RESOLUTION 92-20570 . .
•
CITY OF MIAMI
BEACH
(11:)),
CITY HALL 1700 CONVENTION CENTER DRIVE MIAMI BEACH FLORIDA 33139
OFFICE OF THE CITY MANAGER TELEPHONE: (305) 673-7010
FAX: (305) 673-7782
COMMISSION MEMORANDUM NO. gic-2Z,
TO: Mayor Seymour Gelber and DATE:?/2 2 /9 2
Members of the City Commission
FROM: Roger M. Carat.
4,:,
City Manager
SUBJECT: AWARD OF BID NO. 103-91/96, CITY OF MIAMI BEACH GROUP
BASIC & SUPPLEMENTAL ACCIDENTAL DEATH & DISMEMBERMENT
PLANS
ADMINISTRATION RECOMMENDATION:
The Administration recommends to the City Commission that our Group
Basic & Supplemental Life and Accidental Death & Dismemberment Plans
be awarded to Prudential Insurance Company of America for a one year
period commencing October 1 , 1992 , with options to renew for four
additional one-year periods.
BID AMOUNT AND FUNDING:
$258 , 000 . (Annual Estimate) Basic life costs split 50/50 between
employee/retiree deductions and City
contributions .
Supplement life costs are 100%
employee deductions . AD&D costs are
100% City contributions .
City contribution funding is available
from Budget Accounts of various
departments, subject to OMB approval .
BACKGROUND:
Due to changes in the group insurance market and in the City Commission
and Administration, it appeared to be in the best interest of the City
to solicit bids for the entire group insurance program at this time .
Towers Perrin, the City ' s Benefit Consultant, and the Administration
prepared the bid specifications , with the bid objectives and benefit
changes requested being developed in conjunction with the Group
Insurance Board which is comprised of administration, employee and
retiree representatives.
Invitation to Bid No. 103-91/96 was released on May 14 , 1992 , and bids
were received on June 18 , 1992 .
Towers Perrin evaluated all the bids received and presented a
Preliminary Report - Review of 1992 Bid Proposals and Initial
Recommendations to the City Administration and the Group Insurance
Board on July 10 , 1992 . On July 13 , the Group Insurance Board voted
to recommend the award of the bid for Group Basic & Supplemental Life
and Accidental Death & Dismemberment Plans to Prudential Life Insurance
Company of America, commencing October 1 , 1992 . It is recommended that
the awards be for a one year period, with options to renew for four
additional one year periods .
A Final Report, prepared by Towers Perrin, has been distributed with .1.5
the agenda package, for your review.
AGENDA
FUNDING APPED ITEM
dt
Management an Budget DATE
- 2_
AWARD OF BID NO. 103-91/96, CITY OF MIAMI BEACH GROUP BASIC &
SUPPLEMENTAL ACCIDENTAL DEATH & DISMEMBERMENT PLANS
July 22 , 1992
Page Two
ANALYSIS:
ADVERTISEMENT DATE : May 12 , 1992
PRE-BID MEETING DATE: May 22 , 1992 , 9 : 00 A.M.
BID OPENING DATE: June 18 , 1992 , 4 : 30 P.M.
NOTICES MAILED: Forty-Five (45)
SPECIFICATIONS MAILED: Thirty-Eight ( 38)
REPLIES : Fifteen ( 15) , including 5 "No Bid"
responses
Bids were received from:
American Bankers (Humana Health Care Plans)
Anthem (Accordia Benefits of Florida, Inc. )
Group America Insurance Co. (Cecil W. Powell & Co. )
Life of Virginia
Metropolitan Life
Mutual of Omaha (Richard Pistone)
North American Life
Northwestern National Life
Prudential
Standard Insurance Co. of Oregon (Cecil W. Powell & Co. )
"No Bide responses:
Addison Financial Services, Inc.
Blue Cross/Blue Shield
Colonial Life & Accident Insurance Co.
Employee Benefit Plans, Inc.
Professional Administrators, Inc.
Towers Perrin evaluated the bids, with the following results .
The current total annual cost is estimated to be $309 , 000 . The City ' s
cost is estimated to be $148 , 000 . Prudential , the incumbent life
insurance carrier, offered two options . Option 1 , renewal of the
current non-participating contract, would reduce the City ' s annual cost
by $21 , 000 and guarantee rates for one year. Option 2 offers a
slightly higher rate for a two-year rate guarantee and would reduce the
City ' s annual cost by $19 , 000 for each of the next two years.
Group America ' s quote would reduce the City ' s annual cost by $40 , 000,
with rates being guaranteed for a two-year period.
Of the remaining bids , the designs offered either matched or came close
to matching the plans offered by Prudential , however, none could match
the savings offered by Group America . Therefore, key areas were
compared between Group America and Prudential .
During the review process several potential areas of concern with Group
America ' s bid were identified:
The inability for retirees to increase their life insurance
The payment of commissions, which is not in compliance with
the City ' s bid specifications
The fact that Best ' s financial rating is based on Group
America ' s parent company, and not on Group America itself .
Although the Group Insurance Board considered referring the issues of
payment of commissions and the Best ' s rating to the City Attorney for
a legal opinion, the deciding factor was the unavailability of
increased life insurance for retirees .
3';
AWARD OF BID NO. 103-91/96, CITY OF MIAMI BEACH GROUP BASIC &
SUPPLEMENTAL ACCIDENTAL DEATH & DISMEMBERMENT PLANS
July 22 , 1992
Page Three
ANALYSIS (Continued) :
Ordinances to amend Miami Beach City Code Article V, Section 2-63 to
accommodate increased life insurance for retirees and conversion of
occupational accidental death coverage to accidental death and
dismemberment coverage will be presented to the City Commission at its
next meeting.
CONCLUSION:
Based on the above mentioned criteria, the Group Insurance Board voted
to accept Prudential ' s offer, which will reduce the City ' s cost $38 , 000
over the next two years, and the Administration concurs with that
decision.
RMC: EJ ] f
ctA
37
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ORIGINAL 6'
RESOLUTION NO. 94-20570
'Bid award No. 103-91/96, C.M.B. Group
Basic & Supplemental Life and Accidental
=Death & Dismemberment Plans.