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RESOLUTION 91-20329 RESOLUTION NO. 91-20329 A RESOLUTION OF THE CITY COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA, EXTENDING THE CITY'S GROUP LIFE AND DMO/DENTAL PLANS WITH PRUDENTIAL INSURANCE COMPANY FOR FISCAL YEAR 1991/92 . WHEREAS, Invitation to Bid No. 122-88/93 was awarded to Prudential Insurance Company for Group Life Plans for a one year period on July 26, 1989, with the option to renew for up to four additional one year periods; and WHEREAS, Invitation to Bid No. 127-89/93 was awarded to Prudential Insurance Company for DMO/Dental Plans for a one year period on July 25, 1990, with the option to renew for up to three additional one year periods; and WHEREAS, the City Administration recommends the extension for Group Life Plans for a third one year period commencing October 1, 1991, with a 9 . 2% cost increase in premiums; and WHEREAS, the City Administration recommends the extension for DMO/Dental Plans for a second one year period commencing October 1, 1991, with an 8 . 0% cost increase in premiums; and WHEREAS, Prudential ' s proposed cost increases have been evaluated by TPF&C of Florida, Inc. , the City' s Benefit Consultant, and found to be reasonable; and WHEREAS, the Group Insurance Board, at its July 3 , 1991 meeting, voted to recommend acceptance of Prudential ' s renewal offers for the Group Life and DMO/Dental Plans. NOW, THEREFORE, BE IT DULY RESOLVED BY THE CITY COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA THAT THE CITY COMMISSION HEREBY EXTENDS THE GROUP LIFE AND DMO/DENTAL PLANS WITH PRUDENTIAL INSURANCE COMPANY FOR THE FISCAL YEAR 1991/92 . ADOPTED this 10th day of July , 1991. MAYOR ATTEST: FORM APPROVED F ic,r0AAe,CITY CLERK LEGAL DEPT. By " S Date "�� eerie/ 6.6 Neami e -Mi aF'. FLORIDA 3 3 1 3 9 _*1 INCORP'ORATED)*!r' 'o Y A CA TIONL A Nl) U. S. A. H26 OFFICE OF THE CITY MANAGER CITY HALL 1700 CONVENTION CENTER DRIVE TELEPHONE: 673-7010 COMMISSION MEMORANDUM NO. (71:,2-Y1/ DATE: July 10, 1991 TO: Mayor Alex Daoud and Members of the City Commission dec, -apk FROM: Carla Bernabei Talarico .�` City Manager SUBJECT: RESOLUTION APPROVING THE EXTENSION OF GROUP LIFE AND DMO/DENTAL PLANS WITH PRUDENTIAL INSURANCE COMPANY FOR FISCAL YEAR 1991/92 LAST CONTRACT: Invitation to Bid No. 122-88/93 was awarded to Prudential Insurance Company of America for Group Life Plans for a one year period on July 26, 1989, with the option to renew for up to four additional one year periods. The City Administration recommends the extension for a third one year period commencing October 1, 1991, with a 9 . 2% increase in premiums. Invitation to Bid No. 127-89/93 was awarded to Prudential Insurance Company of America for DMO/Dental Plan for a one year period on July 25, 1990, with the option to renew for up to three additional one year periods. The City Administration recommends the extension for a second one year period commencing October 1, 1991, with an 8 . 0% increase in premiums. TPF&C of Florida, Inc. , the City's Benefit Consultant, evaluated the Renewal Proposals received and found Prudential ' s Renewal Proposals to be reasonable. The Group Insurance Board, at its July 3 , 1991 meeting, voted to recommend acceptance of Prudential ' s renewal offers for the Group Life and DMO/Dental Plans. The presidents of the American Federation of State, County and Municipal Employees (AFSCME) and the Miami Beach Employees Benevolent Association (MBEBA) are members of the Group Insurance Board, and voted on behalf of their respective bargaining units. Please be advised that a withdrawal by either of the two participating bargaining units from the City-sponsored Prudential group life and/or DMO/dental plans to a self- insured trust would result in Prudential ' s revaluation of the remaining members ' demographic composition at the time of withdrawal. Prudential may then request changes in premium rates for the remaining group members for the balance of the Plan Year. A representative from Prudential, the City' s Benefit Consultant, TPF&C, and the City' s Agent of Record are present for questions from the Commission. 117 AGENDA ITEM • DATE _/0-( BID AMOUNT: $ 805, 948 . Cost in Fiscal Year 1990/91 for Group Life and DMO/Dental Plans with Prudential Insurance Company $ 64, 274 . Estimated cost increase in Fiscal Year 1991/92 . $ 870, 222 . Estimated annual cost to be shared between City and Employee/Retiree contributions. FUNDING: City contributions are budgeted in the appropriate departments to provide funding for the anticipated costs. ADMINISTRATION RECOMMENDATION: That the City Commission approve the resolution approving the extension for a third one year period of the existing Bid Award No. 122-88/93 for Group Life Plans with a 9 . 2% increase in premiums with Prudential Insurance Company, and the extension for a second one year period of the existing Bid Award No. 127-89/93 for DMO/Dental Plan with an 8 . 0% increase in premiums with Prudential Insurance Company. CBT:EB:LS 1I8 702 North Eran t to Jrrect Tampa,FL 33602-4.495 813 223-1686 Facsimile:813 223-25 70 C. William Sharon Vice President TPF&C a Towers Perrin company July 2, 1991 Ms. Lyn Schuler Employee Benefits Coordinator City of Miami Beach 1700 Convention Center DriVe Miami Beach, Florida 33139 Life Hean alth a Insurance Re ew1.sf a l a/_1. 91 __to_BILL 2/1n122P1 a Dear Lyn: have thoroughly reviewed the life insurance and dental plan rate renewals from Prudential and the medical plan renewals from Humana. The following are my comments and recommendations. 1• DantAl Elan -- Prudential 's renewal calculation results in a necessary rate increase of 14 . 4% . However, this increase is subject to a maximum of proposal 8%, per ro their osal effective 10/1/90. In my opinion an 8% rate increase is fair and reasonable and I recommend that the City accept the increase. 2. Ilfe Uguonglanip -i Prudential ' s renewal calculation results in a 9. 2% increase in the basic life rate and a 5% increase in the pooled life rate. There is no increase in the AD&D rate. The rate increase is due to the fact that the average age of the City's employees is older than several years ago. In my opinion the proposed rate increase is reasonable. However, I recommend that the City accept the increase only if Prudential agrees to guarantee the rate for two years, i.e. until 9/30/93 . 120 Ms. Lyn Schuler July 2 , 1991 Page 2 . a 9.3$ increase for the 3 , - Humana is proposingease . 4) . Alternatively, current HMO plan (OptiOn copay, their Option 5 plan ($10 p Y Humana offers is a hospital copay) . The Option5 plan $200 p HMO experience for the .8� increase. The City's � 6good. The net past twelve months has not been g paid loss ratio through May, 1991 is 93 .4% . The the would be higher than city' s rate increase was based solely on 9.3% if the increase proposed community-rated. The City benefits the City's claims experien • Y t -rated. As a because the rates are Ywith recommend that the continue result, I City Option 4 and accept the proposed rate increase of 9 .3%. proposed an 8. 4% increase for the 4 . P�,� - Humana 1 renewal letter. plan in their June 21, 199 PPO increase is too high, given the favorable net paid 1 In my opinion, this p loss ratio for the period �� At the June X5, , 1991 6/90 to 5/91 of ?$. . I recommended that the City Board meeting, t to lower the with Humana in an •ons resulted i negotiateeffort negotiations projected increase. These nes for the n a revised PPO increasecurrent planewal of 4 .94. This revised ren (Plan 660) representsto the City. In my asavings ' sed renewal is fair and opinion, this revised reasonable and I recommend the City accept it. this letter, please call. If you have any questions about Very tilt yours, ' 1 J � 4 C. Wil am Sharon cWS/dmd cc: Mr. Ernie Barham 121 •� �� �� l ♦`•�� ..a•! O..e�•N•.•.•��•`� • Jeffrey I. Gordon ThePrudential Regional OrauQ Mana��r 1 "nr 1,116.+ esoo ��►tt�„►�.� .• m m . .. SOutr1 O+;vb.D ODv',11.(1r1ti i300 Neeftt' Ant:fowlA ��•1 fa �a ���, r !,i►t L:1ia►ihf'!•4i.+ FL i3.109 33S 491 L 24 11r,!)wxrct►407 e4.l:!..tU6.= e= •'J!tdssr! !;;cd,l(te•, .1.!•) SCA . July 2, 1991 Mr. C. William Sharon Vice President TPF&C Tim Plaza, Suite 801 702 N. Franklin Street Tampa, Florida 33602 Dear Bill: We hive reviewed your request for a two year rate guarantee for the Group Li fe and AD&O coverages underwritten by Prudential for the City of Miami Beach. Effective October 1, 1991, we are willing to guarantee the rates for a two year period with one provision. The provision included in this two year guarantee is that If the number of active employees lo ees decreases by more than 0% from the number umber reported on October 1, 1991, Prudential will have the right to review the Group Life plan, a n. particularlywith respect to the active census, to determine the adequacy of prior thepr1um levels. Any rate adjustmnt wld not occur pr to October 1or 1992 unless the active census decreases by more than 40%. that this is a fair approach for the City, given that covered We believe employee o let ee totals have fluctuated somewhat over the years. Please me know if you wish to discuss further. Si. erely, • f l` Jeffrey fr. Gordon Regional Group Manager 6042j a _ 1/2 The Prucermai ricistn Cans S stern ORIGINAL RESOLUTION NO. 91-20329 Extending the City's Group Life and DM0/Dental Plans with Prudential Insurance Company for fiscal year 1991/92.