Finance Committee (Meets 4th Tuesday of each month at 4:30 p.m.)

Finance Department Phone: (715) 395-7291 1316 N 14th Street Fax: (715) 395-7292 Superior, WI 54880 To: Councilor – Jack Sweeney (Chair) October 10, 2022 Councilor – Tylor Elm (Co‐Chair) Councilor – Mike Herrick Councilor – Jennifer Van Sickle (Alt) From: Deb Kamunen – Assistant Finance Director Finance Committee Mission Statement: To have broad oversight of financial policies and procedures, and to provide the City Council and management with such financial expertise, opinion, and recommendations as will be helpful for the Council to make decisions regarding the financial stability of the City of Superior. **** SPECIAL FINANCE COMMITTEE MEETING AGENDA **** Please note this is a SPECIAL MEETING of the Finance Committee; regular meetings will continue to be held monthly on the 2nd Thursday at 4:30pm of each month. A Special Finance Committee meeting is scheduled for Tuesday, October 11, 2022 at 4:30 p.m. in Room 204 of the Government Center. The public may also access this meeting online with Google Meet by pressing CTRL + click to follow the link or copying and pasting the address into a web browser: Join with Google Meet Meeting ID meet.google.com/ymq-xjpb-gnb Phone Numbers (US)+1 515-884-8792 PIN: 643 637 283# The following items will be discussed at the Special Finance Committee meeting: 1. Acting Finance Director Deb Kamunen recommending accepting the proposal from Community Insurance Corporation and Marsh & McLellan Agency for municipal liability, self‐funded workers compensation, property, crime, 5 year tail, equipment breakdown, and injunctive relief insurance coverage for the January 1, 2023 – December 31, 2023 period with consideration for optional coverages and/or deductible amounts. If you are unable to attend this meeting, please contact Deb Kamunen at 715‐395‐7293. Cc: Mayor Jim Paine KDAL Radio Taylor Pedersen City Council Members WDSM Radio Peter Luke City Clerk’s Office WEBC Radio Kyle Hawley Bulletin Board Duluth News Tribune Department Heads Superior Telegram Notice is hereby given that a quorum of the City Council may be present. No action will be taken other than the items listed on this agenda. *********************************************************************************************************************************** Pursuant to the Americans with Disabilities Act of 1990, if you are in need of an accommodation to participate in the public meeting process, please contact the City Clerk’s Office at (715) 395-7200 prior to the scheduled meeting. The City will attempt to accommodate any request depending on the amount of notice received. TDD (715) 395-7521. *********************************************************************************************************************************** In compliance with Wisconsin Open Meetings Law, this agenda was: Posted: Government Center, Court House, Public Library Faxed to: Daily Telegram, Public Library, October 10, 2022 Media notified and mailing list: October 10, 2022 Superior Telegram to sign and fax verification of receipt to fax number (715‐395‐7292) __________________________________________________________ Name Date  City of Superior – Finance Department Phone: (715) 395-7293 Deb Kamunen Fax: (715) 395-7292 Assistant Finance Director E-mail: kamunend@ci.superior.wi.us 1316 N 14th Street Superior, WI 54880 TO: Members of the Finance Committee FROM: Deb Kamunen, Acting Finance Director RE: Recommendation of Community Insurance Corporation/Marsh & McLellan It is my recommendation that the winning proposal for coverage in the areas of: Municipal Liability which includes Employment Practices and Auto, Crime, Property, Cyber, and Self- funded Workers Compensation for calendar year 2023 be awarded to Community Insurance Corporation and Marsh & McLellan Agency. Introduction: The City of Superior’s Finance Department has received liability, worker’s compensation, and property insurance proposals from two insurance agencies, Spectrum Insurance Group, who submitted proposals from the League of Wisconsin Municipalities Mutual Insurance (LWM) for the liability and self-funded worker’s compensation coverage and Municipal Property Insurance Company (MPIC), the City of Superior’s current property insurer, and Marsh & McLellan Agency (MMA), who submitted a proposal from Community Insurance Corporation (CIC) for the liability, self-funded worker’s compensation, and property insurance. A comparison was done by the Finance Department with these two agencies and respective insurance companies along with the City’s current insurance company, Cities and Villages Mutual Insurance Company (CVMIC), who is the insurance company for the 2022 liability and fully insured workers compensation. As MPIC is the current insurance company for the City of Superior, the LWM did not quote this coverage in their proposal, but it would port to LWM. Background: The Finance Committee asked the Finance Department to conduct a search to obtain proposals from insurance companies as the same insurance company, CVMIC, has been renewed year after year without going to market for 35 years. Finance located two insurance companies, LWM and CIC, who were interested in submitting proposals for liability, worker’s compensation (both fully insured and self-funded options were 1  evaluated, but ultimately, the self-funded option was chosen as the better option and included in each of their proposals), and property coverage. The Finance Committee has had several meetings over the course of at least a year with all three insurance companies – LWM, CIC, and CVMIC. The last meeting in which all three presented information was on July 12th, 2022. Supporting Information: Based on information presented at the Finance Committee Meetings and included on the respective proposals submitted be each company/agency, it became clear that the self- funded workers compensation was a much better option for the City of Superior as there was opportunity for significant savings. All three insurers agreed at the July 12th, 2022 presentation that the self-funded workers compensation option would generate significant savings to the City of Superior based upon an analysis of the City’s past loss run. While CVMIC does offer self-funded workers compensation, CVMIC does not offer aggregate protection, both of which CIC and LWM do at $500,000 per year. Because of the lack of aggregate protection, CVMIC has been eliminated from consideration and the City was left to only consider the remaining two companies - LWM and CIC. Additionally, both the LWM and CIC have chosen to bundle the self-funded workers compensation together with the liability and property insurance. CVMIC did give us the option to keep the liability and property insurance and only move the workers compensation to a new company, but this is not an option with either the LWM or CIC as both have bundled all coverages together. This means that in order to bind coverage the City of Superior is forced to choose all or nothing. A comparison was made of all three insurance companies. Particular care was given during the analysis to try to align the coverages so an apples to apples comparison could be made. Past loss runs were used to determine the average cost of workers compensation to the City while insured through CVMIC. The average cost paid by the City is $136,440.94 which was added to the administrative cost of the self-funding workers compensation to both LWM and CIC total premium. Additionally, if a savings could be recognized, these were deducted from each of the total cost of the premiums. If there was a cost to maintain a policy as it was not covered in the proposal or the City has current coverage other than CVMIC, this cost was also added to the comparison. An example of this is the airport insured by Aerospace Insurance Services, Inc. with the Holden Agency. The cost was added to both CIC and CVMIC as the City would need to retain this insurance coverage. As the airport coverage generated savings through LWM, this savings was deducted from the LWM’s total premium. Lastly, if 2023 premium rates were not available, it was noted on the comparison that the actual 2022 premium rates were used instead. If the coverage was optional, this was not added to the total unless it was included in the cost of the general liability by an insurance company. Then, the optional coverage cost 2  was added to try maintain the apples to apples comparison. Conversely, if an insurance company was the only one with the optional coverage, this was excluded from the premium total. Throughout this process, the City ensured transparency with all insurance companies/agencies. All three companies received all proposals. All were in attendance at each of the Finance Committee presentations. Lastly, all three received the comparison and were asked to expand, change or add any detail to the comparison. The final total cost for each were as follows: CVMIC/MPIC $855,165.00 MMA/CIC $693,214.94 LWM/Spectrum Insurance $676,060.94 Recommendation: Although Community Insurance Corporation with Marsh & McLellan Agency were not the low bidder, the City of Superior can choose a higher bidder if it can be justified. The following list are the factors which justify my recommendation of CIC and Marsh & McLellan Agency: 1. The Municipal Liability has an aggregate of the deductible of $150,000 whereas LWM does not have aggregate protection. 2. The per occurrence limit was double the amount at $500,000 for cyber coverage through CIC. The LWM’s occurrence limit for cyber coverage was $250,000. 3. The opportunity for additional savings is greater through CIC. 4. Marsh and McLellan Agency also has performed services for the City in the past with a satisfactory level of accuracy, efficiency and responsiveness. It is my recommendation that the Finance Committee accept the proposal to insure for calendar year 2023 the City of Superior in the following areas: Municipal Liability which includes Employment Practices and Auto, Crime, Property, Cyber, and Self-funded Workers Compensation. 3 Business Insurance Proposal City of Superior 1316 N. 14th Street, Superior, WI 54880 Presented By: Bob St. Arnold, CIC, CRM President – Northern MN & WI Sales Presented On: 7/12/2022 Policy Term: 10/7/2022 - 2023 Proposal Expires On: 10/7/2022 A business of Marsh McLennan Marsh & McLennan Agency LLC City of Superior 2022-2023 Business Insurance Proposal Table of Contents SERVICE TEAMS  Structure and Purpose  Risk Prevention Service Team PREMIUM SUMMARY & COMPARISON  Premium Summary  Payment Terms  Credit Policy  Marketing Results  Terrorism Risk Insurance Coverage  Compensation Disclosure & Limitation of Liability  Disclaimer  Best Rating & Best Financial Performance Rating BUSINESS INSURANCE PROPOSAL  Named Insureds  Location Schedule  Property  Inland Marine  Crime  Municipal Liability  Automobile Physical Damage  Workers’ Compensation 2 City of Superior 2022-2023 Business Insurance Proposal Service Teams Structure and Purpose We rely on our organizational structure strategically designed to support and deliver excellent service. By providing a team of skilled individuals to service each account, we offer you the following unique benefits. Please do not hesitate to contact any member of your team at any time. Specialization Each team member brings particular skills and specialties to your account, which enables us to fulfill your needs in the most efficient, affordable manner. Back Up With a panel of individuals trained on your program, service is reliable and continual. You need not be concerned that service will cease upon a single person’s absence. Consistency A team approach guarantees that your account will not be affected if a team member should leave our firm or change positions 3 City of Superior 2022-2023 Business Insurance Proposal Risk Prevention Service Team BUSINESS INSURANCE P: 218-336-1541 Bob St. Arnold Risk Prevention Consultant bob.starnold@marshmma.com C: 218-590-0153 VP of Marketing & Operations – P: 218-625-2105 Rhonda Nikunen rhonda.nikunen@marshmma.com Northern MN C: 218-409-3703 P: 218-623-5772 Dee Ann Briegel Client Advisor dee.briegel@marshmma.com C: 218-349-2427 P: 218-623-5878 Alanna Soukkala Safety Consultant alanna.soukkala@marshmma.com C: 218-721-7664 Whitney Mergens Associate Safety Consultant C: 218-221-5232 whitney.mergens@marshmma.com Chris Cliff Claims Consultant P: 763-746-8314 chris.cliff@marshmma.com Julie Korbel Claims Consultant P: 763-746-8360 julie.korbel@marshmma.com 4 City of Superior 2022-2023 Business Insurance Proposal Premium Summary COVERAGE PROPOSED CARRIER 2022-2023 PROPOSED PREMIUMS Property/Inland Marine Community Insurance Corporation $156,491 Equipment Breakdown Community Insurance Corporation $10,368 Auto Physical Damage Community Insurance Corporation $59,014 Crime Travelers – Agent of Record $4,681 Municipal Liability Community Insurance Corporation $155,925 Excess Workers’ Community Insurance Corporation $124,097 Compensation (Self- Insure) Professional Service Fee – Marsh & McLennan Agency $15,000 WC Total Estimated Annual $525,576 Premium: (This is a summary of estimated premiums and is not a binding contract or a guarantee of issued costs. Additional limits of liability may be available upon request. If foreign coverage is proposed, the premium may be adjusted to reflect the currency rate at the time of the effective date). *5 Year “Nose” for EPLI – 5% Additional Premium - $6,678 Estimated Request to Bind Insurance Coverage Please bind insurance coverage as specifically quoted and identified in this proposal. I understand coverage is ONLY bound when written confirmation is received from the carrier(s). Signature: ______________________________________________ Date: _______________ Print Name: ____________________________________________ Title: ________________ 5 City of Superior 2022-2023 Business Insurance Proposal Premium Summary -Continued Request to Bind Optional Coverage Coverage Annual Premium ACCEPT DECLINE 5 Year Tail on EPLI $6,678 Estimated Cost CIC – Increase Property/EB/Pier-Wharf $8,739 Savings Deductible to $10,000 CIC – Increase Property/EB/Pier-Wharf $21,219 Savings Deductible to $25,000 CIC – Increase Property/EB/Pier-Wharf $38,644 Savings Deductible to $50,000 & Contractors Equipment to $10,000 Crime - $5,000,000 Limit (Zurich) $21,783 Auto Medical Payments $1,750 Injunctive Relief-Only Endorsement $10,447 Signature: ______________________________________________ Date: _______________ Print Name: ____________________________________________ Title: ________________ Deductible Funds Liability – Deductible Funding options are available. Injunctive Relief-Only Endorsement This endorsement will provide claims defense on those injunctive relief claims that may not trigger the Liability Policy; no monetary damages or attorney fees presented. Having the endorsement will provide coverage up to $50,000 for non-triggered injunctive relief claims. 6 City of Superior 2022-2023 Business Insurance Proposal Composite Rated Policy Statement – Waiting on Confirmation The Auto policy is composite rated which requires an accurate schedule as of the effective date for coverage to apply. I have reviewed the equipment schedule presented in the proposal and agree it is accurate and up to date as of the effective date of XX/XX/XXXX Signature: _____________________________________ Date: _______________ Print Name: ____________________________________Title: ________________ Property / Equipment Changes - Streamlined process with only major changes (million dollar plus asset) underwritten mid-term. Details on process will be provided. Signature: _____________________________________ Date: _______________ Print Name: ____________________________________Title: ________________ 7 City of Superior 2022-2023 Business Insurance Proposal Subjectivities Subjectivities: CIC  Municipal Liability coverages must be purchased in order to purchase the Property & Work Comp coverages through CIC.  List of Additional Insureds provided at binding - $25.00 Additional Charge for Each Additional Insured.  Accept / Reject Identity Recovery Coverage. – Application Required & Additional Charge.  Accept / Reject Auto Med Pay & Injunctive Relief Coverage.  Separate Claim Fund established for Workers Compensation. Zurich - Optional  Crime – Loss Runs 8 City of Superior 2022-2023 Business Insurance Proposal Premium Payment Terms COVERAGE: CARRIER PAYMENT TERMS Property: Community Insurance Corporation Semi-Annual Inland Marine: Community Insurance Corporation Semi-Annual Crime: Travelers / Agent of Record Annual Municipal Liability: Community Insurance Corporation Semi-Annual Automobile Physical Damage: Community Insurance Corporation Semi-Annual Excess Work Comp: Community Insurance Corporation Semi-Annual Agency Fee Marsh & McLennan Agency Annual 9 City of Superior 2022-2023 Business Insurance Proposal Named Insureds City of Superior 10 City of Superior 2022-2023 Business Insurance Proposal Location Schedule LOCATION # ADDRESS 001-001 PER STATEMENT OF VALUES ATTACHED. 11 City of Superior 2022-2023 Business Insurance Proposal Property POLICY LIMITS LIMIT Policy Limit – Total Insured Value Per Statement of Values 163,848,125 Building, Personal Property & PIO – Per Occurrence Included Above Contractors Equipment – Per Occurrence Included Above STATEMENT OF VALUES ATTACHED. LIMIT Building $116,777,664 Business Personal Property $15,337,860 Property in the Open $15,993,676 Scheduled Contractors Equipment $15,738,925 INLAND MARINE/MISCELLANEOUS PROPERTY LIMIT Golf Courses Included Pier & Wharf Included Bridges Included Fine Arts Included Builders Risk – 120 Days (Project with higher limit or construction period to $2,000,000 be written separately) ADDITIONAL COVERAGES LIMIT Personal Property of Others $5,000 Pollution Cleanup & Removal (Annual Aggregate) $250,000 Earthquake $10,000,000 Electronic Data Processing Equipment, Including Data & Media $1,000,000 Extra Expense $5,000,000 Communication Systems (Unless Inventoried & Scheduled) $50,000 Flood $5,000,000 Fine Arts/Collective Items (Unless Inventoried & Scheduled) $50,000 Fungus, Wet/Dry Rot and Bacteria $15,000  Extra Expense – 30 Days  Business Income & Rental – 30 Days Business Income and/or Rental Values $5,000,000 Ordinance or Law Included Accounts Receivable $1,000,000 12 City of Superior 2022-2023 Business Insurance Proposal ADDITIONAL COVERAGES - Continued LIMIT Valuable Papers $1,000,000 Property in Transit $50,000 Newly Constructed or Acquired Property (120 Days) $2,000,000 13 City of Superior 2022-2023 Business Insurance Proposal Property COVERAGE: Coverage is provided on a Special Cause of Loss basis subject to all Policy Conditions, Limitations and Exclusions. DEDUCTIBLE: $5,000 Property, Contractors Equipment Piers/Wharfs $1,000 Golf Courses WAITING PERIOD: 24 Hours Extra Expense PROPERTY VALUATION: Replacement Cost COINSURANCE: Waived Building, Business Personal Property, Property in the Open & Scheduled Contractors Equipment COVERAGE EXCLUSIONS/LIMITATIONS Please refer to your policy for a complete list of Exclusions/Limitations the apply. NOTE: The Insured is responsible for verifying their property limits are accurate and sufficient. 14 City of Superior 2022-2023 Business Insurance Proposal Equipment Breakdown POLICY LIMITS LIMIT Equipment Breakdown Limit $100,000,000 Property Damage Included Business Income Included Extra Expense Combined with BI/EE Civil Authority Included Contingent Business Income $1,000,000 Data Restoration $1,000,000 Demolition $1,000,000 Expediting Expenses $1,000,000 Green $25,000 Hazardous Substances $1,000,000 Mold $25,000 Newly Acquired Locations Included for Property Damage Only Off Premise Equipment Breakdown $1,000,000 Ordinance or Law $1,000,000 Perishable Goods $250,000 Public Relations $5,000 Service Interruption $1,000,000 DEDUCTIBLES LIMIT Direct Damage $5,000 - Except Transformers 1.50 Per KVA, $5,000 Minimum - Except ICE/Generator Units $25.00 / Horsepower, $5,000 Minimum Indirect 24 Hours Covered Property does NOT Included plastic media used in trick filters or other sewage processing equipment. 15 City of Superior 2022-2023 Business Insurance Proposal Crime - Travelers COVERAGE LIMIT DEDUCTIBLE Employee Dishonesty – Per Loss $1,000,000 $5,000 Forgery Or Alteration $1,000,000 $5,000 Theft, Disappearance & Destruction – Money & Securities Inside The Premises $1,000,000 $5,000 Outside The Premises $1,000,000 $5,000 Computer Fraud $1,000,000 $5,000 - Computer Program & Electronic Data Restoration $100,000 Expense Funds Transfer Fraud $1,000,000 $5,000 Money Orders & Counterfeit Money $1,000,000 $5,000 Claim Expense $5,000 $0 Faithful Performance of Duty Included Social Engineering Fraud Endorsement – Sublimit Applies Telecommunication Fraud Endorsement – Sublimit Applies Treasurers & Tax Collectors Endorsement Included Employees Required to be Bonded by Statute - Excluded 16 City of Superior 2022-2023 Business Insurance Proposal Municipal Liability COVERAGE - OCCURRENCE FORM LIMIT Limit – Each Occurrence $10,000,000 No Liability Aggregate Applies, Except for Cyber Coverage Deductible – Per Occurrence $50,000 Deductible – Aggregate $150,000 Coverage Includes:  General Liability  Auto Liability  Public Officials E&O  Fire/Police Professional Liability  Employment Practices Liability Coverage Benefits:  No Coverage Sublimits (Except, Cyber Coverage)  No Fault Coverage as Offered by Many Carriers is Contrary to State Statute  Coverage for Defense is Outside Policy Limits.  Prior Acts Coverage  Sewer Backup – Covered when the Municipality is Negligent & Liable for Damages. There is No Sublimit. Liability Coverage Includes Broad Definition of Personal Injury Including:  False Arrest  Malicious Prosecution  Wrongful Entry or Eviction, or Other Invasion of the Right of Privacy.  Libel, Slander or Defamation of Character.  Assault & Battery, Sexual Harassment, including Workplace Harassment.  Discrimination or other Civil Rights Violation, including Employment Discrimination.  Other Civil Rights Violations, Including Employment Discrimination.  Sexual Harassment. NON-MONETARY DAMAGES Injunctive Actions Requesting Plaintiff’s Attorney’s Fees As Monetary Damages Are A “Trigger” Of Coverage. 17 City of Superior 2022-2023 Business Insurance Proposal Municipal Liability - Continued CYBER INCLUDED SUBLIMIT Liability– Each Claim  Data & Network Liability $1,000,000  Regulatory Defense & Costs $50,000  Payment Card Liability & Costs $50,000 $1,000,000  Media Liability First Party Loss – Each Incident  Business Interruption Loss $500,000  Cyber Extortion Loss $500,000  Data Recovery Costs $500,000 $500,000  Reputation Loss ECrime – Limits – Each Loss, Except as Stated Below  Fraudulent Instruction $500,000  Funds Transfer Fraud $500,000  Telephone Fraud $500,000  Criminal Reward $25,000  Breach Response Aggregate Limit of Coverage – Each Incident $1,000,000 CYBER COVERAGE AGGREGATE APPLIES $1,000,000 Deductible – Each Claim $50,000 Claims Made Retroactive Date – Pending Confirmation 18 City of Superior 2022-2023 Business Insurance Proposal Automobile Physical Damage COVERAGE VEHICLES COVERED LIMIT Physical Damage Limit $14,464,262 Comprehensive Coverage Per Schedule on File $5,000 Collision Coverage Per Schedule on File $5,000 VALUATION: Actual Cash Value 19 City of Superior 2022-2023 Business Insurance Proposal Automobile COVERED AUTOS: GARAGE COMP COLL YEAR MAKE MODEL VIN # LOCATION DED DED SEE ATTACHED NOTE: Mobile Equipment that is subject to a compulsory or financial responsibility law or other motor vehicle insurance law in the state it is licensed or garaged is now deemed an auto and must be scheduled under the Automobile Policy. 20 City of Superior 2022-2023 Business Insurance Proposal Excess Workers’ Compensation BUNDLED EXCESS WORKERS COMPENSATION  Excess Coverage  Claim Services  Loss Control Services Excess Workers Compensation Coverage: Included Loss Fund: Replenished as Needed Self-Insured Retention: $100,000 per Occurrence $500,000 Aggregate Included Services: Program Administration Account Management Loss Fund Accounting Full Third Party Claims Administration (No Per Claim Fees) Community Insurance Corporation Care Line Loss Control, Safety Training & Consultation Audited: NOT Audited STATES: WI ESTIMATED PAYROLLS: STATE CODE CLASSIFICATION 2023 PAYROLL WI 5507 Road Construction 3,860,697 WI 7704 Fire Fighters 2,910,685 WI 7710 Civil Defense IF Any WI 7720 Policy Officers 4,338,973 WI 8810 Clerical 5,335,679 WI 9412 Municipal Operators 2,275,890 21 City of Superior 2022-2023 Business Insurance Proposal Terrorism Risk Insurance Act Effective November 26, 2002, Terrorism coverage provided by the Terrorism Risk Insurance Act of 2002 (TRIA) was made available in your policy(ies). In 2007, the federal government signed the version that was passed by the Senate and House. The bill eliminates the distinction between foreign and domestic acts of terrorism and otherwise keeps the program in tact under roughly its current terms through December 31, 2027. The premium charged for the terrorism coverage is outlined below: COVERAGE PREMIUM Property Included Municipal Liability Pending Confirmation Inland Marine Included Workers’ Compensation (Cannot reject coverage) Pending Confirmation ► With the exception of Workers’ Compensation, the Act gives you the right to reject the offer of terrorism coverage. You may waive such coverage by signing a written statement. (See Affirmation Waiver from insurance company.) ► The Terrorism Risk Insurance Program Reauthorization Act (TRIPRA) retains most of the provisions of the original program, however, the following coverages are not included under the federal program. o Commercial Automobile, Garage Liability, Dealer’s Blanket, Professional Liability Surety/Crime, Burglary & Theft and Farm Owner’s Multi-Peril. NOTE: ► Actual coverage provided by your policy for acts of terrorism, as defined in the Terrorism Insurance Act of 2015 are limited by the terms, conditions, exclusions, limits, other provisions of your policy, and/or any endorsements to the policy and are subject to applicable laws. 22 City of Superior 2022-2023 Business Insurance Proposal Minimum Earned & Deposit Premiums We are providing clarification of the following terms as they are often misunderstood. Minimum and Deposit This is the amount of premium due at inception. Although the policy is “ratable” that is, subject to adjustment based on a rate per exposure unit, under no circumstances will the annual earned premium be less than the minimum premium. In other words, the policy may generate an additional premium on audit, but not a return. If such a policy is cancelled mid-term, the earned premium is the greater of the annual minimum multiplied by the short rate or pro-rate factor, or the actual earned as determined by audit, subject to a short rate penalty if applicable. Minimum Earned Premium A minimum earned premium endorsement can be attached to either a flat charge policy or an adjustable policy. In either case, this amount is the least that will be retained by the carrier once the policy goes into effect. The amount retained would be the greater of the actual earned premium whether calculated on a pro-rate or short-rate basis, or the minimum earned premium. Flat Cancellations Surplus lines carriers almost never allow flat cancellations. Once the policy is in effect, some premium will be earned. 23 City of Superior 2022-2023 Business Insurance Proposal Credit Policy Marsh & McLennan Agency strives to offer the highest quality of service at the most competitive price possible. Accordingly, we have the following credit policy in place to assure that your coverage is not interrupted during the policy term.  All premiums are due on the invoice date or effective date of the insurance, whichever is later. Always submit the remittance copy with your payment. If a remittance copy is not submitted, we will apply the cash to the oldest item on the account. Also, credit memos that cannot be applied against the original invoice will be applied to the oldest items on the account unless you direct us otherwise.  If installment payments are available and provided under insurance policy terms, you will receive an invoice for each installment. Installments are due on the effective date of the invoice. Marsh & McLennan Agency does not finance annual or installment premiums. However, should you wish to finance your premium, we can place your financing with an approved insurance premium finance company. Your Service Team maintains the on-line access to all of your coverage, premium and accounting detail and will be able to answer most billing questions. Any other questions will be referred directly to our accounting department for immediate response. We thank you for your support and business. 24 City of Superior 2022-2023 Business Insurance Proposal Compensation Disclosure & Limitation of Liability Marsh & McLennan Agency LLC (“MMA”) prides itself on being an industry leader in the area of transparency and compensation disclosure. We believe you should understand how we are paid for the services we are providing to you. We are committed to compensation transparency and to disclosing to you information that will assist you in evaluating potential conflicts of interest. As a professional insurance producer, MMA and its subsidiaries facilitate the placement of insurance coverage on behalf of our clients. As an independent insurance agent, MMA may have authority to obligate an insurance company on behalf of our clients and as a result, we may be required to act within the scope of the authority granted to us under our contract with the insurer. In accordance with industry custom, we are compensated either through commissions that are calculated as a percentage of the insurance premiums charged by insurers, or fees agreed to with our clients. MMA engages with clients on behalf of itself and in some cases as agent on behalf of its non-US affiliates with respect to the services we may provide. For a list of our non-US affiliates, please visit: https://mma.marshmma.com/non-us-affiliates. In those instances, MMA will bill and collect on behalf of the non-US Affiliates amounts payable to them for placements made by them on your behalf and remit to them any such amounts collected on their behalf. MMA receives compensation through one or a combination of the following methods:  Retail Commissions – A retail commission is paid to MMA by the insurer (or wholesale broker) as a percentage of the premium charged to the insured for the policy. The amount of commission may vary depending on several factors, including the type of insurance product sold and the insurer selected by the client.  Client Fees – Some clients may negotiate a fee for MMA’s services in lieu of, or in addition to, retail commissions paid by insurance companies. Fee agreements are in writing, typically pursuant to a Client Service Agreement, which sets forth the services to be provided by MMA, the compensation to be paid to MMA, and the terms of MMA’s engagement. The fee may be collected in whole, or in part, through the crediting of retail commissions collected by MMA for the client’s placements.  Contingent Commissions – Many insurers agree to pay contingent commissions to insurance producers who meet set goals for all or some of the policies the insurance producers place with the insurer during the current year. The set goals may include volume, profitability, retention and/or growth thresholds. Because the amount of contingent commission earned may vary depending on factors relating to an entire book of business over the course of a year, the amount of contingent commission attributable to any given policy typically will not be known at the time of placement. 25 City of Superior 2022-2023 Business Insurance Proposal Compensation Disclosure & Limitation of Liability  Supplemental Commissions – Certain insurers and wholesalers agree to pay supplemental commissions, which are based on an insurance producer’s performance during the prior year. Supplemental commissions are paid as a percentage of premium that is set at the beginning of the calendar year. This percentage remains fixed for all eligible policies written by the insurer during the ensuing year. Unlike contingent commissions, the amount of supplemental commission is known at the time of insurance placement. Like contingent commissions, they may be based on volume, profitability, retention and/or growth.  Wholesale Broking Commissions – Sometimes MMA acts as a wholesale insurance broker. In these placements, MMA is engaged by a retail agent that has the direct relationship with the insured. As the wholesaler, MMA may have specialized expertise, access to surplus lines markets, or access to specialized insurance facilities that the retail agent does not have. In these transactions, the insurer typically pays a commission that is divided between the retail and wholesale broker pursuant to arrangements made between them.  Other Compensation & Sponsorships – From time to time, MMA may be compensated by insurers for providing administrative services to clients on behalf of those insurers. Such amounts are typically calculated as a percentage of premium or are based on the number of insureds. Additionally, insurers may sponsor MMA training programs and events. We will be pleased to provide you additional information about our compensation and information about alternative quotes upon your request. For more detailed information about the forms of compensation we receive please refer to our Marsh & McLennan Agency Compensation Guide at https://www.marshmma.com/us/compensation-guide.html. MMA’s aggregate liability arising out of or relating to any services on your account shall not exceed ten million dollars ($10,000,000), and in no event shall we be liable for any indirect, special, incidental, consequential or punitive damages or for any lost profits or other economic loss arising out of or relating to such services. In addition, you agree to waive your right to a jury trial in any action or legal proceeding arising out of or relating to such services. The foregoing limitation of liability and jury waiver shall apply to the fullest extent permitted by law. Rev May 26, 2022 26 City of Superior 2022-2023 Business Insurance Proposal Disclaimer No coverage is provided by this summary, nor can it be construed to replace any provision of the policy. Refer to the actual policy for complete information on the coverages provided. If there is a conflict between the policy and this summary, the provisions of the policy shall govern. This proposal contains a brief outline of coverages and not a complete explanation of insurance being presented. It is intended to provide a summary of coverage for your review. Only the policy itself can provide a detailed description of the terms conditions, exclusions and endorsements of coverage. A complete specimen policy form will be made available upon your request. For details of coverage refer to the policy itself when issued. This document is neither a binder nor a legal interpretation of the insurance coverage. In evaluating your exposures to loss, we are dependent upon information provided by you. You ultimately choose the values elected. If there are any areas that need to be evaluated prior to binding coverage, or should any of your exposures change after coverage is bound, such as the beginning of new operations, hiring employees in new states, buying additional property, autos, equipment, etc., please let us know so coverage can be discussed. While we will strive to place your insurance with reputable, highly rated companies, we cannot guarantee the financial stability of an insurance company. In order to ensure that your important changes are properly communicated, please contact us as questions arise and or exposure changes occur. We must discuss how they affect your insurance program. The changes in exposure that have an impact on your insurance program include, but are not limited to, those listed below: 1. Changes to any operation such as expansion to another state, new products, etc. 2. Mergers and/or acquisitions of new companies 3. Any assumed contractual liability, granting of indemnities, or hold harmless agreements 4. Circumstances which may require an increase in liability insurance limits 5. Any changes to fire or theft protection, such as installation or disconnection of sprinkler system, burglar alarms, etc. This includes alterations to same. 6. Any changes to scheduled equipment such as contractors’ equipment, computer equipment, etc. 7. Property, of yours that is in transit, unless we have previously arranged for this insurance. 8. Any changes in existing premises including vacancy, whether temporary or permanent, alterations, demolition, etc. Also, any new premises purchased, constructed, or occupied. 9. Any new exposures or plans for foreign travel or operations Your insurance program will only be as good as the communication between your organization and Marsh & McLennan Agency. 27 City of Superior 2022-2023 Business Insurance Proposal Best Financial Ratings 28 City of Superior 2022-2023 Business Insurance Proposal Marsh & McLennan Agency, LLC 332 W. Superior St., #700 Duluth, MN 55802 +1 218-722-7753 29