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HomeMy WebLinkAboutR-2003-004 Marsh Advantage America, Inc. Broker / Risk Management Services Agreement ExtensionRESOLUTION NO. R-2003- 0 4 A RESOLUTION authorizing and directing the City Manager of the City of Yakima to execute an extension of the Broker/Risk Management Services Agreement with Marsh Advantage America, Incorporated. WHEREAS, on February 23, 1995, the City and Sedgwick James Co. of Washington entered into a Broker/Risk Management Services Agreement for the time period of February 14, 1995 through February 13, 1998; and WHEREAS, on November 12, 1997, the City extended said Agreement for an additional three-year period; and WHEREAS, Marsh Advantage America, Inc. is the successor company to Sedgwick James Co. of Washington; and WHEREAS, on June 19, 2001 the City extended said Agreement through midnight on July 31, 2002, and WHEREAS, the City and Marsh America desire to extend the Agreement through midnight, August 31, 2003; and WHEREAS, the City Council deems it to be in the best interest of the City of Yakima to authorize execution of an extension of the Broker/Risk Management Services Agreement with Marsh Advantage America, Inc., now, therefore, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF YAKIMA: The City Manager of the City of Yakima is hereby authorized and directed to execute the attached and incorporated Extension of the Broker/ Risk Management Services Agreement with Marsh Advantage America, Incorporated. ADOPTED BY THE CITY COUNCIL this 7th da of January, 2003. ATTEST: )<6(A)2_ City Clerk ary Place, Mayor EXTENSION TO INSURANCE BROKER/ RISK MANAGEMENT SERVICES AGREEMENT THIS AGREEMENT EXTENSION (hereinafter "Extension") to the existing Broker/Risk Management Services Agreement (hereinafter "Agreement") is entered into by and between the City of Yakima, Washington, a municipal corporation, hereinafter the "City," and Marsh Advantage America, Inc., a Washington corporation, hereinafter "Marsh America." WHEREAS, on February 23, 1995, the City and Sedgwick James Co. of Washington entered into a Broker/Risk Management Services Agreement for the time period of February 14, 1995 through February 13, 1998; and WHEREAS, on November 12,1997, the City extended said Agreement for an additional three-year period; and WHEREAS, Marsh Advantage America, Inc. is the successor company to Sedgwick James Co. of Washington; and WHEREAS, on June 19, 2001, the City extended said Agreement through midnight on July 31, 2002; and WHEREAS, Marsh America has continued to provide the City with insurance broker and risk management services in good faith that the City would retroactively extend the Agreement through August 31, 2002; and WHEREAS, the City and Marsh America desire to extend the Agreement through midnight, August 31, 2003. NOW, THEREFORE, the. City and Marsh America agree to the following extension and modifications to the Broker/Risk Management Services Agreement: 1. Extension of Agreement. The Insurance Broker/Risk Management Services Agreement (originally executed on February 23, 1995) is hereby extended by the parties through midnight, August 31, 2003. \\ISNT\Users\ranson\Council Agenda Items\2003 Council Agenda Items\01-07-03 - Ins. Broker Contract Extension - Marsh America.doc Page 2/2 Extension Agreement 2. Consideration for Agreement Extension. The City shall pay Marsh America Twenty - Four Thousand Dollars ($24,000.00) in consideration of services rendered by Marsh America through August 31, 2003. The City shall pay said consideration to Marsh America on or by January 31, 2003. Payment of said consideration is expressly conditioned upon Marsh America providing satisfactory services to the City. 3. Other Terms and Conditions of Agreement. Except to the extent expressly modified herein, all of the other terms and conditions of said Agreement shall remain in full force and effect. THIS AGREEMENT EXTENSION is executed by the parties this 7th day of January, 2003. MARSH ADVANTAGE AMERICA, INC. Bye H' iJ Its: Vcedi,e,d,z,tecA. P GM..414.) CITY OF YAKIMA By: Dick Zais, City Manager ATTEST: CITY CONTRACT N0: AO4-9- : �O`' Z RESOLUTION N0: `' V \\ISN \Users\ranson\Council Agenda Items\2003 Council Agenda Items\01-07-03 - Ins. Broker Contract Extension - Marsh America.doc BUSINESS OF THE CITY COUNCIL YAKIMA, WASHINGTON AGENDA STATEMENT Item No. For Meeting Of Jan. 7, 2003 ITEM TITLE: Extension of Contract with Marsh Advantage America SUBMITTED BY: Finance Department CONTACT PERSON/TELEPHONE: Rita Anson, Finance Director( Oa' (# 575-6070) SUMMARY EXPLANATION: This resolution extends the contract with Marsh Advantage America for insurance broker/risk management services. The existing contract expired July 31, 2002. Since that time, Marsh America has continued to provide the City with insurance broker and risk management services upon good faith that the City would retroactively extend the Agreement. Approval of this resolution will extend the contract through August 31, 2003. During this extension period, staff will work to complete a RFP process for future services. This extension maintains the current annual fee of $24,000 for Broker Services. The City shall make payment to Marsh Advantage America on or by January 31, 2003. Payment is subject to the City's receipt of satisfactory insurance renewal proposals for the coverage that renews on January 10, 2003. This includes various bonds, property, boiler and machinery and the travel accident insurance coverage. (During the extension period, Marsh America will also provide insurance renewals to the City for liability insurance coverage; the City's current coverage expires April 2003.) Resolution X Ordinance Other (Specify) Contract X Mail to (name and address): Marsh Advantage America Attn: Joel Pearson, P.O. Box 2547 Yakima, WA 98907 Phone: 509-248-7460 Funding Source Risk Management APPROVED FOR SUBMITTAL: STAFF RECOMMENDATION: Adopt Resolution. BOARD/ COMMISSION RECOMMENDATION: COUNCIL ACTION: \\ISNT\Users\ranson\Council Agenda Items\2003 Council Agenda Items\01-07-03 - Ins. Broker Contract Extension - Marsh America.doc EXTENSION TO BROKER/RISK MANAGEMENT SERVICES AGREEMENT THIS AGREEMENT EXTENSION (hereinafter "Extension") to the existing Broker/Risk Management Services Agreement (hereinafter "Agreement") is entered into by and between the City of Yakima, Washington, a municipal corporation, hereinafter the "City," and Marsh Advantage America, Inc, a Washington corporation, hereinafter "Marsh America." WHEREAS, on February 23, 1995, the City and Sedgwick James Co. of Washington entered into a Broker/Risk Management Services Agreement for the time period of February 14, 1995 through February 13, 1998; and WHEREAS, on November 12, 1997, the City extended said Agreement for an additional three-year period; and WHEREAS, Marsh Advantage America, Inc. is the successor company to Sedgwick James Co. of Washington; and WHEREAS, the City and Marsh America desire to extend the Agreement through midnight, July 31, 2002. NOW, THEREFORE, the City and Marsh America agree to the following extension and modifications to the Broker/Risk Management Services Agreement: 1. Extension of Agreement. The Broker/Risk Management Services Agreement (originally executed on February 23, 1995) is hereby extended by the parties through midnight, July 31, 2002. 2. Consideration for Agreement Extension. The City shall pay Marsh America Forty Two Thousand Dollars ($42,000.00) in consideration of services rendered by Marsh America through July 31, 2002. Said consideration shall be divided into two payments as follows: Eighteen Thousand Dollars ($18,000.00) shall be paid upon execution by the parties of the Agreement Extension; the remaining Twenty Four Thousand Dollars ($24,000.00) shall be paid by the City to Marsh America on or by January 31, 2002. Payment of said consideration is expressly conditioned upon Marsh America providing satisfactory services to the City. (� ti 3. Other Terms and Conditions of Agreement. Except to the extent expressly modified herein, all of the other terms and conditions of said Agreement shall remain in full force and effect. THIS AGREEMENT EXTENSION is executed by the parties this day of June, 2001. MARSH ADVANTAGE AMERICA, INC. CITY OF YAKIMA By: .) c �� e <;m Dick Zais;-Eity Manager ATTEST: City Clerk to - yo .-o 1 Contract No. 2001-66 Resolution No. R-2001-100 ITEM TITLE: SUBMITTED BY: BUSINESS OF THE CITY COUNCIL YAKIMA, WASHINGTON AGENDA STATEMENT Item No. 4 JD_ For Meeting Of Tune 19, 2001 Extension of contract with MARSH ADVANTAGE AMERICA Legal Department Finance Department CONTACT PERSON/'TELEPHONE: Paul McMurray, Assistant City Attorney/575-6030 Rita Anson, Finance Director/575-6070 SUMMARY EXPLANATION: This resolution extends the contract with MARSH ADVANTAGE AMERICA for broker/risk management services. The existing contract expired February 13, 2001. Approval of this resolution will extend the contract through July 31, 2002. During this extension period, staff will complete the RFP process for future services. The fee is $42,000, to be paid in two payments as follows: Eighteen Thousand Dollars ($18,000.00) shall be paid upon execution by the parties of the Agreement Extension; the remaining Twenty Four Thousand Dollars ($24,000.00) shall be paid by the City to Marsh America on or by January 31, 2002. (Note: The vast majority of the broker/risk management service work is completed between January and July.) Resolution X Ordinance Other (Specify) Contract X Mail to (name and address): Marsh Advantage America Attn: Toel Pearson P 0 Box 2547 Yakima, WA 98907 Phone: 509-248-7460 Funding Source Risk Manageme APPROVED FOR SUBMITTAL: City Manager STAFF RECOMMENDATION: Adopt Resolution BOARD/COMMISSION RECOMMENDATION: COUNCIL ACTION: RESOLUTION NO. R-2001-100 A RESOLUTION authorizing and directing the City Manager of the City of Yakima to execute an extension of the Broker/Risk Management Services Agreement with Marsh Advantage America, Incorporated. WHEREAS, on February 23, 1995, the City and Sedgwick James Co. ' of Washington entered into a Broker/Risk Management Services Agreement for the time period of February 14, 1995 through February 13, 1998; and WHEREAS, on November 12, 1997, the City extended said Agreement for an additional three-year period; and WHEREAS, Marsh Advantage America, Inc. is the successor company to Sedgwick James Co. of Washington; and WHEREAS, the City and Marsh America desire to extend the Agreement through midnight, July 31, 2002; and WHEREAS, the City Council deems it to be in the best interest of the City of Yakima to authorize execution of an extension of the Broker/Risk Management Services Agreement with Marsh Advantage America, Inc., now, therefore, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF YAKIMA: The City Manager of the City of Yakima is hereby authorized and directed to execute the attached and incorporated Extension of the Broker/Risk Management Services Agreement with Marsh Advantage America, Incorporated. ADOPTED BY THE CITY COUNCIL this 19th day of June, 2001. ATTEST: 11,EPS, f City Clerk (1k)res/insurance/marsh advantage/contract extension/pm Mary Place, Mayor 7,. J a f' ar i Q or ^ t✓ 4v S 5,<.<<, aY _ s Ztiy an7ico. ../072/0/ Yar--r 1 �1_�j;J-�- C1 . CLE_�K _ YAKS ZG f/2-27sG - z�L Il ti y T`' EXHIBIT III L BROKER/RISK MANAGEMENT SERVICES AGREEMENT THIS AGREEMENT, made and entered into this 14th day of February, 1995, by and between City of Yakima, a municipal corporation of the State of Washington, 129 North 2nd Street, Yakima, WA 98901 (hereinafter referred to as "City", and Sedgwick James Co. of Washington, PO Box 2547, Yakima, WA 98907 (hereinafter referred to as "Broker"): WITNESSETH: WHEREAS, City has determined a need to designate a Broker of Record to market the City's insurance program and has invited proposals under Request for Proposal dated September 23, 1994 for said services; and WHEREAS, The proposal submitted by Broker was accepted by City under the provisions of Request for Proposals dated November 4, 1994; and WHEREAS, City and Broker desire to enter into a contract setting forth the services to be provided by Broker to City as provided for herein; WHEREAS, Appendices A, B, and C attached hereto are incorporated herein; NOW, THEREFORE, in consideration of the mutual promises and obli- gations hereinafter set forth, the parties hereto agree as follows: ARTICLE I COMPLIANCE WITH RFP DOCUMENTS Unless otherwise provided for herein, Broker agrees to act as the City's broker of record and to market the City's insurance program during the period this contract is in effect, in accordance with the provisions, terms and conditions of this Contract, the Request for Proposals, all documents related thereto, and the Broker's proposal. A list of all such documents is attached hereto as Appendix A and all such document are incorporated herein and made a part hereof. JH - Broker/Risk Mgmt Svcs Agrmt 2/10/95 CITY CONTRACT NO. (:)\S \� True and exact copies of this Contract and all such documents listed in Appendix A are on file in the Office of the City Clerk, City of Yakima, 129 North 2nd Street, Yakima, 98901. Unless otherwise provided herein, the City's Director of Finance and Budget shall decide all disputes pertaining to the execution of the services required under this Contract and of the administration of the Contract provisions. ARTICLE II SCOPE OF SERVICES Broker shall perform the work and services specified in Appendix B - Scope of Services, attached hereto and made a part of this Contract. ARTICLE III TIME OF PERFORMANCE This Contract shall be in effect for the three-year period commencing February 14, 1995, and ending February 13, 1998, unless extended upon mutual agreement of both parties. ARTICLE IV COMPENSATION Agency agrees to pay Broker as compensation for the performance of the services set forth in this Contract in accordance with the provisions of Appendix C - Compensation, attached herein and made a part hereof. JH - Broker/Risk Mgmt Svcs Agrmt 2/10/95 -- 2 -- ARTICLE V GENERAL PROVISIONS A. Broker, at its own cost, shall obtain and maintain at all times while this Contract is in effect all licenses, permits and certificates required by the insurance laws of the State of Washington necessary to enable Broker to perform the services set forth in this Contract. Broker, upon the request of City, shall furnish City with evidence of compliance with the provisions of this paragraph. B. Broker shall not assign this Contract without the prior written consent of City. C. (1) City or Broker may terminate this Contract at any time upon thirty (30) days prior written notice; provided, however, in the event Broker fails, at any time during the contract period, to maintain all necessary licenses, permits or certificates as required by Article V, Paragraph A herein, City shall have the right to terminate this Contract upon three (3) days prior written notice. (2) In the event of a termination of this Contract, it is hereby agreed that City shall only be obligated to pay pro -rata, in accordance with the terms of this Contract, for the services furnished by Broker prior to the effective date of any such termination. (3) Failure of City to insist upon performance of any of the terms and conditions or requirements of this Contract shall not be construed as a waiver of such terms, conditions or requirements, and the same shall remain in full force and effect for the duration of this Contract. City expressly retains all other rights or remedies provided by law for any violation of this Contract, and no other action by City shall constitute a waiver of any such right or remedy. D. City or Broker may, from time to time, request changes in the terms or provisions of this Contract. No change shall be effective unless it is mutually agreed upon in writing by City and Broker. JH - Broker/Risk Mgmt Svcs Agrmt 2/10/95 -- 3 -- F. All notices at any time to be served by City upon Broker shall be in writing and sent by certified mail, postage prepaid to the Broker at the address first above written. All notices at any time to be served by Broker on the City shall be in writing, sent by certified mail, postage prepaid to the City's Director of Finance & Budget, City Hall, 129 North 2nd Street, Yakima, WA 98901. In the event the name or address of the party herein listed to receive any such notice or City or Broker shall change, City or Broker shall, within five working days thereafter, notify the other in writing of any such change. Broker 7 Date JH - Broker/Risk Mgmt Svcs Agrmt 2/10/95 -- 4 -- City Manager ATTEST: Acting C y Clerk Date ,-,) RECEIVER '94 NOV -4 ,' O :36 YAKirum r CITY OF YAKIMA BROKER SERVICES PROPOSAL Joel Pearson Vice President 11/02/94 Sedgwick James of Washington, Inc. 143`0 n. 16th Avenue P.O. Box 2547 Yakima, WA 98907 1-800-572-9170 509-248-7460 Deborah A. Krautwurm Vice President COI Sedgwick EXECUTIVE SUMMARY The City of Yakima and Sedgwick have worked together for nine years. When the insurance market turned extremely "hard" in 1986, the city was forced into a self- insurance program. Through diligent efforts on the city's part, with assistance from Sedgwick, a self-insurance/risk management program was established. Over the last nine years, the city has saved a substantial amount of money compared to what would have been paid under a fully insured program. This broker services proposal has given us the opportunity to reflect on what has been done in the past, and determine a course of action for the future. In the "technical proposal" section various risk management options are discussed which would help strengthen the city's program. Sedgwick is more qualified than any other broker in Washington to serve the city's needs. The major advantages of Sedgwick are: • Local Service - The Yakima office, which has specialized in municipal and agribusiness insurance, has been in existence for over 30 years. • • Stability - The two individuals responsible for the city's account are Deborah Krautwurm and Joel Pearson. Deb has been with Sedgwick for 20 years, and Joel has been with Sedgwick for 15 years. Both individuals have extensive experience with municipal business. International Support - As part of the third largest brokerage firm in the world, Sedgwick offers a wealth of available services for municipalities including: * Assistance of our national public entity divisions. * Full technical service department support. * A re -insurance division in Seattle which includes an individual formally employed by the State Risk Management Department and the Washington County's insurance pool, who has substantial experience with alternative risk financing options. * An environmental division available to assist local entities identifying exposure areas and establishing a plan of action. Local service, international expertise and influence give us an advantage over all other brokerage firms. We would appreciate the opportunity to continue to serve as your insurance broker and risk management consultant. TECHNICAL PROPOSAL SCOPE OF SERVICES COST PROPOSAL RISK CONTROL SERVICES MARKETING ENVIRONMENTAL SERVICES MARKET SECURITY RESUMES ORGANIZATIONAL CHART Sedgwick TECHNICAL PROPOSAL 8 brief assessment_ of the City's current program If applicable. a . ... .. E and a rational for any proposed The City's insurance program has evolved over a period of time. In 1986, during the height of the "hard" insurance market, the premiums for the City's general liability, automobile liability, police professional liability, and public officials liability escalated dramatically. The City elected to self -insure those exposures, and continue to purchase property coverage which remained affordable. The City's property coverage is with a financially strong carrier, offers an excellent coverage form, and is competitively priced. Alternatives are explored each year, and Fireman's Fund has remained competitive. A major consideration in the past has been the ability of the carrier to provide high limits of earthquake and flood which are at $20 million limits. We have also explored the incorporation of underground sewer/water pipes for earthquake and flood coverage. Property values were originally established through an appraisal the City had completed in approx. 1989. We have updated those values each year according to the Marshall Valuation Guide. Some lower valued properties, considerably below the deductible, have been eliminated from the schedule. Values at the sewer plant have been updated based on actual construction costs, as provided by staff. (The latest construction has not yet been incorporated into the values we insure.) Options are explored each year even with Fireman's Fund. For example, last year an alternative was provided to increase the deductible from $25,000 to $100,000. Based on the cost savings associated with the increased deductible, that option was chosen. Initially, the City's boiler and machinery coverage was on a limited form with a lower deductible. We made the recommendation to go to a comprehensive form with a higher deductible. Last year, a claim was paid at the Lion's pool for $32,591 due to a breakdown of a boiler. Three years ago, we fully marketed the City's liability coverage in hopes of providing catastrophe protection subject to a large retention level of $500,000 to $1,000,000. Quotes were obtained, but the cost associated with the coverage, considering the past claims experience, was too high. The City elected to continue the self-insurance program. Tiy Sedgwick The following are alternative programs which could be explored: 1. Fully Insured Program. As the name implies, the City could purchase insurance as had been done prior to the self-insurance program in 1986. Considering the success of the self-insurance program, and the City's ability to directly control claims costs, the fully insured program is not a realistic option. 2. All Lines Aggregate. Under this type of program, the City has various retention/deductible levels for each coverage area. The policy would also be subject to an "all lines aggregate " meaning this amount would be the most the City would pay during the course of the year for all property, liability, automobile, police professional, and public official liability claims. For example, an aggregate limit could be set of $1,000,000, and the insurance carrier would be responsible for payment of claims exceeding that amount. There is a possibility this could be expanded to other areas where the City is self-insured, such as workers' compensation or employee benefits. Although the concept of this program sounds good, the reality is that the actual quoted figures will probably be more than the City wants to pay. Considering the loss experience over the last ten years, you would not be able to see a financial benefit to the City. 3. Large Liability Retention. This is an area that has been explored in the past (as discussed earlier). This would provide catastrophe protection but would be subject to a per claim retention of $100,000 to $1,000,000. We do not anticipate the premium would be substantially lower than what we saw a few years ago, and the premium level was not acceptable to the City. used during the course of the project. including subcontractors. The individuals principally responsible for servicing the City's account will be Deb Krautwurm, VP, and Joel Pearson, VP. They will have the ultimate responsiblity of assuring your needs are met and coordinating the team efforts of the entire Sedgwick organization to provide risk management and brokerage services. In addition to Joel and Deb, the following individuals will be involved in servicing the City's account: Lynn Hanke, Account Coordinator - Administration Jana Bland, Account Coordinator - Administration Kathy Cheek, Claims Manager - Claims monitoring, review and preparation of required reports. Monica Young, Bond Manager - Bond marketing Carla Savage, Client Service Coordinator - Disability coverage marketing and placement. Carol Sangster, Risk Control Manager - Loss control activities. Sedgwick The only subcontractor that may potentially be used is Industrial Safety and Health Consultants which we sometimes utilize to prepare photos and diagrams of properties to assist in marketing your property coverage. There would be no added cost to the City, if their services are utilized. A resume of each staff member who will be assigned to the account. The bidder must commit that the staff identified in the proposal titution must have the_approval of the City. See Section 9 - "Resumes" An organizational chart of the bidding firm. See Section 10 - "Organizational Chart" demQnstrate the,__a il.ity to perform the risk management and broker related services for the City. The Sedgwick organization is unique in the Yakima Valley. Our clients receive not only the benefit of local service, but have the market influence and expertise of the world's third largest insurance brokerage firm. In a recent article in Corporate Finance, 1,000 risk managers were interviewed, and Sedgwick was rated #1 in overall broker performance. Part of the reason for that high performance rating is Sedgwick's commitment to quality. Sedgwick is currently pursuing the ISO 9000 rating and has a strong quality program underway. Deb Krautwurm is the Central Washington office Quality Director, with responsibility to implement the quality program, in accordance with ISO 9001 registration. Although we do not have a loss control/technical service department in our Yakima office, we access those services in either our Portland or Seattle offices. A detailed explanation of the services available are outlined in the "Risk Control Services" portion of the proposal. Sedgwick is committed to the public entity business. Our national public entity division located in Columbia, SC is available to assist local offices in all areas of insurance or risk management needs for public entities. We are tied into the network of international offices to provide detailed information on innovative insurance programs and ideas. The Public Entity division is staffed with expertise in law enforcement, and the former Executive Director of PRIMA brings a wealth or knowledge in alternatives to traditional insurance. Our environmental division is available to offer a brief assessment of your current exposures, or have the capabilities to develop a comprehensive risk management loss control program for environmental issues. n(il Sedgwick Locally, we have 43 dedicated employees in our Central Washington office consisting of Yakima and Wenatchee. We have extensive experience handling municipal business including initially establishing the group purchase program for ESD 105; we currently serve as the broker for the Yakima School District, Toppenish School District, Yakima County, the Yakima Valley Farmworkers Clinic, and were recently selected as the broker of record for the Columbia Basin Districts and Grand Coulee Authority. Beyond Mere Insurance Buying A Corporate Finance survey finds that cost-effectiveness is now paramount to risk managers. isk management in the U.S. is start- ing to follow a dis- tinctly European pattern. In Eu- rope, risk man- agers have historically come from the ranks of the corporate finance or operations departments of com- panies. As a result, the European risk manager has viewed himself as more than a mere buyer of insur- ance; instead, he has seen himself as his corporation's protector against the risk of financial loss. And he wants to achieve his goal as cost-effectively as possible. U.S. risk managers aren't neces- sarily being groomed in corporate finance or operations departments across the nation. But they are em- ulating the European risk manage- ment style. Finding the least ex- pensive route to guarding the corporation against financial loss is now paramount, a Corporate Fi- nance survey shows. Overall, risk managers awarded domestic carriers with a grade of 1.9 for the cost of their service. That's slightly better than good, but they are happier with the avail- able limits of coverage, which was graded better at 1.6. Ditto when it came to rating interna- tional carriers, who got higher praise for the breadth of cov- erage (1.88) than they did for cost (1.99). Brokers were graded lowest on their prices. Vendors received a grade of 2.03, which paled against their scores for the design, capac- ity, consulting, and global aspects of their services. Only bro- ker support services garnered a poorer report card (2.18). Issues et greatest risk; llanagemeat Ceneern' (by number ofinentions) Workplace/ ccupationalIllness Insurance market conditions Health care MI costs/reform Environmental liability Insurer IIIIIII solvency OMR liability NM American ! Disabilities Act ■ Tax/regulatory changes 0 15 Such scores aren't meant to make mountains out of molehills. In fact, the survey showed wide dis- parities between what risk man- agers found to be most important and to be least pressing. That's why Corporate Finance used total men- tions when tallying the results. Had we not done this, Corporate Finance would've drastically un- derstated what a vendor accom- plished in a particular category. To - 30 45 60 75 tal mentions is an indicator of a vendor's market share. Consider American Interna- tional Group, which received 248 mentions m the survey. But while the usurer collected 54 mentions in the cost category, it gathered only 17 m the workers' compensa- tion bracket. AIG's situation, how- ever, only mirrored the wider one, 75 for domestic carriers all told re- ceived 236 mentions in the cost category and only 100 when it came to workers' compensation. One other note: Corporations, as part of the cost-effectiveness movement, are putting more em- phasis on loss prevention. Respon- dents noted that they used loss pre- vention consulting services the most, and they anticipate using them quickest within the next year. After all, with more com- panies self-insuring and, thus, paying the bills for loss, risk managers are becoming more attentive to reducing potential liabilities. Whether that means spending extra money to make workplaces safe or retrofitting facilities to withstand natural disasters, corporations would rather pay a penny today to stave off a nickel's worth of liability tomorrow. ■ mango RinteeasvIflnss rvIc. used (by member of mentions) Lou prevention Claims analysis Alternate risk linand Self- insurance elfinsurance C'iss� 1 onsulting to be used soonest within nett year (bynumber Loss prevention Captive issues Alternative al risk financing claims analysis mentions) Self IIIIIIII insurance aim 0 15 fW'$ CORPORATE FINANCE 30 45 60 75 SUMMER 1994 s to ills. dis- tant \vhy ien- dts. rate un- >m- To - >f a -na- 248 hile ons red '1Sa- 3w- >ne, re- _ost 1 it n. >ns, less on- pre - the ,ing 3m - risk ilial lake ural ✓ to ■ 994 READING rI tE TABLES Corporate Finance surveyed 1,000 risk managers at the 1,000 largest (in sales) nonfinandal companies in the U.S. Of those, 100 risk managers responded. They were asked to rate the performance of their domestic insurance carriers, their in- ternational insurance carriers, and their insurance brokers. The magazine also asked some general questions, the an- swers to which are reflected in the charts on page 36. Corporate Finance provided respondents with a list of possible domestic insurance vendors, including Aetna, American International Group, Allendale Mutual, Cigna, and Kemper. If respondents used none of these vendors, they could specify their carrier and rank it. The magazine's list of possible international insurance carriers included Al- lianz, American International Underwriters, Cigna, Royal, and Zurich American (and, of course, "other"). Corporate Finance's list of brokers featured Marsh & McLennan, John- son & Higgins, Alexander & Alexander, Rollins Hudig Hall, Willis Corroon, and other. The cat3egon. ,oder which mestic and international carriers were to how reasonably a vendor has priced its property and lia- bility coverage; BREADTH to how comprehensive coverage is; LIMITS to limits placed on coverage; SERVICE to how fast and accurate a vendor's claims handling is; CONSULT to how helpful a vendor's consulting services are when it comes to corporate self-insurance needs; and, under do- mestic carrier performance, WORKERS' and, refers to how available a vendor makes preferred provider networks that specialize in workers' compensation. For the tables regarding broker performance, COST refers to how reasonably a vendor has priced its services; DESIGN to a vendor's ability to design a comprehensive insurance program; CAPACITY to a vendor's ability to line up needed insurance capacity; CONSULT to the usefulness of a vendor's consulting services; SUPPORT refers to utility of a vendor's self-insurance support services; and GLOBAL refers to the effectiveness of a vendor's local market network for international insurance programs. DOMESTIC CARRIER PERFORMANCE AVERAGE TOTAL CARRIER SCORE MENTIONS COST BREADTH WORKERS' UMITS SERVICE CONSULT COMP. Allendale Liberty Mutual Kemper Arkwright CNA Travelers Aetna Cigna AIG 1.73 1.78 1 86 1.86 2.00 2.07 2.28 2.33 2.49 125 53 114 54 42 51 89 141 248 1.61 1.56 1.86 1.73 2.43 2.50 2.06 2.10 2.06 1 41 1.56 1.70 1.45 2.00 1.67 2.00 1.86 1 96 1.39 1.56 1.65 1.18 1.71 1.89 2.06 1.89 1.65 1.54 2.11 2.10 1.91 2.14 2.10 2.44 2.63 3.19 1.42 1.88 1.79 1.89 2.14 2.00 2,50 2.69 3.14 3.00 2.00 2.06 3.00 1.57 2.25 2.63 2.80 2.94 SCALE: 1 =EXCELLENT; 2=GOOD; 3=NEEDS WORK; 4=PooR BROKER PERFORMANCE BROKER AVERAGE TOTAL SCORE MENTIONS COST DESIGN CAPACITY CONSULT SUPPORT GLOBAL Sedgwick Johnson & Higgins Marsh & McLennan Rollins Hudig Hall Willis Corroon Alexander & Alexander 1.72 1.80 1.92 1.99 2.03 2.24 54 282 277 176 104 193 1.90 1 96 2.16 1.91 2.15 2.14 1.40 1.78 1.90 1.93 1.95 2.21 1.40 1.70 1.68 1.81 1.70 2.06 1.89 1.74 1.89 2.03 1 90 2.41 2.00 2.00 2.22 2.24 2.30 2.37 1.75 1.63 1.68 2.04 2.20 2.26 SCALE: 1 =EXCELLENT; 2=GOOD; 3=NEEDS WORK; 4=POOR INTERNATIONAL CARRIER PERFORMANCE CARRIER AVERAGE SCORE TOTAL MENTIONS COST BREADTH UMITS SERVICE CONSULT Zurich American Allianz Cigna Royal Amer. Int'I Underwriters 2.15 2.18 2.25 2.34 2.37 73 61 132 35 128 1.88 1.93 2.10 2 00 2.34 2.00 1 85 2.00 2.29 2.14 2.06 2.14 2.03 2.29 1 82 2.19 2.54 2.50 2.57 2.67 2.60 2.43 2.61 2.57 2.88 SCALE: 1 =EXCELLENT; 2=GOOD; 3=NEEDS WORK; 4=POOR Reprinted from CORPORATE FINANCE, 1328 Broadway, New York, NY 10001 ©copyrighted 1994 by Financial World Partners. All rights reserved. SUMMER 1994 Use The Power Of Our People. At Sedgwick, we believe there's a certain power that comes from doing things right. The power of time devoted to understanding every as- pect of your business. The power of experience and resources to anticipate and handle the risks Insurance Broking that face your company. And the power of service standards that focus on deliver- ing the right solutions at the right time. That's the power you should expect in your insurance broker. And that is Sedgwick the power you'll find in the full Sedgwick team. Use the Power of our People. Risk Management For more information call our chairman, Quill Healey, at (212) 830-1001. Employee Benefits Sedgwick TECHNICAL PROPOSAL IMPLEMENTATION SCHEDULE The following is a suggested schedule for implementation of the services outlined in this proposal: PATE DESCRIPTION 10-01-94 TO 12-15-94 Marketing of existing insurance coverages including Property, Boiler & Machinery, Bonds, and Disability. Presentation of renewal proposals and options coverage bound and schedules prepared. 12-15-94 TO 01-10-94 RESPONSIBILITY Deb Krautwurm Joel Pearson Deb Krautwurm Joel Pearson 01-10-94 TO 04-01-94 * Property survey & exposure Carol Sangster analysis * Gather casualty underwriting Deb Krautwurm data from various departments Joel Pearson * Casualty exposure survey Carol Sangster 04-01-94 TO 05-01-94 * Meet with city staff to: * Determine goals & objectives Joel Pearson in marketing casualty coverage * Discuss risk management issues relating to risk transfer and avoidance * Determine if a written risk management manual is desired Prepare marketing specifications Market casualty coverages based on goals developed Present property and casualty exposure analysis to city. 08-01-94 TO 09-01-94 Present results of casualty marketing and various quote options to city Deb Krautwurm 05-01-94 TO 08-01-94 * * * Deb Krautwurm Joel Pearson Deb Krautwurm Joel Pearson NOTE: Claims reports would still be prepared on a quarterly basis. at the beginning of the year we would like to meet with city staff and Zaremba Claims Service to discuss how the claim reports could be modified to present more meaningful information to the city. !49i Sedgwick SCOPE OF SERVICES For the flat fee outlined in the "Cost Proposal" section of the proposal, we will provide all of the services outlined in Appendix A of the Request for Proposal. Enclosed under "Scope of Services", Section 2, is a detailed description of the services we would provide to the City. We have also outlined additional available services. In 1995, utilizing either the services of our Seattle Loss Control Department, or the local firm, Industrial Service and Health Consultants, we will update our photographs, diagrams and construction detail of all City properties. Additional areas of service beyond the required services as outlined in Appendix A as requested by the City are as follows: 1. Testing and evaluation of fire protection systems. This would be handled by our loss control department in Seattle with certified fire protection consultants on staff. The cost would be $85.00 per hour. 2. Environmental exposure assessment. In order to do a cost proposal in this area, we would need to determine exactly what you want. The analysis would be coordinated by our environmental services department. The following is a brief outline of the potential costs: STAGE 1: Risk Planning $ 5,000 STAGE 2: Risk Profile $20,000 STAGE 3 & 4: Risk Management & Monitoring $25,000 to $100,000 3. Annual survey of major facilities to identify risk and evaluate property and casualty loss exposures. This survey would be done by our loss control department in Seattle. The cost for their services is $85.00 per hour. However, since we have already committed as part of the basic fee structure to have property surveys completed in 1995, the individuals will already be on-site. The property loss exposures will be evaluated as part of the basic fee, but casualty/ liability exposures would be an additional amount. Since the City's casualty exposures do not change that much year to year, this assessment would be valid for several years and serve as a tool in evaluating potential exposure to loss and to determine methods to eliminate or control that exposure. ei4 Sedgwick 4. Market security review and recommendations. Sedgwick has a security department with the sole responsiblity of reviewing financial data on insurance carriers. They publish a list of markets which meet our security requirements that go beyond the standard rating manuals such as Best's Guide. We receive early warning of carriers which are experiencing financial difficulty. There is no additional cost for this service. 5. Future program development pertaining to risk management and loss control. The future program is dependent on the state of the insurance marketplace. If catastrophe coverage becomes available at affordable rates, that coverage may be purchased. Our Sedgwick reinsurance department in Seattle has recently hired Graham Wright, who was formally with the State Risk Managers Department. His responsibility was to oversee the self-insurance programs. He was the former manager of the Association of Washington Counties Program. Graham developed a written risk management program for the Association of Washington Counties which could be incorporated by the City. Your risk management program could be formalized and geared to your specific needs. Graham is also familiar with the rules and regulations pertaining to self-insurance for municipalities, and is available to assist us when necessary. The fee for his services and cost of the written risk management program would be negotiable. Sedgwick EXHIBIT 1 SCOPE OF SERVICES BROKERAGE SERVICES INCLUDED - Property Exposure Identification and Evaluation Surveys - Insurance Program Audit (The Review of Existing Insurance Policies to Determine Adequacy of Coverage, Adequacy of Limits, Appropriate Deductible/Retention Levels, Significant Restrictions in Coverage, the Existence of Warranties, Concurrency of Coverage, Duplications or Gaps in Coverage, Suitability of Forms, Financial Stability of Insurers and Insurer Service Capability) - Insurance Program Design (The Drafting of Insurance Policy Specifications to Address Exposures to Loss Confronting the City) - Property, Casualty and Marine Marketing Coverages and Related Services: - The Preparation of Appropriately Detailed Coverage/Service Specifications for City Approval, - The Submission of Specifications to Selected Markets/Vendors, - The Negotiation of Coverage and Pricing at Decision Making Level, - The evaluation of Alternatives in Accordance with City Determined Priorities, and - The Preparation of Presentation and Recommendations to City - The Verification of all Requested New and Renewal Policy Terms, Conditions, Rates and Premiums - The Verification of Insurance Company Audit Calculations if Applicable - The Assistance in Allocation of Premiums to Departments as Directed by City - New Acquisition Exposure Surveys/Consulting - The Review of the City's Contracts (Indemnification Agreements and Insurance Requirements) and Establishment of Review Checklists - Building Valuations and Updates for Marketing Purposes - The Monitoring of Insurance Company Services - The Monitoring of Insurer Security - Insurance Company Liaison Activities (Troubleshooting) Sedgwick - Day -to -Day Insurance/Risk Management Advice and Counsel - The Preparation of Insurance Certificates - The Preparation of Insurance Data for Client's Annual Audits - Annual Account Reviews - Annual Stewardship Reports - Monitoring of Insurance Company or Independent Risk Control Services - Review and Negotiation of Insurer Fire Protection Engineering Recommendations - Assistance in Selecting Insurance Company/Independent Risk Control Service Providers - Day -to -Day Advice and Counsel on Risk Control Related Matters - Boiler and Machinery Surveys - Monitoring Carrier Services CLAIMS MANAGEMENT SERVICES INCLUDED - The Monitoring of Insurance Company or Independent Claims Services - The Monitoring of "Questionable" Claims and Active Involvement in "Large" Claim Settlements - The Monitoring of Subrogated Claims - Day -to -Day Advice and Counsel on Claims Related Matters - Evaluating Insurance Company or Vendor Service Performance - Periodic Review of Specific Claims Reserves (Specific Types of Claims and/or Reserves Exceeding Specific Amounts) to Assure Appropriate Action on a Timely Basis - Periodic Status Reports on Agreed Type/Amount Claims with Appropriate Action Recommendations - Maintenance of "Shadow" Files on Agreed Type/Amount Claims Containing Copies of Original Claim Documents and all Subsequent Insurance Company and Sedgwick Status Reports 4J.J Sedgwick Additional services available. but not included within base fees RISK MANAGEMENT SERVICES AVAILABLE - Analysis of Self -Insurance Plan, Trusts and Pools Including: - Loss Forecasting - Ultimate Loss Development for Historic Periods - Funding Levels Determination - Environmental Exposure Analysis - Liability Exposure Survey - Written Risk Management Program - Property & Liability Self -Insurance Risk Retention Studies - Loss Forecasts (Property & Casualty) - Risk Management Audits (Scope to be Determined) - Testing of Fire Protection Systems 419 Sedgwick COST PROPOSAL Our flat fee to perform the services outlined in Appendix A would be $18,500 for each of three years. This fee would also include the property survey including photos, diagrams, details of construction, and exposure analysis for the major locations. We would also guarantee three additional years at $19,000 per annum. Coverages would be written net of commission wherever possible. If commissions are paid, the brokerage fee will be reduced by the appropriate amount. The costs for additional services have already been outlined under the "Scope of Services" section. Determining an appropriate fee to charge would be extremely difficult for a broker who has not been involved with your account. If the City were under a fully insured program, the broker compensation would probably be in excess of $50,000 on a commission basis. The work required under a fully insured program would be less than the services we provide under your self-insurance program. t \1Il Sedgwick RISK CONTROL SERVICES Sedgwick Risk Control Services has an 85 year tradition of providing quality risk control to large organizations. Exposure Analysis Sedgwick professionals conduct in-depth surveys to help you identify exposures to loss and to suggest ways to minimize loss frequency and severity. Our survey reports will provide you with objective analysis for use in developing cost-effective risk control programs. They will also help ensure compliance with regulatory requirements pertaining to concerns such as hazardous materials, labeling, and WISHA/OSHA. Our staff has the ability to test and evaluate fire protection systems. Training, Education, and Specialized Services The Sedgwick team will assist your personnel in their loss control efforts by organizing and conducting training seminars on exposures that are particularly critical to the City. We will also help you prepare effective disaster plans and provide consultation on other contingency planning. This training extends to self -testing of fire protection systems. When a major loss occurs, it must be determined how and why it happened and what can be done to avoid recurrence. Sedgwick Risk Control Services will assist in such investigations and help you in developing appropriate corrective risk control procedures. The services of Industrial Safety and Health Consultants will be called upon to deliver on-site inspection and training services to the City. Individuals of this firm are intimately familiar with operations of municipalities, as well as being the most cost effective means of delivering these services. Analysis of Accident/Claim Experience Loss runs provide information that is often difficult to interpret. Questions arise such as: Do significant trends exist? Are certain types of claims recurring? How can they be prevented? Or minimized? Our risk control consultation will provide periodic loss analysis so that your risk control efforts can be properly focused for optimum effect. Insurance Carrier Utilization Many insurance companies offer excellent service capabilities, but for the best results, you need to know what you should be expecting of them and how to best utilize their facilities. Sedgwick Risk Control Services will devise a plan to ensure the effective use of insurance company services. 010 Sedgwick MARKETING Sedgwick has direct access to more insurance carriers than any other broker in the Pacific Northwest. A tool for your comparison is our premium volume. Typically, insurance carriers have premium requirements for a brokerage firm to become a licensed representative of that company. The accumulated premiums of Sedgwick clients' allow us the ability to leverage our business to the City's, and all Sedgwick clients', best advantage. One of the most important functions of an insurance broker is to solicit premium quotations and to arrange insurance coverages. A business, when considering a brokerage firm, should place a high degree of importance on the quality and quantity of insurance markets available to their broker. The more markets available to a broker increases the probability the most competitive price available will be secured. Sedgwick of Washington office is licensed with more markets that any other broker located in the Pacific Northwest because of its size and its four branch locations. The following is a list of insurance companies that have $1,000,000 of premium, or more, with Sedgwick James of Washington: Aetna Life & Casualty Alaska National American Insurance Group American States Atlantic Companies CIGNA Group Chubb Insurance Co. CNA Insurance Co. Continental Insurance Co. Eagle Pacific Insurance Fireman's Fund Insurance Hartford Insurance Group Home Insurance Co. Kemper Insurance Group Lloyd's of London Old Republic Group Protection Mutual Reliance Group Royal Insurance Group Safeco Insurance Co. St. Paul Group Transamerica Unigard USF&G Wausau Insurance Co. Zurich American Insurance Co. In addition, Sedgwick provides a dedicated professional staff of full- time Marketing Executives. Property, Casualty, Marine, and Surety and Fidelity Bonding Executives are assigned to work with Account Managers and assist in obtaining renewal and new business quotations and options. Results will be reviewed with you and options selected during the proposal meeting. The initiation of new strategies may result from the meeting and specifications prepared for re-entry into the marketplace. Your insurance program is not static, nor is it necessary that review take place only at renewal. T!i Sedgwick ENVIRONMENTAL SERVICES INTEGRATED ENVIRONMENTAL RISK MANAGEMENT THE SERVICES The successful management of environmental risk demands the application of management disciplines: Planning, Evaluating, Controlling and Monitoring. The Sedgwick Environmental Services team has developed an integrated service focused on these disciplines. The protection of client assets and reputation, their executives and employees and the community remain our key objectives. THE SEDGWICK ENVIRONMENTAL SERVICES TEAM Our team is experienced in risk engineering, science, finance, the law and business administration. With these qualifications our team members bring to the table a blend of technical consulting and industrial experience, representing the best integrated environmental risk management service available. THE COMMITMENT The best quality integrated risk service delivered locally or globally. Stage 1 - Risk Planning Establish the positioning the City should take on environmental affairs (risks) and why. This is the foundation of the rest of the program and enables an overall stratedy to be set. Consulting activities in this stage include: - Personnel interview/"brainstorming" session with key executives; - Preparation of a draft positioning/strategy statement; and - Discussion and (if necessary) modification of the draft statement prior to issuance. Stage 2 - Risk Profile Characterizes the environmental threats inherent in and imposed on your operations. This is fundamental to establishing the likelihood of loss, the severity of loss and the business impact such threats of loss would achieve. This stage entails on-site physical inspections of the City's facilities. Sedgwick Consulting activities included in this stage include: - Identify with senior management the key sites to be visited; - Initial meetings with all key site executives to facilitate process; - Distribute survey format for executive preparation; and - Inspect and review selected key sites/operations including personal interviews with site managers. The scope of the risk profile includes: - Screening level compliance assessment for federal and state regulatory compliance; - Selected review of internal documentation and correspondence; - Physical inspection of: - key site conditions - waste management practices - hazardous material storage and handling - special hazards (e.g., asbestos, air handling, PCB's) - analysis of constituents of discharge water - transportation and fleet environmental risks (if applicable) - work practice and housekeeping - third party impacts - Review and collate all key site information, providing commentary on risk prioritization; - Preparation of site specific and overall risk profiles; - Prepare risk improvement plan; - Collate and prepare final draft reports and submittal via counsel for management verification; - Review management responses and modify reports to correct factual inaccuracies or interpretive matters; and - Submit draft final report via counsel reflecting: - overall strategy - prioritization of risks - overall profile of exposures - risk improvement plan Sedgwick ORGANIZATIONAL CHART CITY OF YAKIMA RISK CONSULTANTS Deb Krautwurm Joel Pearson CLAIM ADMIN. Kathy Cheek CLAIM ADJUSTING Zaremba Claims ACCOUNT ADMIN. Lynn Hanke Jana Bland BONDS Monica Young AD&D moi Carla Savage ti PROPERTY SURVEY Industrial Safety & Health Consultants SEDGWICK SERVICES 1 RISK CONTROL Carol Sangster i ANALYSIS CASUALTY Jan Skewes ENVIRONMENTAL Donna Herrmann i FUNDING OPTIONS Graham Wright e3ki Sedgwick Stage 3 - Environmental Risk Management/Risk Improvement Defines and examines the options for managing the exposures once the risks are profiled. Environmental risks can be successfully managed without reference to insurance or other financial tools. In this respect, management training, work practice guidelines, communication and reporting systems and emergency response/contingency planning can contribute to managing environmental threats. The objective is to create and maintain a process for managing the risk within the City's capacities. Stage 4 - Program Monitoring and Performance Review Allows the program to change as circumstances change within your operations or outside. In order for the City to become self- sufficient in managing environmental risk, initial frequent reviews of performance against the strategy plan can sustain the effort. We believe consultants should be, in part, accountable for the integration of the recommended strategy into the business. Consulting Activities included in this stage: - Establish with management the options to be delivered and/or delivered by Sedgwick; - Establish with management on methods to address options not deliverable by Sedgwick; and - Develop and deliver some (or all) of the following: - Management Training - Coordinator Training - Work Practive Guidelines - Communications and Reporting Methods - Emergency Response and Contingency Planning - Preparation of Performance Standards - Other, as required or requested 14,,9 Sedgwick MARKET SECURITY The responsible broker has an obligation to place the client's insurance protection with financially strong carriers. Sedgwick James, Inc., as part of the Sedgwick Group participates in a group effort to monitor information and the financial strength of companies in which we place our client's insurance. It is vital that the insurance placement be with companies that can demonstrate the financial capability to service your needs. In the United States, insurance companies file financial data, at least annually, with insurance regulators having primary responsibility for determining the solvency of companies licensed to write insurance in their states. In addition, the regulator's audit powers allow for the examination of records that are not part of publicly released documents. Also private rating organizations evaluate the size and financial strength of the insurance companies. The oldest and best-known of these companies is A.M. Best & Co.; it is not affiliated with any insurance organization and rates over 1,700 property and casualty companies and a similar number of life f insurance companies. j In addition to the regulatory agencies and private rating organizations, Sedgwick James provides its own independent Market Security and Analysis Department. SECURITY OF MARKETS AT SEDGWICK JAMES Sedgwick James recognized the need to supplement regulatory and outside sources that monitor the financial resources of insurance companies and thereby established a separate security function in 1982. With the active support of Senior Management, Sedgwick North American Security monitors and reviews the financial strength of insurance companies used in North America for the placement of client business. Communication of important developments on security matters are provided to all offices, and access to information regarding markets outside of North America is provided by way of a linkage with a similar group in London. Sedgwick James' Security adds a further dimension and additional security to that which is available through the regulatory process and other sources. We welcome any questions clients may have concerning the insurance companies utilized on their behalf, and we encourage any inquiries you might have prior to market selection. MIJJ, Sedgwick HISTORY OF SEDGWICK JAMES Thousands of businesses, public entities, and individuals look to Sedgwick as their risk services provider, and we are proud to be one of the largest brokers in the United States. While size is certainly not the sole criterion for choosing insurance and risk management representation, it is a measure of success and enables us to offer our clients an unusual depth of service capability. Fred. S. James traces its roots to Chicago, where Alfred James established an insurance agency in 1858. His younger brother Frederick joined the firm in 1864 and soon became a partner. In time, Frederick took over the firm, and in 1900, the firm was incorporated as Fred. S. James & Co., Inc. In August 1985, Fred. S. James & Co., Inc. was purchased by London- based Sedgwick Group plc. Today Sedgwick is the third-largest insurance brokerage/risk services firm in the world, with offices in 62 countries and offices located in 90 cities throughout the United States. Through our parent company, Sedgwick Ltd., we have access to a worldwide network of 300 offices and 13,000 employees, Sedgwick James of Washington, in Seattle, was established in 1944 and currently employs over 150 people, with a premium volume of over $125 million. Sedgwick James came to Yakima in 1975, with the acquisition of the Central Insurance Brokers, founded in 1952. This office employs over 40 people, with a premium volume of over $20 million. Sedgwick offers local, innovative, responsive service . . . and a dedication to excellence in all that we do. Sedgwick is a service- oriented company; a company that offers service programs and marketing approaches designed to respond to the particular needs of individual clients; a company with standards and procedures that ensure excellence. The organization that resulted from the acquisition of Fred. S. James by Sedgwick Ltd. in 1985 is the world's foremost insurance/risk management service firm. It combines Sedgwick's dominance of overseas markets with what an independent analyst recently described as "U.S. brokerage strength," marked by "unimpeachable quality." Our size and the scope of our facilities enable Sedgwick offices to provide an unusual depth of service to client locations, wherever they may be. Nationally and internationally, Sedgwick offices work together to stay abreast of the constantly changing insurance/risk management market- place. A unique electronic bulletin board links Sedgwick offices and their marketing specialists so that answers to insurance placement problems come from the best minds available worldwide. ei% T!/ Sedgwick With the advent of alternative risk -financing programs, individual client's needs are not as easily defined as they have been in the past. Captives, pools, self-insurance trusts, risk retention groups, and purchasing groups have blurred the traditional role of the buyer, creating the need for more broad-based insurance strategies. The Sedgwick Group has initiated a joint venture between divisions of Sedgwick James and Sedgwick Payne, the affiliated reinsurance brokerage company, and utilizes the facilities and expertise of each where needed to develop truly integrated risk financing and transfer programs. That joint venture, entitled Sedgwick Insurance & Reinsurance Services, is a leader in innovative program analysis and design. Duties: \IJ Sedgwick DEBORAH KRAUTWURM, A.A.I., C.P.I.W. VICE PRESIDENT SEDGWICK JAMES OF WASHINGTON, INC. - Insurance Production & Client Service - Risk Management Consulting - Insurance Company Liaison and Contract Review - Quality Director Education - Certified Professional Insurance Woman and Licenses: (CPIW) Designee - Accredited Advisor in Insurance (AAI) Designee - Washington Agent & Broker Licenses Business Experience: - 21 years insurance experience with emphasis on agribusiness, municipal and professional insurance. - 1978 Insurance Woman of the Year - Insurance Industry Appreciation Award 1988 Special Expertise: - Risk Management Consulting - Fruit Packing/Processing Form Design - Municipal Insurance - Special Program Design and Implementation - Rate Analysis & Review Major Clients: - Yakima School District #7 - City of Yakima - Yakima Valley Farmworkers Clinic - Toppenish School District - Benton -Franklin Council on Aging Professional - Rotary Member & 1994-6 Board Member Activities: - Yakima Tennis Club - Director - Tri -Valley Consortium - Private Industry Council - Yakima Visitors & Convention Bureau Director - Central Washington Assn. for Public Television - Past Director - City of Yakima Utility Rate Advisory Board - Yakima Goodwill Advisory Board - Past Director - Fund Raising for United Way & March of Dimes - Yakima County of Agents Association - Past Director 10/94 C&% 9 Sedgwick JOEL PEARSON VICE PRESIDENT SEDGWICK JAMES OF WASHINGTON, INC. Duties: Education and Licenses: Business Experience: Special Expertise: Major Clients: Professional Activities: 10/94 - Major Accounts Manager - Insurance Production - Risk Management Consulting - University of Utah, B.S. Degree in Marketing - Washington Agent, Broker, and Surplus Lines Broker Licenses - 18 years in the insurance business with emphasis in agribusiness and municipal insurance. - Prior to joining Sedgwick James in 1980, employed by Wausau Insurance as a Senior Adjuster in Seattle, and Commercial Account Executive in Portland. - Risk Management Consulting - Fruit Packing & Processing Insurance - Municipal Insurance - Self -Insured Workers' Compensation - Special Program Design & Implementation - Workers Compensation Retrospective Program Consulting - City of Yakima - County of Yakima - Nelson Irrigation Corporation - The Dolsen Companies, Inc. - 12 Major Fruit Packing Operations - Columbia Basin Irrigation Districts and Grand Coulee Authority - Rotary Member & Past Officer - Agents Association Coverage Committee - Fund Raising for Leukemia Society, Yakima Greenway and United Way - Surplus Lines Assocation Member lei l Sedgwick Graham J. Wright, Vice President Mr. Wright is a graduate of the University of California, Berkeley, with a B.A. in economics in 1977. Mr. Wright entered the insurance industry in 1978, working in London at a Lloyd's broker. He has been a property, casualty and workers' compensation underwiter, retail insurance broker, risk manager and a state insurance regulator. Mr. Wright joined the Sedgwick Group in 1993, specializing in alternative risk financing programs. Prior to joining Sedgwick, Mr. Wright was with the State of Washington, Division of Risk Management where he was responsible for the development and implementation of regulations governing local government self-insurance programs and program oversight. Previous to working for the State, Mr. Wright was the Risk Manager for the Washington Counties Risk Pool. Mr. Wright earned his ARM in 1990. Monica Young, Bond Manager Ms. Young has over 20 years experience in the surety business. She joined Sedgwick in 1985. Her experience includes fidelity and surety for public and private clients and has access to numerous bonding companies. Carol L. Sangster, CSP, Regional Director of Risk Control Services Ms. Sangster is a graduate of the University of Washington with a B.S. degree in the field of Environmental Health. Certified Safety Professional: CSP #11068. Ms. Sangster is Manager of Risk Control Services for Sedgwick James of Washington, Inc., based in the Seattle office. She has seven years of experience with Sedgwick James in the risk control field. Prior to her joining Sedgwick James, she had eight years of field experience as a senior loss control representative with a national casualty and property insurance company. Ms. Sangster will be the lead risk control person who will directly provide loss control efforts in conjunction with your direction. Sedgwick Jan Skewes, ARM, Representative of Risk Control Services Ms. Skewes is a Risk Control Services Representative for Sedgwick James of Washington, Inc. She is a graduate of the University of Washington, and additionally has her Associate in Risk Management degree. She has been in the insurance and risk control field for over twelve years. Ms. Skewes' casualty experience includes training in machine guarding evaluations, sound level monitoring and other environmental and occupational health evaluations. Ms. Skewes is currently studying for her Certified Safety Professional designation. Her property and fire protection training is extensive. Before starting in the risk control field, she conducted arson invesigations for the King County Public Defender's office. Over the years, she has attended Factory Mutual's Correspondence Courses, and various other Fire Protection Schools. She has been involved in evaluating sprinkler systems, reviewing plans, and testing systems. Donna Herrmann, Managing Director Ms. Herrmann, Managing Director of the Sedgwick Environmental Services, is a graduate of Pennsylvania State University, where she earned her B.S. in economics and statistics, and of Suffolk University, achieving her M.B.A. in corporate finance. Ms. Herrmann has also been involved in Ph.D. studies at Boston Univeristy in Finance/Risk Management. Ms. Herrmann, a Vice President of Sedgwick and Director of the Sedgwick Environmental Services, has over thirteen years experience in the insurance industry. She has extensive expertise in alternative funding techniques and program design for major domestic and international accounts with environmental exposures. She coordinates environmental consulting functions including claim and risk analyses, marketing and risk financing activities. DEPARTMENT OF FINANCE & BUDGET 129 North Second Street Yakima, Washington 98901 November 12, 1997 Mr. Joel Pearson Ms. Deb Krautwurm Sedgwick James of WA, Inc. PO Box 2547 Yakima, WA 98907 RE: Broker's Contract 1998-2001 Dear Joel and Deb: CJ CrlY OF YAKIMA NOV 14 1997 OFFICE OF CITY MANAGER In accordance with the contract for Broker Services, and Article III, which allows for an extension with mutual agreement by both parties, the City acknowledges acceptance of the terms outlined in your letter of October 31, 1997 and extends the Broker Services agreement for three years. The fees as outlined will be $19,000 for each of three years. In addition, as required by the liability insurance carrier, you will complete the requested Liability Exposure Survey, with annual updates. As this is an additional area of service (referring to the proposal for service dated 1995), the City agrees to compensate you an additional $5,000 for completion of this survey in 1998, with. future years negotiated based on service needs of the liability coverage. Should the City elect to again self -insure, this fee may be waived in total. We appreciate your past years of service to the City and look forward to our continuing rela tionship. Since ly, . Hanson rector of Finance and Budget Yakima ALAme Cly 'IDD' Cilsininyr/Sfol S7C Anvil _ t7:._._ . _ _ ,cnnt .--,.- ..,,..,. . 04/22/99 THU 15:04 FAX October 31, 1997 Mr. John Hanson, Director of Finance/Budget City of Yakima 129 N 2nd Street Yakima, WA 98901 Broker Service Agreement Dear John: &)(‘' The three-year period of our Broker Service Agreement ends in 1998. The contract allows for an extension, if mutually agreed upon, and our proposal dated 1995 included an extension clause with our fees for that period. The expiring agreement included fees of $18,500 per year. The extension clause increases our fee per year to $19,000 for the period ending 2001, In the proposal, there were additional services available, not included in the base fee. Enclosed is a copy of those services, which include "Liability Exposure Survey." This past year, Catastrophic Liability Insurance coverage was written through our firm_ The company requires a Liability Exposure Survey which has not yet been completed. The initial quote, which was accepted by the City, included a broker commission of $ 10,000_ Although under the strict terms of our contract with the City relating to services provided for the basic fee, we probably could have accepted the commission, we did not. The bill to the City was reduced by the $10,000. There is substantial work involved in obtaining the information for the liability survey, and placement of the excess coverage. We would propose an additional fee of $5,000 per year, which is 50% Less that the commission we would have received. This would make our total annual fee $24,000, guaranteed for three years. If you would elect to cancel the liability coverage during that period, we would waive the additional $5,000 fee. John, please let us know if this is acceptable to the City. Sincerely, Deborah Krautwurm Vice President encl. 0002 04/22/99 THU 15.05 FAX True and exact copies of this Contract and all such document,. ]istQd in Appendix A are on file in the Office of the City Clerk. City of Yakima, 129 North 2nd Street. Yakima, 98901. Unless otherwise provided herein, the City's Director of Finance and Budget shall decide all disputes pertaining to the execution of the services required under this Contract and of the administration of the Contract provisions. ARTICLE II SCOPE OF SERVICES Broker shall perform the work and services specified in Appendix B - Scope of Services, attached hereto and made a part of this Contract. ARTICLE III TIME OF PERFORMANCE This Contract shall be in effect for the three-year period commencing February 14, 1995, and ending February 13, 1998, unless extended upon mutual agreement of both parties, ARTICLE IV COMPENSATION .Agency agrees to pay Broker as compensation for the performance of the services set forth in this Contract in accordance with the provisions of Appendix C - Compensation, attached herein and made a part hereof. JH - Seeker/Risk Mgmc Svcs Agrmt 2/ t0/95 --2-- E -- Z004 04/22/99 THU 15:05 FAX RISK MANAGEMENT SERVICES AVAILABLE - Analysis of Self -Insurance - Loss Forecasting Plan, Trusts and Pools Including: - Ultimate Loss Development for Historic Periods - Funding Levels Determination - Environmental Exposure Analysis - Liability Exposure Survey - Written Risk Management Program - Property & Liability Self -Insurance Risk Retention Studies - Loss Forecasts (Property & Casualty) - Risk Management Audits (Scope to be Determined) - Testing of Fire Protection Systems C3j 005 9 • . 04/22/99 THU 15:05 FAX FAX Transmission Sedgwick Date DATE: 22 September 1997 Time No. pages TO: City of Yakima Confirmation No. LZ Attn: John Hanson, Director of Finance and Budget 2003 SUBJECT: Broker Services Agreement FROM: Joel Pearson and Deb Krautwurm Sedgwick James of Washington 1430 N. 16th Ave. Yakima, Washington 98907 (509) 248 - 7460 (509) 248 - 9007 Fax The three year period of our last Broker Service Agreement ends in 1998. Our fee for that period of time was $18,500 each year. The contract allows for extensions, and in our Broker Service proposal which is part of the contract, we agreed to extend for an additional three years at an annual fee of $19,000. In the proposal, there we additional services available not included in the base fee. Enclosed is a copy of those services which list "Liability Exposure Survey". This past year, Catastrophe Liability coverage was written through our Agency. The company requires a Liability Exposure Survey which has not yet been completed. The initial quote, which was accepted by the City, included a Broker commission of $10,000. Although under the strict terms of our contract with the City relating to services provided for the basic fee, we probably could have accepted the commission, we did not. The bill to the city was reduced by $10,000. Because of the extra work required in obtaining Liability surveys and placing the excess coverage, we would propose an additional $5,000 fee which is 50% Tess than the commission we would have received. This would make our total annual fee $24,000 a year guaranteed for three years. If you elect to cancel the excess coverage during that period, the extra fee will be waived. Please let us know if this is acceptable to the City. BUSINESS OF THE CITY COUNCIL YAKIMA, WASHINGTON AGENDA STATEMENT Item No. / For Meeting Of 2/14/95 ITEM TITLE: Resolution Authorizing Execution of an Agreement for Broker/Risk Management Services SUBMITTED BY: John R. Hanson, Department of Finance and Bu CONTACT PERSON/TELEPHONE: John R. Hanson/575-6070 SUMMARY EXPLANATION: The purpose of this report is to authorize execution of an agreement for Broker Services for Risk Management and Property/Casualty Insurance Services. BACKGROUND In 1984, and again in 1987, the City issued a request for proposals (RFP) for property/casualty broker of record services, and for placement of certain miscellaneous insurance coverages which the City chooses to obtain. Accordingly, this past September, in keeping with the City's past tradition of offering the opportunity to local companies to compete for the City's business, the City again made a request for proposals (RFP) from local insurance brokers. This request for proposal was not issued because of dissatisfaction with the current broker, but rather to offer others in the area who might be qualified and interested the opportunity to compete for the City's business. Continued r Resolution X Ordinance Contract X Other (Specify) Agreement Funding Source APPROVED FOR SUBMITTAL: City Manager STAFF RECOMMENDATION: Adopt resolution. BOARD/COMMISSION RECOMMENDATION: COUNCIL ACTION: JH -- Agenda - Broker/Risk Mgmt 1 — 2/10/95 lcr• r roriii . -- nu LLL711. J. This professional service RFP was very similar to other City broker/claims service RFP issues. (See RFP attached -- Exhibit I) Potential service providers were given approximately one month to: 1) post a letter of interest and statement of qualifications, and 2) submit a proposal response qualified by the City. This two step process was initiated so that proposers would not spend significant time on the RFP response if they did not meet the City's minimum qualifications. The two respondents who indicated interest were Conover Insurance and Sedgwick James of Washington, Inc. Both respondents met the City's minimum qualifications and were notified to prepare a response to the RFP. Both returned timely responses to the City's request. RFP Evaluation Process An evaluation team consisting of Assistant City Attorney, Paul McMurray; Deputy Personnel Officer, Sheryl Smith; and the Director of Finance and Budget, John Hanson; reviewed the responses. The following criteria were the basis for proposal comparison. These are the same criteria which the City has used in each of the previous broker service RFP evaluation reviews in 1984 and 1987. • Firm's demonstrated ability to service self-insured/partially self-insured programs comparable to the City. • The firm's perception of the City's property and casualty coverage needs, and quality and responsiveness of the firm's proposals. • Qualifications experience and risk management philosophy of personnel assigned to the City's account. • Firm's ability to provide selected support services. • Overall responsiveness to the RFP. • Projected costs. Each member of the review team evaluated the RFP responses fndividually.. A composite rating evaluation form is attached as Exhibit II. JH -- Agenda - Broker/Risk Mgmt 2 — 2/10/95 The primary emphasis of the RFP review format centers on determining which respondent provides the best response to the City's request for proposal. The evaluation review included proposed cost as one of the review points. Cost alone, or method of charging the City for service was not considered as the primary rationale to determine the best proposal for the City. Recommendation The evaluation review team concluded that based on the RFP responses and experience with the current broker the City should continue to contract with Sedgwick James for broker services and placement of property/casualty insurance coverages and other miscellaneous general insurance coverage. The agreement for service (Exhibit III) as indicated in the RFP is to cover a three year period from February 1995 through February 1998. The Sedgwick James proposal guarantees a cost of $18,500 annually, with three more years guaranteed at $19,000 annually at the City's option. These fees would be net of any commission. This compares with the fee charged for 1992-1994 of $17,500 annually. JH -- Agenda - Broker/Risk Mgmt 3 — 2/10/95 RESOLUTION NO. R-95- 23 A RESOLUTION authorizing the execution of a professional services agreement for broker and property casualty insurance services. WHEREAS, the City desires to engage professional insurance broker/risk management services to provide insurance broker and risk management services to the City, and WHEREAS, the City issued a request for proposal dated September 23, 1994, requesting such services, and WHEREAS, Sedgwick James of Washington, Inc. has agreed to provide the services described in their request for proposal response according to the terms and conditions of the attached agreement document; and the City Council deems it to be in the best interests of the City that the attached agreement be executed, accordingly, now, therefore, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF YAKIMA. The City Manager and City Clerk of the City of Yakima are hereby authorized and directed to execute an agreement with Sedgwick James of Washington, Inc. for the purposes mentioned above, a copy of which agreement, entitled "Broker/Risk Management Services Agreement," is attached hereto and by reference made a part hereof. ADOPTED BY THE CITY COUNCIL this 14th day of February, 1995. S/ PATRICIA A. BERNDT ATTEST: /S/ MELYNN SKOVALD ACTING CITY CLERK JH -- Res Broker/Prop Insurance 1 -- 2/10/95 MAYOR Ce 'tl. '«Y bo, a true a,nd correct ' ur ig ii z1 flied in my ol.b.icc. CITY CLERK Deputy