HomeMy WebLinkAbout11/4/2015 - STAFF REPORTS - 2.E. ;OQ?ALM siO4
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Cq<fFO001" City Council Staff Report
DATE: November 4, 2015 CONSENT CALENDAR
SUBJECT: APPROVAL OF AMENDMENT NO. 2 TO AGREEMENT NO. A5656
EXTENDING THE PROFESSIONAL INSURANCE BROKERAGE
SERVICES AGREEMENT WITH KEENAN & ASSOCIATES FOR AN
ADDITIONAL THREE (3) YEAR TERM
FROM: David H. Ready, City Manager
BY: Douglas Holland, City Attorney
SUMMARY
The City is self-insured and annually purchases various lines of insurance coverage to
minimize the adverse effects of accidental losses and claims against the City. The City
has an agreement with Keenan & Associates, a professional insurance brokerage firm,
to assist in the management of the City's various insured and self-funded insurance
programs, as well as to market and procure various lines of insurance. Based upon
the exemplary performance of Keenan & Associates over the previous eight (8) years,
staff is recommending that the City extend its agreement with Keenan & Associates for
an additional three (3) years with no increase in the annual brokerage fee.
RECOMMENDATION:
1. Approve Amendment No. 2 to Agreement No. A5656 with Keenan & Associates
for professional insurance brokerage services, extending the agreement for three
(3) fiscal years (Fiscal Years 2016-17, 2017-18, and 2018-19) in an amount not-
to-exceed $60,000 per year.
2. Authorize the City Manager to execute the necessary documents.
STAFF ANALYSIS:
The City is self insured for major risk programs, such as general liability, auto liability
and workers' compensation. The City purchases various lines of insurance, including
general liability, automotive, property and excess workers' compensation insurance to
help protect the City from potential losses.
To assist in the marketing and purchase of various lines of insurance, the City has
contracted with Keenan & Associates since 2008 as approved by City Council to serve
as the City's broker of record at a flat fee of $60,000 per year. Keenan is proposing to
extend the term of the contract for an additional three years at the current contract fee
ITEM NO.
City Council Staff Report
November 4, 2015 -- Page 2
Insurance Brokerage Services
of $60,000 per year as well as continue to place all policies "net of commissions", which
save the City an estimated $50,000 per year.
The City's current contract with Keenan & Associates for brokerage services will expire
in the Spring of 2016, prior to the completion of the annual insurance renewal process
begins for the FY 2016-17 coverage. If the current agreement is not extended at this
time, the City would need to start an RFP process for a new broker of record. Keenan &
Associates would remain the broker for the existing policies until the policies expire.
Remarketing and the application process starts in January, to ensure timely insurance
before expiration of the current policies.
Keenan & Associates has worked almost exclusively with public agencies for over 45
years and understands the complexities involved in placing public insurance. The firm
has represented over 700 public agencies, including local agencies such as Palm
Springs USD, Desert Sands USD, Coachella Valley USD and Desert CCD.
Over the course of our current eight (8) year agreement, staff estimates Keenan has
saved the City approximately $1.5 million in premiums, affordably restructured and
expanded the City's DIC (earthquake) coverage in a hardened market, dramatically
reduced our Workers Compensation premiums from a high of $271K in FY 2006-07 to
$142K today, and consolidated all policies onto one common expiration date improving
efficiency and annual budgeting.
Keenan & Associates has proven to be a professional and reliable partner assisting the
City with claims processing and is a valuable extension of the city's Risk Management
team. As such, Staff is recommending that the City Council extend these services for
an additional three years at the same flat fee of $60,000 per year. All other terms and
conditions of the original agreement remain unchanged.
FISCAL IMPACT:
The proposed cost of $60,000 per year from Keenan & Associates for the next 3 fiscal
years is the same as the rate that the City has been paying and funds will be
appropriately budgeted each fiscal year within the Risk Management Fund to
appropriate__thlIee//cost of insurance brokerage services.
D UO GLAS C. HOLLAND , AMES THOMPSON
City AttorneyChief of Staff/City Clerk
DAVID H. READY
City Manager
Attachment:
1) Amendment No. 2
2) Keenan Letter 2
AMENDMENT NO.2
TO
PROFESSIONAL SERVICES AGREEMENT
Insurance Brokerage Services
(Agreement No.5656)
THIS SECOND AMENDMENTto the Professional Services Agreement No. 5656 for Insurance Brokerage
Services is made and entered into on the 1st day of January, 2016 by and between the City of Palm
Springs, a California charter city and municipal corporation (hereinafter referred to as the "City"), and
Keenan &Associates, a California corporation (hereinafter referred to as the"Consultant')collectively,
the "Parties".
RECITALS
A. City and Consultant previously entered into a professional services agreement for insurance
brokerage services on June 3, 2008(the "Agreement").
B. City and Consultant previously amended the agreement(Amendment No. 1) on December
12. 2012 to extend the agreement for three additional years to January 1, 2016.
C. City and Consultant desire to amend the Agreement(Amendment No. 2)to extend the term
of the Agreement No. 5656 to June 30, 2019 on the same terms and conditions, including without limitation
compensation.
NOW, THEREFORE, in consideration of the mutual promises and covenants contained herein,the
Parties agree as follows:
AGREEMENT
1. Amendment to Section 3.4 of the Agreement is amended in its entirety to read:
3A Term. Unless earlier terminated as provided elsewhere in this Agreement,this Agreement shall
commence on the effective date of this Agreement and continue in full force and effect until June 30, 2019.
2. Full Force and Effect. This modifying Amendment is supplemental to the Agreement and is by
reference made part of said Agreement. All of the terms, conditions, and provisions, thereof, unless
specifically modified herein, shall continue in full force and effect. In the event of any conflict or
inconsistency between the provisions of this Amendment and any provisions of the Agreement, the
provisions of this Amendment shall in all respects govern and control.
3. Corporate Authority. The persons executing this Amendment on behalf of the Parties hereto warrant
that (1) such party is duly organized and existing, (ii) they are duly authorized to execute and deliver this
Amendment on behalf of said party,(iii)by so executing this Amendment, such party is formally bound to the
provisions of this Amendment, and (iv)the entering into this Amendment does not violate any provision of
any other agreement to which said party is bound.
[SIGNATURES ON NEXT PAGE]
03
IN WITNESS WHEREOF, the parties have executed this Amendment as of the dates stated
below.
ATTEST: "CITY"
CITY OF PALM SPRINGS, CA.
By By
James Thompson, City Clerk David H. Ready, City Manager
Date: Date:
APPROVED AS TO FORM:
By
City Attorney
Date:
"CONSULTANT"
Keenan & Associates
Date: By:
Date:
2 04
901 Calle Amaneca 9499401760
Keenan San Clemente,
949 369-0324 fa
San Clemente,C:A 92673 azm.keeaan.rom
Iirease No.0451271
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August 13, 2012
Mr. Douglas C. Holland
City Attorney
City of Palm Springs
320o Tahyuitz Canyon Way
Palm Springs, CA 92262
RE: Professional Services Agreement for Insurance Brokerage Services Extension
Doug,
It has been a pleasure providing services to the City and we are very proud of what we've
accomplished on your behalf. Our Brokerage Services agreement will expire June 2, 2013 and we are
proposing a 3 year extension at the same fee of$60,000 per year so out compensation will remain
unchanged for 8 years. In addition, we will continue to place all policies "net of commissions,"
which saves the City an estimated $50,000 per veal as the total estimated commissions would be in
excess of$110,000. Also, the extension will also enable us to begin the marketing for the 2013/14
renewal in a timely manner, which is important as the insurance market continues to harden and
early entry to market is critical.
As the City's insurance broker and consultant, we have often improved upon the previous year's
program while reducing the City's per line of coverage premiums resulting in over $1.5 million
savings to the City. Detailed below are several specific achievements:
• Policy Consolidation — Previously, the City had numerous policies with multiple
expiration dates that crossed over fiscal years. We consolidated all insurance policies so
there is now one common expiration date which eliminates redundancies, improves
efficiencies and helps with the City's overall budgeting process.
• Property — During this past renewal, Traveler's proposed a 23% increase while excluding
"wind" coverage for outdoor property. We proposed a new carrier (Affiliated FM)
resulting in a $44,000 premium decrease. Although the City has sustained over $1.2
trillion in losses, premiums are 5104,258 less than they were in 2009/10.
• Excess Liability — Premiums have decreased from a high of $178,422 in 2007/08 to
$135,800 for 2012/13,a 24% decrease.
05
• Excess Worker's Compensation—Premiums have been reduced from a high of$271,799
in 2006//07 to $86,431 in 2012/13, while the City's per claims Self Insured Retention
for Police/Fire and All other City Employees has decreased from $2M/$1M to
$lM/$1M. While worker's compensation medical inflation continues to soar, the
reduced SIR greatly reduced the City's exposure while providing nearly $800,000 in
accumulated savings.
■ DIC — In 2008/09, premiums were $535,024 for blanket City and Waste Water
Treatment coverage. The DIC program has been restructured so there is now dedicated
coverage for the City and WWI' facilities and as the DIC market has hardened, we
developed a creative solution this past renewal to reduce the City's costs, while still
providing necessary coverage. While the overall coverage has increased, premiums are
almost $100,000 less than 2008/09. Also, it was nice to hear Councilman Mills provide
accolades to the Risk Team for the DIC structure after all these years.
• Claims Assistance — Following the April 2009 wind claim, we negotiated retroactive
coverage and worked with Traveler's Senior Management to help the City receive
$231,148 in payments. In addition, following the January 2012 wind claim, we've
negotiated a $250,000 advance from Traveler's to provide the City with cash flow as we
work to resolve the claim.
Doug, it is often after you sustain a claim that you find out the effectiveness of your coverage and
broker partner. We believe we've proven that we are an extension of the City's Risk Team and hope
the City continues to find value in our expertise, resources and services. It is truly an honor and
pleasure working with the City and we hope the City continues to have trust and confidence in our
services. Please let me know if you have any questions pertaining to our contract extension request.
Thank you and I look forward to hearing back from you soon.
Sincerely,
a--
John Stephens
Sr. Vice President
Property&Casualty Practice Leader
Cc: Craig Gladders, City of Palm Springs
Geoffrey Kiehl, City of Palm Springs
Jay Thompson, City of Palm Springs
Audra Powers,Keenan
Keenan n s