Vancouver City Council |
ADMINISTRATIVE REPORT
Date:
November 05, 2003
Author:
Maria Law
Phone No.:
604.873.7737
RTS No.:
03720
CC File No.:
1202
Meeting Date:
December 2, 2003
TO:
Vancouver City Council
FROM:
The Director of Risk & Emergency Management
SUBJECT:
Broker of Record Appointments for the City's Insurance Program
RFP #PSO3007
RECOMMENDATION
A. THAT Willis Canada be appointed as the City's Broker of Record at an annual cost of $85,000 plus an "At Risk" component of up to $15,000 payable and contingent upon satisfactory delivery of proposed services with respect to property, liability and marine insurance coverages for a period of three years commencing January 1, 2004, with the option to renew for a further two years.
B. THAT Vancouver Holdings (B.C.) Ltd. be appointed as the City's Broker of Record with respect to automobile and accident and death insurance coverages for a period of three years commencing January 1, 2004, with the option to renew for a further two years at no additional cost to the City. Compensation for the broker services is paid directly by the insurance companies in the form of commissions.
The insurance broker service fees are funded as part of the City's overall insurance premium expense under the operating budget and the liability reserve fund.
GENERAL MANAGER'S COMMENTS
The General Manager of Corporate Services concurs with the recommendations as outlined in A. and B. above.
COUNCIL POLICY
In December of 1991 Council resolved that the City's Broker of Record for its Insurance coverages be reaffirmed or reassigned once every five years following a competitive process.
PURPOSE
The purpose of this report is to provide Council with the results of Request For Proposal #PS03007 - Insurance Brokerage and Related Risk Management Services. This RFP process was carried out to solicit and rank proponent submissions based on specified service and cost criteria and to seek Council's approval of Recommendations A. and B. above.
DISCUSSION
The Brokers of Record are responsible for placing the City's insurance coverages and act as the City's insurance experts in the provision of a range of related consulting services, including loss prevention inspections, property-related claims administration and analysis, policy interpretation and other.
Since 1991 Marsh Canada has been the City's broker of record with respect to property, liability and marine insurance coverages. Their reappointment over this period followed several competitive processes and the required council approval. In the current RFP, fees for brokerage services were separated from insurance terms and premiums to ensure equal opportunity was given to all proponents.
The incumbent broker of record for the City's licensed vehicle fleet insurance is Vancouver Holdings (B.C.) Ltd. This broker has handled the City's fleet since 1975. This coverage is provided through the Insurance Corporation of British Columbia (ICBC) and payment for services takes the form of commission paid directly by ICBC with no additional service fees to the City. The assessment on this portion of the proponents' submissions was based solely on service related criteria.
Willis Canada and Vancouver Holdings (B.C.) Ltd. received the highest overall ratings within the coverage areas previously identified. Rating was based upon independent staff assessments of the proponents' submissions with respect to predetermined criteria, including but not limited to: market capacity, quality of service, timeliness, cost, value added services and experience.
ALTERNATIVES/OPTIONS
Option #1 Jardine Lloyd Thompson Canada
· Proposed Service for all lines of insurance
· Annual fee of $110,000 payable in JanuaryOption #2 Willis Canada
· Proposed Service for all lines of insurance
· Annual fee of $85,000 payable - $10,000 in January- $25,000 in April
- $25,000 in July
- $25,000 in October
Plus an "At Risk" component of up to $15,000 payable in December and contingent upon satisfactory delivery of proposed services
Option #3 Marsh Canada
· Proposed Service for all lines of insurance
· Annual fee of $80,000 payable - $40,000 in February
- $24,000 in April
- $16,000 in July
Option #4 Vancouver Holdings (B.C.) Ltd.
· Proposed Service for placement of Automobile and Accident & Death Insurance
· No annual cost to the City of Vancouver, commissions are payable directly by the insurance companies.Note: With respect to Option #1 through #4, fees for service will take the form of commissions for automobile liability insurance and will be paid directly by ICBC with no additional cost to the City.
FINANCIAL IMPLICATIONS
Appointment of Willis Canada as broker of record with respect to property, liability and marine insurance coverages, would result in an additional annual fee of between $5,000 and $20,000 over the lowest bid by Marsh Canada, depending upon the City's evaluation of the firm's compliance with proposed service delivery. Based upon the overall evaluation findings, this cost difference was outweighed by other rating criteria as outlined previously in the report.
Appointment of Vancouver Holdings (B.C.) Ltd. as broker of record with respect to Automobile and Accident & Death insurance coverages would result in no additional financial implications to the City.
The insurance broker service fees are funded as part of the City's overall insurance premium expense under the operating budget and the liability reserve fund.
CONCLUSION
Given the outcome of the RFP process, it is recommended that Council confirm appointment of the City's Brokers of Record for its insurance program as outlined in Recommendations A. and B.
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