HomeMy WebLinkAbout2004-25640 Reso
RESOLUTION NO. 2004-25640
A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF
THE CITY OF MIAMI BEACH, FLORIDA, ACCEPTING THE
RANKING OF THE PROPOSALS RECEIVED FOR GROUP
EMPLOYEE LIFE INSURANCE BENEFITS PURSUANT TO THE
REQUEST FOR PROPOSALS ISSUED MARCH 24, 2004, BY
ARTHUR J. GALLAGHER AND CO., THE CITY'S BROKER FOR
GROUP EMPLOYEE BENEFITS, AND AUTHORIZING THE
ADMINISTRATION TO ENTER INTO AN AGREEMENT WITH THE
NUMBER ONE RANKED FIRM, STANDARD INSURANCE
COMPANY, TO PROVIDE GROUP EMPLOYEE BASIC LIFE,
ACCIDENTAL DEATH & DISMEMBERMENT, AND
SUPPLEMENTAL LIFE INSURANCE BENEFITS; AND,
AUTHORIZING THE MAYOR AND CITY CLERK TO EXECUTE AN
AGREEMENT NOT TO EXCEED AN ESTIMATED ANNUAL
PREMIUM OF $450,000, EFFECTIVE OCTOBER 1, 2004 FOR A
PERIOD OF THREE YEARS, WITH THE OPTION TO RENEW FOR
A FOURTH AND FIFTH YEAR WITH A CONTINGENT RATE
GUARANTEE UPON AN INCURRED LOSS RATIO OF 81% OR
BETTER.
WHEREAS, on March 24, 2004 a Request for Proposals for Group Employee Life,
Accidental Death & Dismemberment and Supplemental Life Insurance Benefits was issued by
Arthur J. Gallagher & Co, the City's broker for group employee benefits, with nine (9) vendors
responding; and
WHEREAS, on May 6, 2004, Arthur J. Gallagher & Co. began meeting with the City
Administration to present it's evaluation of the proposals received in response to the Request For
Proposals; and
WHEREAS, Arthur J. Gallagher & CO.'s recommended that the City accept he proposal of
Standard Insurance Company; and
WHEREAS, this recommendation was presented to the Group Insurance Board on July 9,
2004 with the Board agreeing with the recommendation of Arthur J. Gallagher & Co., and
WHEREAS, the City Manager has reviewed and agrees with the aforestated
recommendations of the Group Insurance Board and Arthur J. Gallagher & Co.
NOW, THEREFORE, BE IT DULY RESOLVED BY THE MAYOR AND CITY
COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA, that the Mayor and City
Commission hereby accept the ranking ofthe proposals received for Group Employee Life Insurance
Benefits pursuant to the Request for Proposals issued March 24,2004, by Arthur J. Gallagher & Co.,
the City's broker for Group Employee Benefits, and authorizing the Administration to enter into an
Agreement with the number one ranked firm, Standard Insurance Company, to provide group
employee basic life, accidental death & dismemberment, and supplemental life insurance benefits;
and, authorizing the Mayor and City Clerk to execute an Agreement not to exceed an estimated
annual premium of$450,000, effective October 1, 2004 for a period of three years, with the option to
renew for a fourth and fifth year with a contingent rate guarantee upon an incurred loss ratio of 81 %
or better.
PASSED AND ADOPTED this
28th
day of
July
,2004
ATTEST:
~.'<GN~7)
r CITY CLERK ([
F:IHUMA \$all\COMM.RES\GroupEmployeeLifeRFP04,doc
APPROVED AS TO
FORM & LANGUAGE
& FOR EXECUTION
~~,7~t:Y
CITY OF MIAMI BEACH
COMMISSION ITEM SUMMARY
m
Condensed Title:
Group Employee Life, AD & D and Supplemental Life Insurance as a result of RFP issued March 29, 2004
for plan year beginning October 1, 2004.
Issue:
Should the City accept the recommendations from Gallagher Benefits Services, the City's broker for
employee benefits, as a result of the RFP Issued on March 29, 2004 for Group Employee Life Insurance,
including basic, accidental death & dismemberment and supplemental life insurance?
Item Summarv/Recommendation:
The City Administration recommends that the Commission accept the recommendations of Gallagher
Benefits Services to award the Agreement for Group Employee Life Insurance to Standard Insurance
Company based on performance guarantees, benefits offered, rate guarantees and local service office.
The City's estimated annual cost is estimated not to exceed approximately $140,000, allowing for growth of
covered payroll.
Advisory Board Recommendation:
The Group Insurance Board agrees with the recommendations of the City Manager and Gallagher
Benefits Services.
Financial Information:
Source of
Funds:
D
Finance Dept.
Ci Clerk's Office Le islative Trackin
Mayra D. Buttacavoli
AGENDA ITEM C 7 C-
OATE 7~~f-oV
CITY OF MIAMI BEACH
CITY HALL 1700 CONVENTION CENTER DRIVE MIAMI BEACH, FLORIDA 33139
www.miamibeachfl.gov
To:
From:
Subject:
COMMISSION MEMORANDUM
Mayor David Dermer and Date: July 28, 2004
Members of the City Commission
Jorge M. Gonzalez /~~
City Manager U
A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY
OF MIAMI BEACH, FLORIDA, ACCEPTING THE RANKING OF THE
PROPOSALS RECEIVED FOR GROUP EMPLOYEE LIFE INSURANCE
BENEFITS PURSUANT TO THE REQUEST FOR PROPOSALS ISSUED
MARCH 24, 2004, BY ARTHUR J. GALLAGHER AND CO., THE CITY'S
BROKER FOR GROUP EMPLOYEE BENEFITS, AND AUTHORIZING THE
ADMINISTRATION TO ENTER INTO AN AGREEMENT WITH THE
NUMBER ONE RANKED FIRM, STANDARD INSURANCE COMPANY, TO
PROVIDE GROUP EMPLOYEE BASIC LIFE, ACCIDENTAL DEATH &
DISMEMBERMENT, AND SUPPLEMENTAL LIFE INSURANCE
BENEFITS; AND, AUTHORIZING THE MAYOR AND CITY CLERK TO
EXECUTE AN AGREEMENT NOT TO EXCEED AN ESTIMATED ANNUAL
PREMIUM OF $450,000, EFFECTIVE OCTOBER 1, 2004 FOR A PERIOD
OF THREE YEARS, WITH THE OPTION TO RENEW FOR A FOURTH AND
FIFTH YEAR WITH A CONTINGENT RATE GUARANTEE UPON AN
INCURRED LOSS RATIO OF 81% OR BETTER.
ADMINISTRATION RECOMMENDATION
Adopt the Resolution.
ANALYSIS
Group Life Insurance Benefits, including basic life, accidental death & dismemberment,
and supplemental life insurance for active and retired employees except those covered by
the Fraternal Order of Police, have been provided to the City by Hartford Life for over 10
years.
Hartford had maintained their rates, with no increase, for five years until 2003. The City,
through Arthur J. Gallagher & Co., issued an RFP for Group Employee Benefits, including
Basic and Supplemental Life, and Accidental Death & Dismemberment (AD & D)
Insurance, in February 2003. Nine vendors responded to the Life Insurance portion, with
Hartford requesting a 36% increase in premium for the basic life insurance, (one times and
employees salary, 50% paid by the City), but no increase in rate for the supplemental life
portion (an additional one times an employees salary, fully paid by the employee).
The carriers were requested to split their basic and supplemental life proposals to develop
a more cost effective program, however the carriers declined to do this and required
participation requirements in the supplemental program which could have negatively
affected the basic rate. The City had experienced an overall 162% loss ratio over the past
four years for basic life insurance and a 114% loss ratio for supplemental life insurance, so
the requested rate increases were not unreasonable and the Commission approved
continuing with the Hartford for one additional year.
In February of this year, Hartford advised the City that it would again be increasing rates;
23% for basic life; 25% increase on the optional life; and a 45% increase for retiree
optional life (maximum of $4,000). The City requested that Arthur J. Gallagher issue an
RFP for Basic, AD & D, and Supplemental (optional) life insurance.
Nine responses were received for the RFP issued March 24, 2004. Gallagher & Co.
reviewed the responses and short-listed to four vendors; Hartford, Standard, Fort
Dearborn, and Unimerica (Attachment A). Gallagher recommended that the City accept
the proposal of Standard Insurance Co. due to rates offered, performance guarantees,
contract provisions and benefits offered, and a local service office in Ft. Lauderdale
(Attachment B).
Standard offered a basic life rate of $0.285 per thousand (currently $0.30); AD & D of
$0.015 per thousand (currently $0.03); supplemental rate for active employees of $0.270
per thousand (currently $0.25); and supplemental rate for retired employees of $3.25 per
thousand (same as the current rate but significantly less than the renewal rate of $4.713).
Standard's rate is guaranteed for three years with an option to renew for the fourth and fifth
year contingent on a loss ratio of 81 % or better. Hartford offered a one year rate
guarantee only. Standard is also making available a one-time open enrollment period for
employees to elect to purchase supplemental life insurance (an additional one times their
salary) without having to complete forms to prove medical insurability.
The City's projected annual cost for fiscal year 2004-05 is estimated to not exceed
$140,000, allowing for growth of covered payroll at calendar year end.
CONCLUSION
The City Administration recommends that the Commission accept the ranking and
recommendations of Gallagher Benefits Services, the City's consultant for Group
Employee Benefits, to award the life insurance agreement to Standard Insurance Company
with a guaranteed rate for three consecutive years and the option to renew for a fourth and
fifth year if the City maintains a loss ratio of 81 % or better.
JMG:MDB:ph
T:\AGENDA\2004\JuI2804\RegularlGroup Employee Life RFP04-05-#1 memo.doc
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Gallagher Benefit Services, Inc.
A Subsidiary of Arthur }. Gallagher & Co.
May 27, 2004
Ms. Mayra Buttacavoli, Director of Human Resources and Risk Management
City of Miami Beach
1700 Convention Center Drive
Miami Beach, Florida 33139
Re: Life Insurance Benefits RFP
Dear Mayra,
The Life, AD&D, Supplemental and Retiree life Request for Proposal was forwarded to
16 vendors (Exhibit A). Nine responses were received including the incumbent carrier
Hartford.
The respondents were short listed to three vendors, which included Standard Life,
Unimerica and Fort Dearborn Life. This short listing was based on plan costs, benefits
provided, qualifications, responsiveness to RFP requirements and references provided
(Exhibit B).
A subsequent request was made to the finalists requesting the following: best and final
rates, written notification the rates were exclusive of any agent commissions, a one time
open enrollment for supplemental life and a request to waive their Life contracts
"Actively at Work" provision. The finalists responded with the following: Standard and
Fort Dearborn Life made additional rate concessions. All three vendors agreed no
commissions would be paid to any Florida agents and to the one time open enrollment for
supplemental life. Finally, Standard and Unimerica both waived the "Actively at Work"
provision while Fort Dearborn modified their contract language. Based on the results of
this inquiry, we recommend the City award the contract to Standard Life. Although
Standard did not offer the overall lowest price (+2%) we do so based on the following:
. Performance guarantees
· Contract provisions and benefits offered
· Three year rate guarantee with option to renew
. Local sales and service office
One Boca Place
2255 Glades Road, SUite 400 E
Boca Raton, FL 33431
561.9956706
Fax 561.995.6708
www.ajQ.com
"
G
We appreciate the opportunity to work with the City of Miami Beach and look forward to
answering any questions ou may have.
Sh"~
-Richard G. S II
Area Vice President
Cc: Patricia Hipple, City of Miami Beach