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Item C39 BOARD OF COUNTY COMMISSIONERS AGENDA ITEM SUMMARY Meeting Date: September 17, 2013 Division: Employee Services Bulk Item: Yes X No _ Department: Employee Benefits Staff Contact Person/Phone#: Maria Fernandez-Gonzalez Ext. 4448 AGENDA ITEM WORDING: Approval to purchase Specific Excess Workers' Compensation Insurance with Preferred Governmental Insurance Trust. Annual premium of$401,366 (auditable) with a self-insured retention of$500,000 for the period of October 1, 2013 through October 1, 2014. ITEM BACKGROUND: 2012 RFP distributed with the proposal submitted by Star Insurance Company through Brown and Brown with $500,000 self-insured retention for the period of October 1, 2013 through October 1, 2014. July 2013 received official notification of non-renewal of excess policy by Star Insurance. PREVIOUS RELEVANT BOCC ACTION: Excess Insurance RFP's done 2003, 2006, 2009 and 2012. 2012 RFP distributed in accordance with purchasing guidelines with 2 bids received. The proposal submitted by Star Insurance Company through Brown & Brown with a $500,000 self- insured retention best served Monroe County. Monroe County is currently insured with Star Insurance of Brown & Brown Insurance. Excess RFP scheduled for early 2014. CONTRACT/AGREEMENT CHANGES: Annual premium of$401,366 (auditable) with a self- insured retention of$500,000. STAFF RECOMMENDATIONS: Approval TOTAL COST: $401,366 INDIRECT COST: BUDGETED: Yes X No DIFFERENTIAL OF LOCAL PREFERENCE: COST TO COUNTY: $401,366 SOURCE OF FUNDS: Primary Ad Valorem REVENUE PRODUCING: Yes_ No X AMOUNT PER MONTH Year APPROVED BY: County Atty�t A/Purcig—m-g Risk Management DOCUMENTATION: Included X Not Required DISPOSITION: AGENDA ITEM # Revised 7/09 MONROE COUNTY BOARD OF COUNTY COMMISSIONERS CONTRACT SUMMARY Contract # Contract with: Preferred Governmental Effective Date:October 1, 2013 Insurance Trust Expiration Date:October 1, 2014 Contract Purpose/Description:Approval to renew Specific Excess Workers' Compensation Insurance. Contract Manager: 4448 Employee Services Maria Fernandez-Gonzalez (Name) (Ext.) (Department) for BOCC meeting on September 17, 2013 Agenda Deadline: September 3, 2013 CONTRACT COSTS Total Dollar Value of Contract: $401,366 Current Year Portion: $217,795 Budgeted?Yes® No ❑ Account Codes: 501-07502-530450- - Grant: $ - - - - County Match: $ ADDITIONAL COSTS Estimated Ongoing Costs: $ /yr For: (Not included in dollar value above) (eg.maintenance,utilities,janitorial,salaries,etc.) CONTRACT REVIEW Changes Date Out JaDe Needed Reviewer Division Director Yes❑ No Risk Management �_ "� �� '3 Yes❑ No O.M.B./Purchasing Yes❑ No[ 0 kn' --kKa �� County Attorney Yes❑ No❑ "° P Comments: OMB Form Revised 9/'11/95 MCP#2 I NTERISK CORPORATION Consultants 1111 North Westshore Boulevard Suite 208 Risk Management Tampa, FL 33607-4711 Employee Benefits Phone(813)287-1040 Facsimile (813)287-1041 September 4, 2013 Ms.Maria Z. Fernandez-Gonzalez Sr.Benefits Administrator Monroe County Board of County Commissioners 1100 Simonton Street,Suite 2-268 Key West,Florida 33040 Re: Renewal of Excess Workers'Compensation Insurance Dear Maria: On June 19, 2012 the County posted an RFP for the County's Excess Workers' Compensation insurance on Demand Star. Three different agencies initially expressed an interest in providing the coverages the County was seeking. During the process one of the agencies advised that they were unable to structure a competitive program and withdrew from the process. On August 21, 2012 sealed proposals were received from the remaining two (2) agencies (the Florida League of Cities and Brown & Brown) with Brown & Brown offering 2 different self insured options. Brown & Brown's first option was based on the County's existing self insured retention of $500,000 while the second option proposed to increase the County's self insured retention to $600,000. After careful consideration it was believed that the premium savings associated with Brown & Brown's $600,000 self insured option did not justify the additional exposure the County would have to assume. The County's Board approved renewing its Excess Workers' Compensation coverage with a $500,000 self insured retention with Brown & Brown/Star Insurance Company for an annual premium of$217,795 on September 19,2012. In early 2013 Interisk learned that Star Insurance Company was withdrawing from the governmental insurance market and in July 2013 the County received official notice that Star would not be renewing the County's coverage effective October 1, 2013. When it was first learned that Star was withdrawing from the governmental insurance market, Interisk contacted Brown & Brown to determine the approach they were going to use to replace Star as the County's insurer. Brown & Brown advised that they were exploring various options but a final decision had not been made. Also in July 2013, it was learned that Star Insurance Company's A.M. Best's rating was being reduced to an unacceptable level. A.M. Best is the leading evaluator of insurance company operations. In August 2013 Brown & Brown advised that the had "indications" from Security National Insurance Company and Safety National Insurance Company as well as a formal proposal from the Preferred Governmental Insurance Trust (PGIT). It should be recognized that "indications" are not formal proposals and do not obligate the insurer to provide the coverage(s) as being indicated. It was later learned that both Security National and Safety National withdrew their indications. PGIT is a self insured trust established in 1999 to provide the insurance needs of governmental entities. While self insured trusts are not rated by the A.M. Best Company PGIT is viewed as one of the leading insurers for Florida governmental entities. PGIT offered 3 self insured options for the County to consider. The first option would require the County to retain its current self insured retention of $500,000. The second option would increase the County's self insured retention to $600,000 and the third option would increase the County's self insured retention to $750,000. The following table displays the proposed premium for all three options. Self Insured Retention Proposed Annual Premium $500,000 $401,366.00 $600,000 $374,462.00 $750,000 $334,110.00 PGIT's proposed premiums would provide coverage for all claim expenses in excess of the self insured retention selected by the County for claims occurring between October 1, 2013 and September 30, 2014. Star would remain responsible for claims occurring prior to October 1, 2013. While the premiums being proposed by PGIT are considerably higher than Star's current premium ($217,795) they are believed to be consistent with premiums being offered by other insurance companies that offer Excess Workers' Compensation insurance. If the County were to select PGIT's $500,000 self insured retention option, they would retain coverage consistent with their current program and realize an increase in their annual premium of $183,571 (84%). If the County were to select PGIT's $600,000 self insured retention option, they would realize a premium increase of $156,667 (72%) and an increase in the County's exposure for each claim of$100,000. If the County were to select PGIT's $750,000 self insured retention option, they would realize a premium increase of$116,315 (53%) and an increase in the County's exposure for each claim of $250,000. Other than the potential increase in the County's self insured retention, the terms and conditions of all three of PGIT's options are consistent with those of the expiring Star insurance program. Considering PGIT's proposed premiums, the additional exposure the County would have to assume associated with the $600,000 and $750,000 self insured options and the County's historical claim experience, it is believed that the premium savings associated with PGIT's $600,000 and $750,000 options do not justify the additional exposure that would have to be assumed. It is therefore recommended that Monroe County renew its Excess Workers' Compensation coverage with the Preferred Governmental Insurance Trust with a $500,000 self insured retention as being proposed by Brown&Brown. While it is believed that the County could have done little to retain Star, and its favorable pricing, as its Excess Workers' Compensation insurer, it is believed that Brown & Brown could have been more diligent in keeping the County informed about the difficulties they were experiencing in the renewal process. Had Brown & Brown advised the County of these difficulties in a more timely manner, the County could have elected and had the time to obtain competitive proposals for its 2013/14 Excess Workers' Compensation program through an RFP process. It is therefore recommended that the County consider issuing an RFP for its 2014/15 Excess Worker's Compensation program to ensure they are obtaining the most comprehensive coverage at the most competitive price. It is believed that this RFP process should start sometime in March or April 2014. As always, if you have any questions or concerns, please do not hesitate to call. Cordially, INTERISK CORPORATION N Sidney G.Webber CPCU,ARM Cc: Teresa Aguiar INSURANCE PROPOSAL PREPARED FOR: A INSURAN C -. Monroe County Board of County Commissioners 10/01 /2013 - 10/01/2014 Excess Workers Compensation PRESENTED BY: Scott Hindman, CIC Brown & Brown of Florida, Inc. PO Box 491636 Leesburg, FL 34749-1636 Business Phone: (352)787-2431 Fax Phone: (352)787-9922 This presentation is designed to give you an overview of the insurance coverage's we recommend for your company, based upon information provided by you. It is meant only as a general understanding of your insurance needs and should not be construed as a legal interpretation of the insurance policies that will be written for you. Please refer to your specific insurance contracts for details on coverage's, conditions and exclusions. Specimen copies of all policies are available upon request prior to binding of coverage. If there are any other areas that need to be evaluated prior to binding of coverage, please bring this to our attention. Should any of your exposures change after coverage is bound, such as operations, hiring employees in new states, buying additional property etc. please let us know as proper coverage can be discussed. NONE= Your business represents a considerable investment of time, effort and money. It warrants the service of a company that can provide a comprehensive analysis of all your insurance needs, offer insurance programs that are competitively priced and extend full protection to meet your specific needs. You need an Insurance Agency that is large enough to market your account to more than one leading insurance carrier, yet focused on providing professional, personalized service. Our agency Brown & Brown of Florida, Inc. is that caliber of an agency. We provide the kind of quality attention and protection you and your company deserve. Representing more than 15 major carriers, specializing in every type of insurance coverage, we are able, and honored, to assume the responsibility of meeting your insurance needs. Our recommendations are based on a careful analysis of the risks unique to you and your company. To this end, we have prepared a sound, competitively priced, insurance proposal for your review. We appreciate the opportunity to evaluate you and your company and provide this proposal to cover your insurance and asset management needs. Claims Manaaement At Brown & Brown of Florida, Inc., we take an active role in the management of your claims. Our Service Team is committed to assuring you receive prompt and fair treatment for any claim involving coverage extended by our agency, to you or your company. Loss Control/Risk Management A successful Loss Control/Risk Management Program is based on a successful partnership between Brown & Brown of Florida, Inc., you and your insurance carrier. As a team, all parties must work together to protect you, your business, your assets and to prevent future loss. We will provide you with technical advice, resources, and assistance in developing, improving and monitoring an effective Loss Control/Risk Management program by: • Reviewing your current Loss Control/Risk Management program; • Analyzing loss data to identify specific areas which generate the greatest claim frequency; • Reviewing your current environment and operations, including your physical assets, personnel practices, and organization of management; • Conducting visits to all locations to develop a risk profile and to define management and insurance carrier responsibilities; • Developing, improving, and implementing a Loss Control/Risk Management program with a written plan of expectations. (This program will be consistent with your management style and easily implemented); • Establishing a meeting schedule to review and discuss safety and loss analysis reports with management and/or staff as required by your insurance carrier. Employee Benefits Brown & Brown of Florida, Inc. offers a full range of Employee Benefits that may be tailored to fit the needs of your company. With access to virtually all the major benefit companies in the US, we have the resources, knowledge and experience to help customize your benefits program to include any or all the following: Medical — Health Care Dental Coverage Life Insurance Long and Short-Term Disability Group Retirement Plans Pension and/or Profit Sharing Brown & Brown of Florida, Inc. also has the experience to advise and administer both fully insured or partially self-insured plans. Excess Workers' Compensation Monroe County Board of County Commissioners 1100 Simonton St., Rm 2-268 Key West, FL 33040 305-292-4448 Excess Workers' Compensation Coverage Limit Part I—Workers' Compensation Statutory Part II— Employers Liability Bodily Injury by Accident $1,000,000 Bodily Injury by Disease Aggregate $1,000,000 Bodily Injury by Disease Each $1,000,000 Employee Self-Insured Retention $500,000 Estimated Payroll Amount—All Other Employees: $40,035,812 Estimated Payroll Amount— Police & Fire: $27,216,692 s e ® -• Coverage Limit Part I—Workers' Compensation Statutory—Subject to $10,000,000 maximum benefit per person Part II—Employers Liability Bodily Injury by Accident $1,000,000 Bodily Injury by Disease Aggregate $1,000,000 Bodily Injury by Disease Each $1,000,000 Employee Self-Insured Retention $600,000 Coverage Limit Part I—Workers' Compensation Statutory—Subject to $10,000,000 maximum benefit per person Part II—Employers Liability Bodily Injury by Accident $1,000,000 Bodily Injury by Disease Aggregate $1,000,000 Bodily Injury by Disease Each $1,000,000 Employee Self-Insured Retention $750,000 ® s Coverage Limit Part I—Workers' Compensation Statutory Part II —Employers Liability Bodily Injury by Accident $1,000,000 Bodily Injury by Disease Aggregate $1,000,000 Bodily Injury by Disease Each $1,000,000 Employee Self-Insured Retention Please see below Safety National has provided an indication only. The Self Insured Retention would be between $1,500,000 and $1,750,000 with the premium ranging between $160,000 - $200,000 This indication is not an offer capable of acceptance, but instead is intended to provide only an estimation as to potential pricing, terms and/or conditions based upon the facts and details as presented to Safety National. PREMIUM SUMMARY Named Insured: Monroe County Board of County Commissioners Dates: 10/1/2013 to 10/1/2014 DESCRIPTION OF COVERAGE PREMIUM Excess Workers' Compensation Option 1 $401,366.00 Excess Workers' Compensation Option 2 $374,462.00 Excess Workers' Compensation Option 3 $334,110.00 Excess Workers' Compensation Option 4 Please see above Preferred Governmental Insurance Trust is not rated by A M Best, and they are not protected by the Florida Guarantee Association in the event it becomes unable to meet its claims payment obligations. Safety National is rated A XI by A M Best. Public Risk Underwriters an intermediary is owned in whole or part by Brown & Brown, Inc., the parent company of Brown & Brown of Florida, Inc.. Brown & Brown entities operate independently and are not required to utilize other companies owned by Brown & Brown, Inc. but routinely do so. In addition to providing access to the insurance company, the Wholesale Insurance Broker/ Managing General Agent may provide additional services including, but not limited to: underwriting; loss control; risk placement; coverage review; claims coordination with insurance company; and policy issuance. The compensation received by the Wholesale Insurance Broker/Managing General Agent for the services above is based upon commission The commission for the services above is typically in the range of 10%to 15% of policy premium. 25% Minimum earned applies to the Preferred quote. SUMMARY OF PROPOSED PREMIUMS A 'D RELATED INFORMATION Payment Plan: Premiums are due in full This proposal is based upon the exposures to loss made known to the Agency. Any changes in these exposures (i.e., new operations, new products, additional states of hire, etc.) need to be promptly reported to us in order that proper coverage(s) may be put into place. Higher Limits of Liability may be available Quote is subject to the following: Options 1-3: • Signed first page of the PGIT Application • Latest Audited Financials (Year Ended 9/30/12) • Signed PGIT Participant Agreement • Signed Signature Page • Signed SIR Signature Page Option 4: • Subjectivities contingent upon a formal quote being issued