93-84 Resolution No. 93-84
RESOLUTION
ACCEPTING THE PROPOSAL OF CORPORATE POLICYHOLDERS COUNSEL, INC.
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF ELGIN,
ILLINOIS, that Larry L. Rice, City Manager, be and is hereby
authorized and directed to accept the proposal on behalf of
the City of Elgin of Corporate Policyholders Counsel, Inc. for
insurance consulting services, a copy of which is attached
hereto and made a part hereof by reference.
s/ George VanDeVoorde
George VanDeVoorde, Mayor
Presented: March 24 , 1993
Adopted: March 24 , 1993
Omnibus Vote: Yeas 6 Nays 0
Recorded:
Attest:
s/ Dolonna Mecum
Dolonna Mecum, City Clerk
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Proposal for Competitive Bidding and Broker
Compensation Review
Since you are satisfied with the technical expertise and service of R.C. Hanchette
Agency, we recommend a single broker competitive bidding process.
L We will create a simplified set of bid specifications. Since the incumbent broker will
be securing all the bids, he has all of the appropriate exposure information, so there
is no need to create a level playing field. The major purpose of the bid specs will be
by the broker to set the mental stage for the underwriters that their broker is in
control of all bids and will get the order. This enhances their expected pay-off in
terms of investing their efforts in a good quote.
2. We will require, as part of the specs, that the carrier allow us to verify terms and
conditions directly with them. This acts as an audit function to assure the Council
that the bids presented by the broker accurately reflect the bids made by the carrier
and vice versa.
3. We will analyze the various quotes and indicate recommended course of action for
the Finance Committee and Council to take. This will include exploring opportunities
to consolidate services such as loss control and claim administration,currently divided
between two sets of providers,yet having common grounds within the City. This may
also encompass coordination with the workers'compensation TPA and the employee
benefits TM.
4. We will service the policies when reviewed as part of the normal audit of coverage,
to ascertain that policies have been issued as ordered, according to coverage
specifications.
5. We will assist in exploring broker compensation alternatives, negotiating on your
behalf with R.C. Hanchette. Since the City requires a certain level and array of
service depending upon its exposures and needs, a commission based broker
compensation system unduly rewards the broker when the premiums skyrocket and
demoralizes him when the premiums arc low. A fee-based approach allows the
broker to be fairly compensated for services rendered according to services needed,
without the wide swing. Since such a system assures his level of compensation, the
broker is more inclined to maintain top-quality service,as he knows ft is always in his
best interest to provide you with the lowest priced quality coverage available.
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The fees for this project would follow our agreed schedule of$163 per professionel
hour,$35 per clerical hour. The time estimate for the bid specifications atiau and enables of bids
(steps 14) is flv�e m eight hood.
The audit opt on(step 4)is a fcnction of the number of policies acrd the carrier(La.
PENCO policies are non-standard,and require more attention to terms and conditions than
standardtned ), and is estimated to be three to ale hours. The broker compensates
option (step 3 is estimated to take four to six hours.
This is sunnmariaod and denominated as follows:
Bidding $ 930 to$1423
Audit $360 to$1095
Broker Comp. $ 730 to$1095
We would agree to cap this at an amount not to exceed$3600. The adding program
is probably the most .• • , of those which might be considered, and therefore requires
the most work. However is the one which we have recently analyzed. 'Therefore,I would
expect the actual fen to be closer to the lower range than the maximum.
t .
CPC
2/14193
,131 •
DF f[
/ �� Agenda Item No.
March 4, 1993
MEMORANDUM
TO: Mayor and Members of City Council
FROM: City Manager
SUBJECT: Insurance Consulting Services
PURPOSE: The purpose of this memorandum is to accept a propos-
al for insurance consulting services from Corporate Policyhold-
ers Counsel.
BACKGROUND: At your August 26, 1992 Committee of the Whole
and September 9, 1992 regular meetings, Council approved a pro-
posal from Corporate Policyholders Counsel (CPC) retaining them
as our independent insurance consultant.
Based upon CPC's recommendation, Council approved the renewal of
the City's limited self-insured retention (SIR) program for the
period October 1, 1992 through September 30, 1993 for worker's
compensation, property, and various liability coverages at their
September 23, 1992 meeting. During discussions that evening,
Council was advised that this renewal was for the third year of
our $100,000 occurrence SIR "All lines Aggregate" liability and
that prior to the October 1993 renewal it would probably be in
the City's best interests to utilize CPC's services to more
fully explore the impact of other levels of our SIR, the possi-
bility/practicality of consolidating loss control and claims
administration services, and entertaining other underwriting
proposals for various specific excess and umbrella liability
policies; charts depicting the structure of our current limited
self-insurance program for liability and worker's compensation
are attached for Council information (reference pages 17-1 &
17-2 respectively) .
Enclosed is CPC's proposal, which outlines the various services
that they would perform in greater detail.
FINANCIAL IMPACT: There are sufficient funds set-aside in the
Risk Management Fund under the general classification "Miscella-
neous Professional Services"
( Approp #601-0000-796-3099 Budget Amount: $48,000) .
Memo to Mayor and Members of City Council
Page 2
March 4, 1993
RECOMMENDATION: The recommendation is to approve the proposal
from Corporate Policyholders Counsel to provide certain indepen-
dent insurance consulting services for a total cost not to ex-
ceed $3600.
Nop Adf )II1W
Lar Ti's. Ri ity Manager
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CORPORATE POLICYHOLDERS COUNSEL, INC.
1460 RENAISSANCE DRIVE,PARK RIDGE,ILLINOIS 80086
(708►288-1770 FAX:(708)298-3458
INDEPENDENT CONSULTANTS ESTABLISHED 1898
February 10, 1993
Mr. Michael A. Sarro
Purchasing Director
City of Elgin
150 Dexter Court
Elgin, IL 60120
Dear Mile:
Thanks for spending a few moments to talk about your future plans. I hope the
telephone gremlin is discovered soon.
With regard to your concern about assuring the Council that the program selection
rprocess generates the optional insurance and risk management program in terms of cost and
benefit,I have enclosed a proposal for bidding and broker compensation for your review and
presentation to the Council.
Naturally, if you have any questions regarding the proposal, please call.
Thanks again.
Very truly yours,
CORPORATE POLICYHOLDERS COUNSEL, INC.
B 4/4,4
Richard G. udo ph, CPCU, ARM
RGR:ms
CDC.
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Management Consultants in Risk and Insurance