Select Committee on Insurance Relations - Property and Casualty

Regular Meeting

Charleston, WV · July 1, 2021

Minutes

MINUTES SELECT COMMITTEE ON INSURANCE AGENT RELATIONS – PROPERTY AND CASUALTY THE MEETING WAS HELD IN THE AV ROOM AND WAS MADE AVAILABLE TO THE PUBLIC VIA ZOOM PER THE AGENDA. 5:30 P. M., JULY 1, 2021 Joseph Jenkins, Chairperson, called the meeting of the Select Committee on Insurance Agent Relations – Property and Casualty to order at 5:30p.m., July 1, 2021. Committee Members Present: Joseph Jenkins, Chair Shannon Snodgrass (over Zoom) Bobby Reishman (left at approximately 6:35 pm, after all votes) Mary Beth Hoover (over Zoom) Adam Knauff Members Absent: Will Laird Jennifer Pharr Other Councilmembers Present: None A roll call was taken, and it was determined that a quorum was present. July 1, 2021 1. Approval of Previous Minutes – Councilmember Reishman asked for unanimous consent to dispense with the reading of the minutes for the January 28, 2021 meeting and that they be approved as distributed. There were no objections, and the minutes were approved. 2. Discussion – Councilmember Jenkins stated that the meeting will be an open discussion about what steps the Committee should take going forward. At the last meeting, they discussed getting a consultant (or someone very familiar with the industry) to speak to the Committee. Some people he had spoken to were not appropriate as they might want to submit proposals or were not presently available. They also discussed researching what other cities had done. Councilmember Jenkins added that it does appear to be a fairly common practice for cities to put out RFP for insurance brokers. He found an RFP from Petersburg, Virginia to be of note (also Eerie, Pennsylvania). Councilmember Jenkins asked the Committee what specific steps they wanted to take going forward. Councilmember Snodgrass added that her research led her believe that the best process would be to put out an RFP, select 3 or so brokers via interview and scoring and give them all the detailed information they would need to come back with quotes. Councilmember Reishman agreed, and added that they need an overall package to know what the insurance will cost the City. Councilmember Reishman added that he wanted to make sure the brokers were very clear on what they need to bid. Councilmember Snodgrass added that different brokers might have new ideas to present to the Committee. Referencing the packet listing the City’s current insurance coverage, Councilmember Jenkins added that workers comp and cyber security might also be included. City Manager, Jonathan Storage, agreed with Councilmember Snodgrass’ approach in general. He added that making a short list of candidates is a common practice within the City. The short list of brokers with the right work history will then compete by going into the marketplace, and the City will be able to compare their quotes. He added that insurance policies are good for one year, and he recommended a multi-year contract once a broker was chosen. Councilmember Snodgrass agreed that a 3-year contract with an out-clause would be best. Additionally, the RFP should ensure that a broker is able to represent the various policies that the City needs. Councilmember Knauff agreed. Councilmember Reishman added that they should also consider the track record of the broker. Councilmember Snodgrass added that the brokers will likely be going to roughly the same companies, so it will probably come down to which broker can offer the better deal. Councilmember Reishman and Storage added that certain brokers can have exclusive relationships with insurance carriers. Councilmember Jenkins stated that July 1, 2021 could be considered in their evaluations (such as if a broker has relationships with 5 big companies versus 1). Councilmember Hoover added that it only seems like a small number of agencies are willing to take on municipalities. Councilmember Jenkins suggested that they reach out to the various national groups for known entities that work with municipalities to send out the RFP. Councilmembers Jenkins and Reishman liked the idea of sending out an Expression of Interest before the RFP. Councilmember Snodgrass suggested targeting brokers who represent similar municipalities. Councilmember Knauff asked if they, as Committee members, could independently reach out to various potential brokers during the first phase. Storage replied that. Storage recommended that, once the Committee agrees on a draft, that they treat is as a regular purchase in that his office would publish, send emails to the major entities and the League of Cities and field questions. This is to ensure that Councilmembers are not bombarded with questions, and to ensure that all interested parties get the same and equal information. Storage added that the EOI would contain a schedule of events with a time period to submit written questions that the other respondents could have access to. However, Committee members can send links to potential brokers or send them directly to the City Manager’s Office. Storage advised that proposals in the second phase might not be apples-to-apples comparisons, as brokers may suggest that the City does not need total loss protection on a particular building, etc. Additionally, the timing on quotes will be crucial. For example, it would likely be too difficult for a broker to get accurate quotes for March 2022 too far out. Councilmember Jenkins added that once the short-list is chosen, it will take time anyway for them to gather and process of all the data necessary. Councilmember Reishman stated that they needed to get bids on what the City already has, not necessarily recommendations on what to change. Councilmember Jenkins added that it would be important to look at minimum levels and what the deductible and self-insured is. Perhaps they will decide that it would be better to be less self-insured. The EOI should state the City is open to potential changes. Those decisions can be further narrowed once they have a base-line comparison. Councilmember Reishman agreed. Councilmember Snodgrass agreed with the minimum levels, and added that they should also look at creative packaging and entertain other products to possibly get better quality coverage at less cost. Councilmember Jenkins added that the wording will be important, particularly concerning the listed minimum insurance. Councilmember Reishman added that they did not have to choose the cheapest option, but they would need a baseline comparison to be able to narrow down the candidates. Councilmember Jenkins added that it would be beneficial to use a wholistic approach in terms of what levels of insurance they would need to protect buildings, etc. rather than straight dollars. Councilmember Snodgrass added that another factor would be qualified immunity. Councilmember Jenkins added that the purpose of insurance is to protect from catastrophic loss, so they will need to determine what levels they feel comfortable with keeping/changing. July 1, 2021 Councilmember Jenkins stated that the EOI should be written by the City Manager, and the Committee can review it and give feedback, ideally within the next week. This would give the Committee time to review it individually before their next meeting in 2 weeks. Storage added that the most difficult thing in an EOI is to explain what is needed to get to the next round. The scoring system will be key to this. Storage asked if they wanted an emphasis on local vendors. Councilmember Jenkins stated that he would prefer a preference on vendors that have concrete experience with similar municipalities. Councilmembers Snodgrass and Knauff agreed. Storage added that it was very important that their ultimate decision/recommendation could be justified. He agreed that the ultimate goal is the get the best value (not necessarily the cheapest), and putting value on geography only is not that helpful. Councilmember Snodgrass added that she had been told that they will be shocked at the level of interest they will receive, which is why it is important to be open and transparent during the process. Councilmember Reishman added that the current company AssuredPartners has done a great job over their many years with the City. While it may not have been done in this manner, it has been looked at before. Councilmember Snodgrass motioned that the City Manager will send a draft of the EOI to the Committee by July 13, 2021, which will be discussed at the next meeting on July 15, 2021. Councilmember Reishman seconded. With no objections, the motion was approved. Councilmember Jenkins stated that at the next meeting they will work on a timeline for the EOI, likely 30 days. Storage agreed that a minimum of 30 days is appropriate. Storage added that the second phase would be to identify the 3 or so firms that they would choose to present their best quotes based on an RFP written by the City Manager and approved by the Committee. Councilmember Snodgrass motioned that the City Manager will present to the Committee an outline for phase 2 at the next meeting, July 15, 2021. Councilmember Jenkins added that would be included in the EOI. Councilmember Snodgrass withdrew the motion. Councilmembers Reishman and Knauff asked how long it would take the eventual chosen broker to get set up. Councilmember Jenkins replied that he was agreeable to defer to the City Manager for that, but he imagined that the EOI would be available for 30-60 days, the Committee would create a short-list within 30 days and then an additional 3-4 months for those responses. Storage added that they should keep in mind that in addition to the brokerage services, the City also has a TPA service, who manage the claims. Some insurance carriers might not approve the current TPA, so they need to be prepared to potentially have to choose a new TPA. Councilmember Jenkins stated that should be a factor during the later stages of the process. Councilmember Jenkins asked what parts of the process should go to full Council. He July 1, 2021 viewed the Committee as Councilmembers getting the opportunity to work closely with the Administration for something that could have been done without their input. Storage added that it takes such a monumental amount of work and preparation to choose a broker, that by the time the recommendation goes to Council, if Council doesn’t agree, there isn’t time to make another choice. He added that this is such an important purchase, that having Councilmember participation during the committee process is important because it helps to sell the final decision to other Councilmembers since the decision wasn’t just from one person. Councilmember Snodgrass suggested that the Committee select one final broker to present to Council to either approve or not. Councilmember Knauff agreed that they should at least select the first round of brokers, and give their recommendation for the final broker. Councilmember Jenkins added that he thought they should pick the brokers from the EOI responses that are the best fit to submit proposals. The Committee should then choose a broker from those responses to present to Finance and full Council via resolution. Councilmember Snodgrass agreed, adding that to give full Council a choice of three brokers would be a disservice since they would not have done all of the research that the Committee will have done. Councilmember Knauff motioned to adjourn the meeting. Meeting adjourned. July 1, 2021

Agenda

Packet

CITY OF CHARLESTON West Virginia Council Member – 12th WARD Joseph Jenkins Finance Committee, Chair 839 Gordon Drive Parking Committee, Chair Charleston, West Virginia 25303 Public Safety Committee 304‐575‐9202 joseph.jenkins@cityofcharleston.org AGENDA SELECT COMMITTEE ON INSURANCE AGENT RELATIONS – PROPERTY AND CASUALTY July 1, 2021 5:30 PM To be held in person and over Zoom (audio only) AV ROOM #308, CITY HALL *Join via internet: https://us02web.zoom.us/j/86512642360?pwd=cTgydWxRRGZMakg5T1AwZEhlNGpRZz09 Passcode: 881116 *Join via Telephone: (312) 626‐6799 or (929) 436‐2866 Webinar ID: 865 1264 2360 __________________________________________________________________________________________ 1. APPROVAL OF PREVIOUS MINUTES 1282021 2. DISCUSSION a. Formulate what the City is looking for in an insurance broker and develop parameters and factors for a request for proposal to seek interest from current and prospective insurance brokers b. Discuss timeline for: preparation and publication of RFP; review of proposals received in response to RFP; and recommendation to Council c. Comments from committee members 3. ADJOURNMENT JJ/ns *Meetings may be recorded and broadcast via internet https://charlestonwv.civicclerk.com City Council | 501 Virginia Street, East | Post Office Box 2749 | Charleston, West Virginia 25330 www.charlestonwv.gov | 304.348.8179 | 304.348.8038 fax Page | 1 of MINUTES SELECT COMMITTEE ON INSURANCE AGENT RELATIONS – PROPERTY AND CASUALTY THE MEETING WAS HELD VIA ZOOM AND WAS MADE AVAILABLE TO THE PUBLIC. 6:30 P. M., JANUARY 28, 2021 Joseph Jenkins, Chairperson, called the meeting of the Select Committee on Insurance Agent Relations – Property and Casualty to order at 6:30p.m., January 28, 2021. Committee Members Present: Joseph Jenkins, Chair Will Laird Shannon Snodgrass Bobby Reishman (left at approximately 6:00 pm) Mary Beth Hoover Adam Knauff Jennifer Pharr Members Absent: None Other Councilmembers Present: Bruce King Brady Campbell A roll call was taken, and it was determined that a quorum was present. January 28, 2021 Page | 2 of 1. Introduction – Councilmember Jenkins stated that the Committee has been formed to review and analyze the City’s insurance agent relations, specifically for property and casualty. The Committee will be reviewing those relationships to ensure they are serving the best interests of the City. 2. Overview of the Current Insurance Agent Relationship – City Manager, Jonathan Storage stated that creating the Committee in no way means that the Administration is dissatisfied with any of the work of AssuredPartners or any of their affiliates. The point of the Committee is to be transparent. Storage added that the City’s relationship with AssuredPartners (formerly called Commercial Insurance) goes back 30+ years. The agent has been a professional consultant that guides the City through the insurance selection process, making sure that the City receives reasonably priced insurance products as well as credit for a long claims history. Storage stated that the City’s current structured insurance is somewhat unique in that it is a custom-made insurance plan. For at least the past 15 years, the City has had an ALA (All Lines Aggregate) Package, which is many different coverages and layers of insurance. This allows the City to have multiple insurance carriers involved in the overall insurance plan, and means the City has very extensive coverage for a relatively low cost. The ALA Package policy covers: property, general liability, boiler and machinery, auto, general crime, professional liability, law enforcement coverage, excess property and boiler, TPA services, some risk management training, excess workers’ compensation, cyber liability and some pollution. Storage added that most insurance companies specialize instead of offering all- encompassing options. Additionally, the number of companies that will cover municipalities seems to get smaller every year. For example, the last time this insurance was renewed, only 3 of the 40 companies looked at for one component would be willing to submit a quote. 3. Scope of Committee Work – Storage added that the scope of the Committee will be to evaluate what the City expects a broker to do for the best interest of the City. Cost should not be the final factor. The City wants to hire a consultant that has a reasonable price, experience in the relevant areas and can navigate the complicated field of property and casualty January 28, 2021 Page | 3 of insurance. Storage added that this is a consultant selection process, and if they put out RFPs, the determination will be based on several scored factors. Storage stated that the Committee should decide what they want in a broker, and come up with factors to evaluate the candidates. The City will then put out a solicitation for submissions. The Committee will review those proposals based on set criteria, and will report their recommendation to full Council. Storage added that he did not recommend piece-meal insurance, in which the City hires a broker for property, a broker for general liability, etc. 4. Comments From Committee Members – Councilmember Jenkins stated that the Committee’s discussion should be centered around what they want to look for in a broker, look at potential factors for evaluation, develop an RFP, review and interview submittals. Councilmember Reishman agreed with Storage that they should not be splitting up their insurance. Additionally, he has been impressed with the current insurance broker’s ability to save the City money over the past 20 years. From the audience, Councilmember King added that he had been wanting to do this process from the past several years, because he doubted the City’s current broker is the only one available. They have a responsibility to do that due diligence. Councilmember Jenkins encouraged the Committee to keep an open mind. Councilmember Hoover asked what the time frame for their evaluations. Councilmember Jenkins replied that approval would need to happen around August or September for the next year’s renewal. Storage added that it was the intention to have these decisions in place for the 2021 renewal, but that was not possible due to the pandemic. He would imagine that if the City chose a new broker, they would probably need to be in place by the summer to fully understand the needs of the City, so ideally the Committee would have a recommendation by May. Councilmember Snodgrass expressed disappointment that another year will go by before they will be able to put out an RFP. She added that the City’s broker also hired a consultant also held by AssuredPartners, which the City paid for. Councilmember Snodgrass thought it would be reasonable to get responses for an RFP in 30 days. 5. Next Steps – Councilmember Jenkins stated that he was skeptical that they would be able to make a decision by the end of March. Storage added that he thought that timeframe would be January 28, 2021 Page | 4 of impossible given all the information and intricacies. Councilmember Knauff added that asked how quickly other cities obtained RFPs, and asked what the harm was in doing it. Storage replied that he didn’t know how the Administration would have time to allow a company to respond to an RFP due to intensive research that would be required on the part of the respondents (claims reports, detailed information about the City’s finances, police and fire policies, etc, IT systems). Councilmember Laird added that he appreciated the transparency of the process. Also, the RFP would be for a broker, who would also be reaching out to many other insurance providers, which would take time. He cautioned the Committee against rushing through the process. Councilmember Snodgrass added that she knew it was complicated insurance, and she was assured this process would have already happened. She agreed that there wasn’t enough time for this year to be effective. From the audience, Councilmember King agreed. He suggested consulting with other municipalities to see how they approach putting out RFPs, etc. Councilmember Jenkins added that the broker did present alternate insurance options at the last renewal. He has looked at other cities, and Huntington uses BRIM and pays much more than Charleston. Storage added that in 2019, there was no opportunity (3 months into the new Administration) to explore other options. They did tell the broker they expected him to show their work in detail to justify their work, which was done to the satisfaction of the Administration. Councilmember Jenkins stated he would entertain a motion for putting out an RFP by the end of March. Councilmember Knauff asked if the Administration would prefer that be pushed back a few weeks until the budget had been finalized. Storage said he would defer to the decision to the Committee. Councilmember Jenkins added that instead, the Committee could design an RFP by the end of March, but not publish. Storage recommended that they immediately decide on the factors they would want for a broker RFP. Respondents should be given about 30 days to respond. Councilmember Jenkins replied that, based on that time frame, an RFP would need to be published by the end of March. Councilmember Snodgrass stated they should say they are looking for 1 company that can represent the City, and then narrow the respondents to 3. She didn’t see the need to hire a broker to then go out and get many quotes. Councilmember Jenkins added that they were talking about getting a person in place by May so they would have the rest of the year to work on contacting insurance carriers and getting familiar with the City. Councilmember Snodgrass responded that they would be picking someone without knowing what they were going to offer in quotes. Councilmember Knauff asked if Councilmember Snodgrass meant that they would be picking the broker based on the RFPs. Councilmember King replied that the RFP will be January 28, 2021 Page | 5 of for brokers who will come back with a package to contain detailed quotes. Councilmember Jenkins agreed. Storage added that the only way brokers can get those quotes is for the Administration staff to individually share the claims data with them. He was worried about giving out sensitive workers’ claim data. He also added that insurance companies are not going to want to give 30 different brokers quotes for the City. From the audience, Councilmember Campbell added that, for commercial insurance, a single carrier will only issue a single quote. His recommendation would be that the City put together a claims data packet to give to 3 or so chosen brokers. Councilmember Jenkins replied that, based on that, they put out an RFP for a broker, narrow the respondents to 3-5, give them the data and hire the broker based on the best quote. Councilmember Pharr asked a question to clarify this, and asked if it would be too cumbersome for the City to supply this information. Storage replied that they can be given claims data, although it is time-consuming, because insurance companies might want to tour facilities, examine financial statements, etc. (this has happened in the past), which would take days. The brokers would likely want to ask a lot of questions as well. Councilmember Jenkins added that he also shared concerns with hiring a broker without knowing what the ultimate price will be. Storage added that, regardless of which RFP process they choose, the City can factor in specific scenarios and relationships into the process (such as having a good relationship with an insurance company). Councilmember Laird added that he would like to hear from potential brokers abut their take on the process. He asked if the local vendor preference would apply or to each individual policy. Storage replied that there is an exception for professional services. Councilmember Snodgrass added that she would recommend putting out an RFP for brokers, the Committee will interview 2-3 based on specific parameters, then pick a broker to move forward with a quote. Councilmember Knauff asked the Administration how difficult it would be to put out the initial RFP and to give the Committee the top recommendations. Storage replied that the Committee would be reviewing the RFPs directly. The difficulty would depend on the factors and how clear they are to follow and score. Councilmember Hoover agreed with Councilmember Hoover’s suggestion. Councilmember Jenkins suggested that the Administration draft an RFP for the Committee to review and discuss. From the audience, Councilmember Campbell recommended bringing in an expert to advise on the RFP process. Councilmember Snodgrass agreed, adding that the Committee should be heavily involved. Storage replied that he would expect to reach out to a consultant; the Committee may speak to them if desired. January 28, 2021 Page | 6 of Councilmember Jenkins asked Councilmembers Snodgrass, Campbell and Pharr to speak to potential consultants to speak to the Committee. Councilmembers Hoover, Knauff and Laird to research what other cities have done (sample RFPs, etc.). Storage could submit a broad RFP if desired for the Committee could use as a foundation. Councilmember Hoover motioned to adjourn the meeting. Meeting adjourned. January 28, 2021 Page | 7 of City of Charleston Current Lines of Insurance February 5, 2021 • Property • General Liability • Boiler & Machinery • Auto • Crime • Professional Liability • Law Enforcement • Excess Property & Excess Boiler & Machinery • Excess Workers’ Compensation • Cyber Liability • Pollution (underground tanks) • Miscellaneous – Bonds Page | 8 of Page | 9 of Page | 10 of Page | 11 of Page | 12 of Page | 13 of Page | 14 of Page | 15 of Page | 16 of Page | 17 of Page | 18 of Page | 19 of Page | 20 of Page | 21 of Page | 22 of Page | 23 of Page | 24 of Page | 25 of Page | 26 of Page | 27 of Page | 28 of Page | 29 of Page | 30 of Page | 31 of