Vote: Yeas 7 Nays 0 Attest: s/ Dolonna Mecum Dolonna Mecum, City Clerk Insurance Proposal For City of Elgin October 1, 1996/97 r Table of Contents I. Service Committ►ent 1-2 II. Property Terms and Conditions 3 Summary of Values Insured 4 Crime 5 Boiler and Machinery 6 III. Casualty Commercial General Liability 7 IV. Public Officials Liability 8 V. Automobile Coverage and Limits 9 r VI. Specific Excess Worker's Compensation Guaranteed Cost Plan 10 VII. Excess Liability 11 VIII. Summary Premium Summary and Comparison 12 Comments and Subjects for Discussion 13 IX. Mesirow Financial Background _ 14 Mission 14 Approach 14-15 Additional Insurance Services 15 • Organization 15 Other Capabilities 16 Products and Services 17 r AerMesirow Financialy .' Mesirow Financial Service Commitment To City of Elgin The following are the services which,based on our knowledge of the needs of City of Elgin,we commit to continue to perform during the coming year: • Identify the best combination of risk transfer,reduction and assumption consistent with your business philosophy. • On a continuing basis,analyze exposures and make recommendations for management of risk including program design, communications,priorities and loss control goals. • Negotiate and place all insurance products on your behalf,seeking the most cost-effective program on a long-range basis. • Advise of any change in conditions in the insurance marketplace or the legal climate that may have an impact on your risk management program. • Specify,monitor and coordinate the loss control services provided by your insurance carriers. This is done with our risk management services department and includes: Review and evaluation of loss control reports. Review of loss runs to identify trends and problem areas. Act as communications liaison with City of Elgin and insurance carriers to focus service emphasis in critical areas. Negotiate resolution of disputed recommendations and suggest alternative solutions. • Monitor and coordinate the claims handling activities of your insurance carriers and act as your liaison with the carriers' claim departments. • Review all losses over$10,000 annually. rib* page 1 Mesirow Financial Mesirow Financial Service Commitment To City of Elgin (Cont.) • Review all documents relating to risk control and transfer including: Contracts Leasing Agreements. Required Insurance Certificates from suppliers,contractors and regular non-owned auto users. • Monitor and verify dividend calculations,experience modifications, property rates and other factors impacting your net cost of insurance. • Maintain all policies on your behalf,verifying their correctness and accuracy. r page 2 Mesirow Financial • '"'k Property Terms and Special perils subject to policy exclusions Conditions Coverage Includes: Water damage including back-up of sewers and drains/accumulation of surface water/wind driven rain Flood-$6,000,000 Earthquake- $16,000,000-underground pipes $6,000,000-all other locations Replacement cost valuation for real,personal property and computers Actual cash value for auto and contractors equipment 100%valuation on real and personal property Agreed amount-waiver of coinsurance on real property,personal property, auto physical damage,contractors equipment and computer Operation of building laws,increased cost of construction and demolition and debris removal $100,000 deductible per claim except 1%for earthquake Business income and extra expense Gross earnings form 30 days extended period of indemnity 50%valuation as respects Contingent Tax Interruption Agreed amount-coinsurance waived Limit excludes ordinary payroll $0 deductible • page 3 M@Sit'oW Aft Financial) Summary of Amount Values Insured Blanket real and personal property including inventory $86,606,461 Including property of others in your care,custody, control Business income(water sale to Bartlett) 1,000,000 Contingent tax interruption(river boat,4.6 months) 5,000,000* Extra expense 1,000,000 Personal property including inventory at any other 25,000 location(per location) Electronic data processing equipment,media and 1,085,618 extra expense Accounts receivable 250,000 Valuable papers 100,000 Contractors equipment(including auto) 16,979,550 Radio equipment floater 1,663,685 Fine arts 83,642 Emergency equipment 513,554 Unscheduled equipment 1,000,000 * $7,000,000 optional limit available. ri4 au' Carrier: St.Paul Insurance Effective Date: October 1,1996 page 4 ffArh Mesirow Financial Crime Limits Employee dishonesty-per loss $500,000 Money and securities- inside-broad form 500,000 Money and securities-outside-broad form 500,000 Depositors forgery 500,000 Money order and counterfeit currency 500,000 Deductible 100,000 Features: Faithful Performance Agreement applies • r ���' Carrier: St.Paul Insurance Effective Date: October 1, 1996 page 5 Mesirow Alt Financial Boiler and Comprehensive form- including production equipment Machinery Objects Covered: Heating,air conditioning,cooling,freezers,boilers,miscellaneous electrical apparatus panels,generators,motors,etc. Perils Covered: 1. Electrical injury including artificially generated current 2. Mechanical breakdown 3. Explosion of steam vessels and piping Type of Coverage Limits Deductible Valuation Direct damage& $16,000,000 $1,000* Repair or replace extra expense Business income 100,000 24 hours Actual less sustained * $2,000 deductible on sewage/water treatment facilities. Joint loss agreement clause . I '1866 ter•• . .�•' c'fy ioCarrier: Hartford Steam Boiler INSUlt Effective Date: October 1,1996 page 6 Mesirow Afr 111:Financial .' Casualty Commercial Bodily injury and/or property damage per occurrence $2,000,000 General Liability Annual aggregate 3,000,000 Annual aggregate products/completed operations 3,000,000 and Personal injury and advertising liability(excludes 2,000,000 Law Enforcement discrimination and wrongful termination) Fire legal liability-real property 100,000 Liability Medical payments per person 5,000 Law enforcement-each wrongful act 2,000,000 Law enforcement-annual aggregate 2,000,000 Coverage Form: Occurrence SIR- $250,000 Applies to bodily injury and property damage,per occurrence $750,000 Combined aggregate for General Liability,Auto Liability,Public Officials Liability,and Law Enforcement Liability Features Include: All premises/operations,independent contractors and products and completed operations including*: • Blanket contractual • Host liquor liability • Employees as additional insured • Broad form property damage • Extended definition of bodily injury • Incidental medical malpractice • Limited worldwide liability(suits in U.S.) • Automatic coverage-newly acquired organizations(90 days) • Public Executive Officers are Protected Person • Employee benefits liability(each claim and aggregate) Claims made coverage Limits: $1,000,000 each claim 3,000,000 aggregate Deductible: 1,000 Retroactive date: 10/1/87 * Note: all pollution is excluded AMU! Carrier: St.Paul Insurance Effective Date: October 1,1996 page 7 AfAr M.esirow Financial ... Public Officials Liability Coverage Each claim/annual aggregate $2,000,000 and Limits Self-insured retention each wrongful act 100,000 Coverage Form: • Claims made • Retroactive coverage date: 10/1/87 • $750,000 Combined aggregate SIR for General Liability,Auto Liability, Public Officials Liability and Law Enforcement Liability Note: The limit of liability includes defense costs,charges and expenses. rah' • Carrier: St.Paul Insurance r aStalUI Effective Date: October 1,1996 page 8 MesiroW Financials Business Automobile Policy Coverage Limits and Limits Limit of liability per accident for bodily injury and $2,000,000 property damage including employer's non-ownership and hired auto liability Automobile medical payments 5,000 SIR- $250,000 Per occurrence $750,000 Combined aggregate SIR for Auto Liability,General Liability,Public Officials Liability and Law Enforcement Liability r ���' Carrier: St.Paul Insurance Effective Date: October 1,1996 page 9 Mesirow .;111'.�Financial Specific Excess Worker's Compensation Coverage A: Statutory: Illinois Coverage B: Employers' liability: $1,000,000 Other states endorsement Voluntary compensation endorsement Rating Basis: Payroll $27,594,838 S.I.R.-$300,000 each and every loss Carrier: Safety National Effective Date: October 1,1996 page 10 Mesirow ii Financial® • Umbrella Liability Coverage Limits and Limits Each occurrence $4,000,000 * Annual aggregate 4,000,000 Self-insured retention 10,000 * $5,000,000 limit option quoted up to$10,000,000 limit available Terms and Conditions: Exclusions: ERISA Asbestos Pollution Care,custody,and control of real and personal property Employment-related discrimination Uninsured and underinsured motorists liability Sexual and physical abuse r Notes: Including first dollar defense Defense coverage is in addition to limits au' Carrier: St.Paul Insurance Effective Date: October 1,1996 page 11 drAr 7Mesirow ,„,!i Financial Summary Premium • st.Paul St.Paul Summary and Expiring Proposed Comparison Real and Personal Property+ $80,991 $102,413 Boiler and Machinery 9,538 9,996 Employee Dishonesty 1,435 1,435 Crime Included Included Flood and Earthquake 7,300 7,300 Comprehensive General Liability 126,526 87,689 Police Professional 65,730 66,555 Public Officials 26,292 26,045 Paramedic Liability Included Included Auto Liability 20,676 33,093 ** Auto Physical Damage Included Included Excess Workers Compensation 59,444 56,569 Liquor Liability Included Included Umbrella Liability++ 52,161 54,289 CGL Claims Administration 32,548 32,548 *** Loss Control Administration Included Included Mesirow Subtotal $482,641 $477,932 WC Claims Administration 35,250 35,250 Avg.CGL Claims 390,000 390,000 Avg.WC Claims 810.000 810.000 Total Program Cost $1,717,891 $1,713,182 + Includes additional premium to increase Contingent Business Income to$7,000,000(6.5 months),in lieu of$5,000,000. ++ Includes additional premium to increase Umbrella Liability to $5,000,000 in lieu of$4,000,000. * Property values increased by 24% • ** 40 more vehicles in 1996 than in 1995. *** Optional Claims Handling Fee Structure: 7%per claim Handling Fee. No other fees applicable for Claims Administration. page 12 AFT,Mesirow „ii Financial Comments Property and Subjects Signed business income worksheet-agreed amount for Discussion Marine Mail-first class or registered Ocean cargo Liability Pollution liability or environmental impairment including clean up coverage Crime Kidnap and ransom Computer fraud Miscellaneous Discrimination/wrongful termination legal defense coverage or special discrimination/wrongful termination policy All items, except premiums, contained in this proposal are for illustration purposes only. Please read your policy for specific details. page 13 Arjr Mesirow awilw , c1 Financial® rk Mesirow Financial Corporate Insurance Services Background Mesirow Financial's Insurance Services Division was established in 1972 as part of the firm's diversification into the financial services industry. Our growth was designed to allow us to meet more of our clients' financial needs. Our Insurance Services Division is the second largest local insurance agency in metropolitan Chicago. We provide comprehensive insurance for businesses and individuals. Besides risk management services,our areas of expertise encompass employee benefits,qualified and non-qualified employee savings plans,and life and disability protection. Mission To maintain Mesirow Financial as a leader in serving the financial needs of businesses and their owners,affluent individuals and investing institutions. To fulfill this mission,we will serve our clients with the highest levels of integrity,service,and performance. "Client Delight"will be our measure of success. Approach We develop an in-depth understanding of the client's business needs, enabling us to create strategies that fulfill the client's risk and human resource requirements. An integral part of our problem-solving success is our long-standing and close relationships with many major insurance companies, as well as our ability to create self-funded programs where appropriate. We are contract agents for the following companies: Atlantic Companies Casualty Insurance Company Chubb Group CNA Commercial Union EBI/Orion Fireman's Fund Insurance Company Hartford Insurance • Kemper National Companies Maryland Casualty Company page 14 Mesirow iII Financial Approach Northbrook Property and Casualty (Cont.) St.Paul Insurance Company Travelers Insurance Company USF&G West Bend Zurich Insurance Company Additional Services Aggressive claims services review. Draft authority for certain claims. Safety and engineering services in conjunction with Mesirow Financial Risk Management Services Division and insurance company personnel. Annual internal audit of service and coverages. Organization To service the needs of our clients,Mesirow Financial utilizes a team approach. The teams are directed by principals of Mesirow Financial who have devoted their entire professional careers to the insurance industry. Each has experience in designing,placing,and servicing the most complex programs to satisfy property/casualty,human resource,executive compensation and business planning needs. City of Elgin will be handled by Ronald S.Pavlik and his support staff. Your team members are: Ronald S.Pavlik Senior Vice President 847-289-7557 William E.Beckmann Vice President 847-289-7518 John J.Hamilton Account Representative 847-289-7529 Carol Novak Team Assistant 847-289-7555 Barbara Pacente Claims Manager 312-595-6585 Thomas H.Honn Risk Management Services 312-595-6299 page 15 Mesirow Ariff �;Financial r Other Expertise in the areas of employee benefits,disability,non-qualified Capabilities deferred compensation,medical and life insurance programs. Since we are part of a full services financial firm,Mesirow is able to handle other needs such as 401(k),pension and profit sharing plans,venture capital, corporate finance,and real estate. r r page 16 AfAr Mesirow „I'll Financial r Products and Mesirow Financial provides high-quality financial services for businesses, Services individuals and institutions. Businesses Corporate Finance Private Equity Real Estate Services Risk Management Employee Benefits Investment Advisory Services Investment Services Individuals r Investment Services Investment Advisory Services Planning Services Insurance Services Institutions Fixed-Income Sales,Trading&Research Public Finance Equity Sales,Trading&Research Corporate Finance Private Equity Investments Small Capitalization Equity Management Merger Arbitrage Short-Term Fixed-Income Management Correspondent Services r page 17 Mesirow Ary !Financial° El Agenda Item No. (7?' IY. September 6, 1996 TO: Mayor and Members of the City Council FROM: Richard B. Helwig, City Manager SUBJECT: Insurance Renewal PURPOSE The purpose of this memorandum is to approve the renewal of the City's limited self-insurance program for the period October 1, 1996 through September 30, 1997 . BACKGROUND Last year, Mesirow Financial (formerly R. C. Hanchette & Associates) , the City's insurance agent, obtained competing limited self-insurance program proposals from our then cur- rent broker, Penco, and from St. Paul Insurance Company. Corporate Policyholders Counsel (CPC) , the City's long-time independent insurance consultants, reviewed the two propos- als; their task was to compare coverages and make recommenda- tions . Based upon CPC's recommendations, the City Council approved St. Paul 's limited self-insurance program at the September 27, 1995 meeting. This program combines Safety National 's $300,000/occurrence self-insured retention (SIR) for workers compensation with claims administration by Manage- ment Services, Inc. and the St. Paul 's $250,000/occurrence with $750,000 annual aggregate SIR for "all lines" liability coupled with various excess insurance policies to give the City a total of $6,000,000/occurrence and $7,000,000 of aggregate liability coverage. As it has been the City's long-standing practice to keep our limited SIR programs in place for 2-3 years, enclosed is a copy of Mesirow's renewal proposal for the second year of the St. Paul program. This proposal is the same as the first year with a couple of recommended enhancements: emk * Our 50% co-insurance contingent Business Income interrup- tion coverage limits are being increased from $5,000,000 to $7,000,000 due to the increased tax revenues being Mayor and Members of the City Council Page 2 realized from the Riverboat Casino operations at an additional cost of $1349 . * Our umbrella liability coverage is being increased by $1,000,000, which improves the C,ity's total "all Lines" liability limits to $7,000,000/occurrence and $8,000,000 aggregate at an additional cost of $2, 128 . As shown on the premium summary and comparison (Attachment "A" ) , the recommended second year renewal program with the noted enhancements is $4,709 less than our expiring first year program. COMMUNITY GROUPS/INTERESTED PERSONS CONTACTED None. FINANCIAL IMPACT There are sufficient funds in the 1996 Risk Management Fund to cover the insurance premiums ($421 , 363 + $56,569 + $35,250) and related claims expense ($390,000 + $810,000) listed directly below and in Attachment A. Sufficient funds will be established in the 1997 Risk Management Fund's budget for the next year's expenses . LEGAL IMPACT None. ALTERNATIVES Although not recommended, the City could save an additional $3,477 in excess premium payments by not accepting either of the enhancements noted above. RECOMMENDATION The recommendation is for Mesirow Financial to place the following limited self-insurance coverages for the period October 1, 1996 through September 30, 1997 outlined in the last column of Attachment A as follows : a. To accept the St. Paul $250,000 SIR "All Lines" Liabili- ty with Aggregate proposal for a total excess premium and claims administration cost of $421,363. b. To accept the Safety National $300,000 SIR worker's compensation proposal for a total excess premium cost of $56,569 . c. To accept the Management Services Inc 's. proposal for worker's compensation claims administration services for $35,250 . t .. Mayor and Members of the City Council Page 3 (00.- d. For the City of Elgin to continue to maintain our City- controlled SIR annual loss fund of $390,000 for Genral Liability claims and $810,000 for Worker's Compensation claims within the structure of our Risk Management Fund. Respectfully submitted, Michael A. Sarro Purchasing Director Richard B. Helwig City Manager MAS/db