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Subject
Approval of funds for FY11 General Liability, Property, Auto, Workers' Compensation, Excess Liability and associated insurances and implementation of Agreements with IWIF and LGIT.
Recommendation
Staff recommends that the City Manager sign the authorizing applications and implement the FY11 Agreements with LGIT and IWIF for General Liability, Property, Auto, Workers' Compensation, Excess Liability and associated insurance with combined funding requirements of $1,202,184. This amount is a substantial decrease from the Montgomery County Self-Insured Program's FY11 required contribution of $1,812,010 and provides for equitable coverage.
Discussion
Due to a significant increase in contributions required for insurance coverage through the Montgomery County Self-Insurance Program (MCSIP) for FY11 ($1,812,010 required as a FY11 contribution) and new terms of coverage that City staff believe are unfavorable to the City, the City has directly approached Local Government Insurance Trust (LGIT) and Injured Workers’ Insurance Fund (IWIF) to research alternative options.
The anticipated premium requirements of $1.2 million provided by LGIT and IWIF for all identified lines of insurance coverage will realize a savings of approximately $600,000 in FY11. Some additional insurance coverage may be required, which is not expected to exceed $50,000 in aggregate excess premium. Based on our review of both of these carriers, staff expects improved loss control services and comparable insurance coverage for the City of Rockville, which leds us to the recommendation to exit the MCSIP and secure the coverage offered by LGIT and IWIF which Mayor and Council approved on March 22, 2010.
City staff has also initiated a Request for Proposal (RFP) for the purposes of establishing an insurance broker relationship. This relationship will better position the City in determining and obtaining more competitive rates across all lines of insurances. In addition, a primary function of the selected insurance broker is to further analyze our operating insurances for any coverage gaps and to secure effective insurance products to better insulate the City from under-insured exposures. This process and the purchasing of any addition insurance products specific to our operations insurances should be completed prior to the July 1, 2010 renewal date.
Mayor and Council History
The Mayor and Council have been individually briefed on the specifics of this recommended change in insurance coverage and on February 1, 2010 the recommendation was presented to Mayor and Council (Meeting No. 4-10) with consent secured by Mayor and Council on March 22, 2010 (Meeting No. 22-10).
Options Considered
In researching options for alternate insurance arrangements, the following was considered:
- Sign the revised MCSIP Agreement and agree to the 35% increase in premium for FY11.
- Consider private insurers, although this would require a request for proposal process, and the results could not be considered in a timely basis for a July 1, 2010 renewal.
- Directly communicate with LGIT and IWIF to secure insurance quotes.
Procurement Information
In accordance with Chapter 17, "Procurement," Section 17-72, of the Rockville City Code, the City may contract directly with other public entities for goods or services when such goods or services were obtained through competitive procurement procedures. LGIT and IWIF are quasi-governmental in nature and providers for public entity insurance in the State of Maryland.
Fiscal Impact
The Montgomery County Self Insurance Program had notified City staff that FY11 contributions for business insurance coverage (workers' compensation, general liability, property, auto and other related operating insurances) would increase 35% to $1.8 million for the policy year beginning 7/1/2010 through 6/30/2011.
LGIT and IWIF premium requirements of $1.2 million for comparable insurance coverage will realize savings of approximately of $600,000 in FY2011 (with anticipated funds reserved for any necessary gap coverage). There are sufficient funds in the FY 2011 adopted budget to cover these costs.
Next Steps
- City Manager to sign and implement the agreements and related endorsements listed above with IWIF and LGIT for FY11 effective July 1, 2010.
- Upon completion of RFP insurance broker selection process and prior to July 1, 2010, conduct a broker review of scopes of coverage to assure all exposures are adequately insured and to determine options for any necessary gap coverage.
- Purchase any gap coverage prior to July 1, 2010.
Attachments
Department Head:
Carlos Vargas, Director of Human Resources
Approved on: 06/10/2010
City Manager:
Scott Ullery, City Manager
Approved on: 06/10/2010
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