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Home My WebLink About09-27-1983 EMERGENCY AGENDA ADDENDUM CITY OF DENTON CITY COUNCIL September 27, 1983 Special Called Meeting of the City of Denton City Council on Tuesday, September 27, 1983 at 500 p,m, in the Civil Defense Room of the Municipal Building at which the following items will, be consideredi 5100 p.m, consider approval of Purchase order # 60195 for auditorium seating for the Police Department, CERTIFICA'T'E I certify that the above notice of meeting was posted on the bulletin board at the City Hall of the City of Denton, Texas, on the c 7 day of , 1983 at c •yC1 r o'clock (a.m, (P.M.) CITY SECRETARY 10410 sr'Ii M CALLED A1GI3'I'INt~ AND MEiRUNCY pusTflu: ADDHNDUM AOUNUA: NiINUITS: NAME: CITY UF DEN'TON CITY COUNCIL DAY: Sontombor 27, 1983 T I IM S.00-- .111, PLAUbt Civt~ Defezise MhNIBLRS NU'TATI0NS YES Nu Richard Stewart 382-3225 _ Joe Alford 387.4373 Jack Barton 566-2410 l~ Marx l:h)%v 383-1083 Charles Hopkins 566-3031 1'J James Riddlesperger 382-8757 Ray St hens -6-1340 MHAL SURV1CR YES NO NOTIFY PREiSS YES NU Denton Record Chronicle 820 KDNT _ 838 Channel 25 VS t. _ 'IT U Lass-() #78 NT U a i l y 56S-2353 K N'1' U S65-3688 Denton CoUntY Enterprise _ 837__ lla.llas Tiutes Herald 566-OS9.1) 01660 AGLNDA CITY OF DENTON CITY COUNCIL September 27, 1983 Special Called Meeting of the Cit6 of,mDe fin he Lil ont Cit Cou Defense Tuesday, September 27, 1983, at 5:00 p Room of the Municipal Building at which the following items will be considered: 5:00 P.M. 1. Consider adoption of an ordinance appropriating funds to the General Fund/Finance Department. 2. Consider approval of a contract for City of Denton insurance. 3, Executive Session: A. Legal Matters Under Sec. 2(e), Art. 6252-17 V.A.T&S. B. Real Estate Under Sec. 2(f), Art. 6252-17 V,A.T.S. C, Personnel Under Sec. 2(g), Art 6252-17 V,A.T.OS. D. Board Appointments Under Sec. 2(g), Art 6252-17 V.A.T,S, \1 CERTIFICATE I certify that the above notice of meeting was posted on the bulletin board at the City Ball of the City of Denton, 'T'exas, c~n the day of 1983 alt o'clock (a.m.) (p.m.) CITY SECRETARY 10350 EMERGENCY AGENDA ADDENDUM CITY OF DENTON CITY COUNCIL September 27, 1983 Special Called Meeting of the City of Denton City Council On Room Tuesday, the Municipal Bui lding5 a0t0 which in hfollowing Defense items will be consideredt 5;00 p.m. 1. Consider approval of Purchase Order # 60195 for auditorium seating for the Police Department. CERTIFICATE I certify that the above notice of meeting was posted on the bulletin board at the City Hall of the City of Denton, Texas, day of , 1963 on the at o'clock (a,m.) (p.m.) CITY SECRETARY 1041C EMERGNNCY AQXNDA ADDENDUM CI'T'Y OF DENTON CITY COUNCIL September 27, 1983 Special Called Meeting of the City of Denton City Council on Tuesday, September 270 1983 at 5100 p.m. in the Civil Defense Room of the Municipal Building at which the following items will be consideredi 500 p.m. 11 Consider approval of Purchase Order # 60195 for auditorium seating for the Police Department. CER'T'IFICATE I certify that, the above notice of meeting was posted on the bulletin board at the City Hall of the City of Denton, Texas, on the day of It 1983 at o'clock (p.m.) CI'T'Y SECRETARY 10410 - - V 1 , CITY COUNCIL AGENDA BACKUP SUMMARY SHEET DATE OF MEETING: September 27, 1983 COUNCIL AGENDA ITEM fi SUBJECT: Purchase Order #60195 Auditorium Seating for Police Department, SUMMARY: This purchase order is for the purchase of 58 auditorium seats for the Police Department in the new Police Building. We looked at what they wanted and what would fit and found the specifications were the same as recently bid by Tarrant County, I asked for and was granted permission to use their bid and the low and best bidder was agreeable to the bid price. This is the basis for the approval of this purchase order for seating, I am attaching a tabulation sheet showing the vendors that bid, ACTION REQUIRED: Approval by council, SOURCE OF FUNDS: Budget account 100-007-0043-9102, RECOMMENDATION: We recommend this purchase order be approved to Cowsert Associates of Dallas, at $76,00 each making a total of $4,408,00 installed. We have determined that this is a very good price considering the type of installation re- quired and the seating specified, EXHIBITS: Tabul-,s tion" t, SUBMITTED BY: !in arshaC p ~urcha5ing Agent SID TITLE-goa UP N>?.0 MAL 3-1-t- 1283 Awerionn Irwin Cowsert J,h, C1ar Desk Mfg. Seating Co. Assoc, ACCOUNT N 100-0070043-9102 _ I ~S.CR 'TIQC~.. _ lVENUOR _ ___YpNK-.-. V Nr86.65 N4~OR„__ VFN1xJ1tVENDOR 1~CNUUR 1. 58 Auditorium Seating fur Police 83,78 88,61 76,00 -.F. bu r(Tr-ng Total $4,859.24 $5,139.38 $4,408,00 $5,025.70 i I CITY OF OSNTON, PURCHASIN43 DEPT, PU"ASI CH MN NUMSMR [7~~ 9 215 6, McKInmY i Denton, Tsx4s 76201 pAfl 9/26/83 NN =1119IH211 OIPW Nitro 247402 W.O. VIN"N 49. rM1M No, oalvarT ACCT, No, 100-0070043-9102 Cowsert Associates w«► 9995 Monroe Dr, Suits 127 Tat CITY OF DINTON P,O, Sox 340444 Dallas, TIC 75234 SHOW P.O. NO.ON ALL SHIPMENTS, DELIVERY TICKETS, INVOICES ETC„ SEND INVOICES TO ACCOUNTS PAYASLE, THE CITY OF DENTON, TEXAS IS EXEMPT FROM SALES TAX AS PER HOUSE SILL #20. THE CITY OF OENTON IS PROH161TED FROM PAYING Pon MERCHANUISE BEFORE IT IS RECEIVED, ALL SHIPMENTS MUST SS P,O,S„ CITY OF OENTON, TEXAS. ITEM CITY STOCK NUMBER DESCRIPTION QUAN./UNIT PRICE AMOUNT Seating, auditorium type for Police Dept. 58 $76,00 $4,408,00 1, 1 1 I i Direct All Inqulrles To, CITY OF DENTON, PURCHASING DEPT, John J. Marshall, C,P,M„ Purchasing Agent Tom D. Shaw, C.l Asst, Purchasing Agent i AGENDA CITY OF DENTON CITY COUNCIL September 27, 1983 Special Called Meeting of the City of Demon Cit Council on Tuesday, September 27, 19830 at 5:00 p.m, in the Civil Defense Room of the Municipal Building at which the following items will be considered; 5:00 p.m. 1. Consider adoption of an ordinance appropriating funds to the General Fund/Finance Department. 2. Consider approval oz a contract for City of Denton insurance. 3. Executive Session: A, Legal Matters Under See. 2(e), Art. 6252-17 V.A.T.S. B. Real Estate Under Sec. 2(f), Art. 6252-17 V.A.T.S. C. Personnel Under Sec. 2(g), Art 6252-17 V.A.T.S. D. Board Appointments Under Sec. 2(g), Art 6252-17 V.A.T.S. CERTIFICATE I certify that the above notice of meeting was posted on the bulletin board at the City Hall of the City of Denton, Texas, on the l day of 1983 at 41 o'clock (a.m.) CITY SECRETARY 1035C ~ I AGENDA CITY OF DENTON CITY COUNCIL September 27, 1983 Special Called Meeting of the City of Denton City iv Council on Civil Defense Tuesday, September 27, 1983, at 5100 p.w. in the Room of the Municipal Building at which the following items will be considered; 5;00 P.M. 11 Consider adoption of an ordinance appropriating funds to the General Fund/finance Department. 2. Consider approval of a contract for City of Centon insurance. 3. Executive Session; A. Leggal Matters Linder Sec. 2(e), Art. 6252-17 V.A.T.S. H. Real Estate Under Sec. 2(f), Art. 6252-17 V.A.T.S. C. Personnel Under Sec. 2(g), Art 6252-17 V.A.T.S. 1). Board Appointments Under Sec. 2(g), Art 6252-17 V.A.T.S. CERTIFICATE I certify that the above notice of meeting was posted on the bull;jtin beard at the City Hall of the City of Denton, Texas, on the day of , 1983 at o1clock (a.m.) (p.m.) CITY SECRETARY 1035C i NO. . AN ORDINANCE AMENDING THE 1982.63 BUDGET OF THE CITY OF DENTON, BYxTHE SUMIOFR$1$4oQ66-001EPROVIDINGDFORN'THE PUBLICATION HEREOPT AND DECLARING AN EF'FEC'TIVE DATE. WHEREAS, pursuant to section 8.08 of the Charter of the City of Denton, Texas, the City Council is authorized to amend the (5) public a least five of i grave vote Of and members original of budget the Couupon ncil t in cases affirmative WHEREAS, emergency expenditures are necessary to meet unusual and attention could note which, initheeoriginal budgets now, therefore, THE COUNCIL OF THE CITY OF DENTON, TEXAS HEREBY ORDAINSi SECTION I. The 1982-83 Budget of the City of Denton, Texas is hereby amended by appropriating the sum of $154,168,00 for the following extra-ordinary expendituresi Lawsuit Settlement $129,168.00 Revenue Fee Stuoy 25,000.00 Total $154,168.00 SECTION II. That the City Secretary is directed :o attach a copy of this ordinance tm the original budget and cause this amendment to be published once in the Denton Record Chronicle, SECTION III, That this ordinance snall become effective immediately from and after its date of passage, and it is so ordained. PASSED AND APPROVED this the 27th day of September, 1983. RICHARD O• STEWART, aL4YOR CITY OF DENTON, TEXAS ATTESTT CHARLOTTE ALLEN, CITY SECRETARY CITY OF DENTON, TEXAS APPROVED AS TO LEGAL FORA1, C. J. TAYLOR, JR., CITY ATTORNEY CITY OF DENTON, 'TEXAS PUBLICATION DATE: __~ll c,/~..J 1 , CIrY of DENrON, TEXAS MUNICIPAL BUM)ING DENTON, TEXAS 76201 TELEPHONE !V7) 566-8200 M E M O R A N D U M T0; G, Chris Hartung, City Manager FROM: Rick Svehla, Assistant City Manager DATE: September 19, 1983 SUBJECT; Bids for Insurance Coverage for the City of Denton Bids w d on Jul) y 25, 1983 and were received by the were advertise your Purchasing Office on September 1, 1983. At ) suggestion, the Council approved hiring Rimco, a risk management firm to evaluate the City's coverages and exposures and also to make recommendations on the bids that were received, Mr, A ck Stubbs from Rimco met 'with the staff in the early part of Se tain embe alrl to of,Crehe view information City's coverages and exposures and to p .on the bids, Last week the staff obt visited with him and Air, Brent Clark from Rimco to discuss their findings and their recommendations, We have included for the Council's review a copy of the report from Rimco outlining their recommendations. Based on those recommendations, the staff has been visiting with Gallagher, Inc. and Hobbs-Brook, since those: are the two firms that were recommended by Rimco, We have asked each respective company whether the City would be covered for the specific items that were listed in Rimco s report (i.e., things such as non-sudden pollution, auto physical damage, "XCU" coverage, etc.). We have attached for your review, a letter discussing what ext-eptions Gallagher would take. Hobbs-Brook was' unable to provide us with a letter, however, through telephone conversations, they have indicated that they would cover everything listed by Rimco with the exception of business interruption and they are providing a definition for what they will cover on inverse condemnation. DFPARTMENT OF PUBLIC WORKS Page 2 Bids for Insurance Coverage for the City of Denton Based on these discussions, as well as the thorough review done by the staff, the staff would recommend that the insurance coverage for the City of Denton be awarded to Gallagher, Inc. for fiscal 1983-84. We make this recommendation based on their willingness to cooperate and to provide information, the way our aggregate fund would be set up with us being able to make interest off the proceeeds, and finally the cost. Gallagher has indicated a maximum cost of $503,9371001 They have also dollars worth quoted us a price of $500.00 per extra million coverage. In Gallagher's proposal, they proposed n upper limit of $5,000,000.00 worth of coverage. Staff feels that this should be increased to $20,000,000 and therefore we would recommend that we buy an extra $15,000,000 dollars worth of coverage from Gallagher at a cost of $7,5001000 thus makir.q the total maximum cost $511,437100. This is a roximately $10,000 less than the Hobbs-Brook proposal and $3,000 less than the VL proposal, The staff would also like to point out to the Council that this policy is varying from the policies or the coverages that were obtained in prior years) This policy, in effect, sets up the City of Denton to insure itself up to a limit of $50,000 per occurrance or an aggregate loss of $325,000. Beyond this point, Gallagher, or other insurance companies will take all of our risks and all of our liabilities up to a limit of $20,000,000 for liability and $50,000,000 for property. This type of system insures us that we will pay no more by insuring ourselves that we would by buying outright policies, as is evidenf,ed by the cost of the TML proposal. Yet, if the total aggregate of $325,000. is not used, the City will stand to gain any of those unused funds plus the interest from investing these funds. The staff believes that the City of Denton has grown to such a size that this type of arrangement can provide us with extra earning power for our funds, while still limiting our liabilities or potentials for loss, If you or the Council have any further gvestions, John Maxwell or I 4vvveee 7h ilable at the meeting. Ri.c a hR ; H U R J. C L Lf~GHER CO, • G~..LLAS September 19, 1953 Mr. G. Chris Hartung City of Denton 215 E, McKinney Street Denton, Texas 76201 REi Insurance - City of Denton Dear Mr, Hartungi I would like to clarify the following points as discussed on the 19th) 1. The "exclusion" regarding Inverse condemnation has been removed. The polic; provides coverage for the City arising out of or In any way connected with th,e operation of the principles of eminent domain, condemnation, etc, The polic;: also provides coverage for suites brought against the City on zoning changes.. etc. 2. Pollutlon/Contamination Liability coverage Is provided for non-sudden, occurrences provided the Clty has no prior knowledge of the incident ar.c corrections Lire made when informed, Law suits are defended. 3. Liability for Non•-owned/Owned Watercraft It provided for craft not exceedl-,g 25 feet. y 4. Non-owned Aircraft Liability is provided for aircrafts chartered with qualified pilots; up to 10 seats. 5. Fire Legal Liability is provided for all locations, )eased/rented/controlled '.y the Cltv. 6. Business Interruption coverage Is available and may be Incorporated Into tie package for an additional charge. On receipt of the Information from tie City, we will firm up the added premium. 7. "X-C-U" coverage is provided under the policy, 8. Liability coverage may be increased from the quoted $5,000,000, limit a a charge of $500. per $1,000,000. Increase. I trust this is the information you need. Thank you for your consideration. Y truly s, ~Ji n Leonard f CCOUnt Executive 1 1 Rimeo Risk rslanagement Consultants Ing Tillinghast, Nelson & Warren, Inc. U14111.1) SIAT(S 0 t1NI1EI1 KING POM 1 CANk0% s arRMUIM 10300 North Centfal CxpresswaV Bullding V, Suite 350 Dallas, 1eKas 75231 (214) 363,2451 September 15, 1983 Mr, John Maxwell Risk Manager City of Denton 215 E, McKinney Denton, TX 76201 Dear Mr. Maxwell, This letter outlines our analysis and recommendations for the Property and Casualty insurance proposals for the City of Denton. While there are a few areas which need clarification from the bidders and possible discussion with the City Council, we believe that the bidders represent reputable companies with proven track records in the municipal Insurance area, and that an appropriate decision can be made for the City of Denton based upon the quotations received, It is important to note that two of the three complete bids offer a self- insurance program for Casualty Insurance. The quote offering a conventional program was provided by the Texas Municipal League. Other than the Workers' Compensation quotes provided by Texas Employers and the Hartford, no conventional Casualty programs were submitted by any major insurance companies, Assuming the City prefers a self-insured program on the casualty insurance, we believe an appropriate decision can be made using current bids. In our opinion, the Gallagher quote is the most cost competitive complete program, The Hobbs-Brook program, however, is competitively priced and is, in our opinion, superior with respect to the Property insurance portion of the quote. The Workers' Compensation quotes provided by Texas Employers and the Hartford are also competitive. However, we see no particular advantage in separately purchasing the Workers' Compensation. In our opinion, the decision would be between the Gallagher quote and the Hobbs-Brook quote, based primarily upon whether or not the City feels that the Property insurance program offered by Arkwright- Boston is worth the additional cost. It is essential to stress that we are not confident, based upon the quotations received, in making firm recommendations as to either coverage or price without discussion with the bidders concerning their quotes, In addition to items included in the analyses of the quotes in the appendices, 1ve feel that there is also a need to discuss some items of importance to the City which may 1 A4r John Maxwell -2- September 15, 1983 or, may or, not been have contemplated by the bidders in making their proposals. The following paragraphs will overview our, analysis and findings The appendices include a summary of the pricing and a review of some of the important points corcerning each proposal. The notes in these appendices include the important question Items which should be asked of the bidders concerning their, propo,als. Overview of Proposals Complete, or substantially complete, proposals were received from three bidders; the Texas Municipal League, the Hobbs-Brook Agency, and Arthur J. Gallagher & Company. Partial quotes were received from the Denton Insurance Center, Inc, and Texas Employers. An overview of the cost comparison for these quotes is included in Appendices I, ll, and III. It is essential to stress in reviewing Appendix 1 and other, appendices that there are substantial variations in the types of programs which are being quoted in terms of the use of self-insured retentions, deductibles, and other, "loss sensitive" features. Also, there are some important coverage differences. Therefore, extreme care must be taken in looking at the cost figures for, comparison purposes. • Complete Quotes The Texas Municipal League was the only bidder to offer- a complete, conven- tional program. By conventional, we mean a program which porovides coverage on a "first dollar" basis or, oover, relatively small deductibles as opposed to the self-insured retention programs which provide insurance only on an excess basis over substantial self-insured retentions. The price for the Texas Municipal League quote, based upon the exposures outlined in the bid specification document is $513,456. This quote, however, only provides Casualty limits of $1,000,000, and does not include a quote for' excess coverage. Furthermore, the coverage provided in this program is not as broad as either the Hobbs-Brook or Gallagher programs. Both the Hobbs-Brooks Agency quote (utilizing Arkwright- Boston on Property, Gray Insurance Company as the service provider on Casualty, and various insurance companies on the Excess Liability policy) and the Arthur J. Gallagher quote (using Gallagher subsidiaries for the service providers and several companies on the excess insurance) utilize significant self-insured retentions on all or part of the programs which they are quoting. Since the application of the self-insured retention on these two quotes has significant differences, great care must be taken in making cost comparisons. 'Chese proposals utilize self-insured retentions of up to $50,000 per occurrence and $325,000 in the aggregate, which means that the loss experience in the various Mr. John Maxwell -3- September '15, 1983 tines covered or not covered by the self-insured retention can have a substantial impact on the ultimate cost of the program, For purposes of initial comparision, however, the minimum and maximum costs under these two proposals can be given as follows; Hobbs-Brook Gallagher ivllnimum $278,106 $178,937 Maximum $521,871 $503,937 Loss Fund s293,765 $325,000 Est, Cost Based on Average 5-Year toss History $451,748 $353,579 One major difference in these two quotes is that the Hobbs-Brook program includes a conventional Property insurance program (subject to certain deductibles), That Is, the Property coverage is not subject to the self-insured retentions of $50,000 per occurrence and $293,765 in the aggregate applicable to the General Liability, Automobile Liability, and Workers Compensation In this program, This is also true of the Public Officials Liability, In contrast, the Gallagher quote includes rthe Property, and all otlJAV lines, in the self- insured retentions of $50,000 per occurrence and $325,000 in the aggregate. This makes cost comparisons difficult, Under the Hobbs-Brook plan, the City would not incur' the $50,000 per occurrence deductible on Property and Public Officials losses. Consequently, the premium charged for the Property and Public Officials Liability insurance is presumably higher in the Hobbs-Brook plan, but the aggregate retention amount has been reduced to $293,765 from the $325,000 requested in the specifications, On the other hand, under the Gallagher proposal, Property and Public Officials losses incurred in the $50,000 self-insured retention would reduce the amount of total aggregate retention which the City would have to bear on all lines of insurance, We oelieve the Hobbs-Brook program is superior on the Property portion of the quote. With respect to Boiler and Machinery insurance, it should be noted that the Hobbs-Brook proposal provides a Property insurance plan in which the Boiler and Machinery and the Direct Damage coverage is provided by the same insurer. This is advantageous for the City since it effectively removes the possibility of coverage disputes between the Property insurance and the Boiler and Machinery insurance carriers. It also should be pointed out that Arkwright- Boston is a recognized leader, worldwide in providing high quality Property insurance and related engineering services for industrial and municipal and other institutional properties. (This is not meant to imply that i • A Nir. John Maxwell -A- September 15, 1J83 the Gallagher Agency Is not capable of providing services of equiva',nt quality, ) It is, nevertheless, our opinion that the Property insurance program quoted by the Hobbs-Brook Agency is superior, to the Gallagher program, recognizing that It may be somewhat more expensive depending on the City's actual loss experience. On the Casualty portion of the quote, however, Nye are somewhat more com- fortable with the Gallagher program. The Gallagher organization has had extensive experience on a natlonwide basis in implementing the type of self- insured retention program for municipalities being quoted While we believe that the pricing on the Casualty portion of the Hobbs-Brook quote is competitive with the Gallagher program, Nye are simply not as familiar with the service capabilities of the Gray Insurance Company and the Hobbs-Brook Agency in this area. We strongly recommend that the City plan a pre-award conference with representatives from both the Hobbs-brook Agency and the Gallagher organization to w dluate the service capability of these two organizatio is with respect to both Property and Casualty lines of coverage. Partial Quotes Partial quotes were received from Denton Insurance Center, inc., using the. Hartford Insurance Group, and the Texas Political Subdivisions Workers' Compensation Joint Insurance Fund provided by the Texas Employers Insurance Association, The Denton Insurance Center quote includad Property insurance and Workers' Compensation Insurance, The TEIA quote was for Workers' Compensation only. The Denton Insurance Center quote utilizes the Hartford insurance Company, which is a highly respected, major insurance group. The Property insurance quote, however, had an estimated annual cost of $92,859, and is not com- petitive with either the Hobbs-Brook or the Gallagher proposals. (The Hobbs- Brook quote, for example, on Property is S20,769.) The Workers' Compensation quote, however, is competitive. It offers the advantage of a fully-insured (conventional) program utilizing a retrospective rating formula with significant discounts, dividends, and cash flow features. If consideration is given to purchasing the Workers' Compensation insurance separately, the Hartford quote should be considered as a viable alternative. The TEIA quote on Workers' Compensation is the most competitive "stand alone" Workers' Compensation quote received from a cost standpoint. (By "stand alone", Nye mean separate pricing, the Hobbs-Brook and Gallagher quotes Include Workers' Compensation in the overall package.) The guaranteed cost quote is less expensive than the Texas Municipal League quote for a guaranteed cost program. Furthermore, the cash flow plan provided by TEIA, is in our opinion, more competitive than tho quote provided by the Hartford and the cash flow plan provided by TML, The cash flow plan quoted by TEIA • h1r, John Maxwell - a - September 19, 1983 has a major difference from the cash flow plan quoted by TML In that the 'l'EIA quote is provided on an "Individual risk" basis, rather than the "pooled risk" approach taken by the Texas Municipal League That Is, In the cash flow plan set out by the TML, all participants in the plan are treated on a pooled basis. Each city shares in the loss experience of all other cities under the program. While additional reinsurance protection can be purchased on an Individual basis under the ThIl. program, in our opinion It Is Inappropriate for accounts which pay in excess of $,50,000$100,000 of premium to be sharing In the loss experience of other cities. We see no justification for a city the size of the City of Denton to directly subsidize, or be subsidized by, other Texas cities as I.ng as competitive pricing on an individual account basis is available, On the other hand, the City Council may wish to participate in the TML pool to help ensure such a mechanism will always be available, The TEIA Worker' Compensation quote also has the advantage of continuing with the present servicing organization, Furthermore, TEIA is the largest writer of Workers' Compensation insurance in the State of Texas, and is a highly reputable and professional organization, However, we have severe reservations concerning this program in that MA has stated that the program will be disbanded if certain premium volumo objectives are not met by December 31, 1983• Obviously, it would be difficult to recommend this program knowing that there may be a significant possibility that the program would be dissolved shortly after the City of the Denton enters into it. Unless • TEIA can give assurance that this would not happen, we must recommend that the City rule out this proposal. However, should appropriate assurance be received, in our opinion, the cash flow program quoted by the TEIA is the most competitive "stand alone" Workers' Compensation proposal received. Recommendation In our opinion, the quotations provided by the Hobbs-Brook Agency and the Gallagher organization should be considered as the best candidates for the award of the City's insurance program. This is based on several assumptions. The first assumption is that the City is comfortable with the type of self- insured retenion program being quoted under these proposals, Neither of these bidders included a proposal for conventional programs on the casualty lines of insurance included in the SIR program. While the SIR programs are sound from both a theoretical and practical standpoint, in the current "Soft insurance market" it is possible that a conventional program could be as competitive, or more competitive, than the self-insured retention programs. Another assumption is that the City prefers to take a complete program from a single bidder rather than accept separate proposals on either the Workers' Compensation or Property insurance. If this is not the case, we would rank the Hobbs-Brook Agency as superior on the Property insurance, and the Gallagher organization as superior on the Casualty, with the possible exception Mr, John Maxwell -6• September, 15, 1083 of either, the Hartford or, TVIA on the Workers' Compensation, Finally, It Is assumed that acceptable clarification will be recelved from the bidders on Important coverage and cost Items which are noted In the Individual analyses of each quote included in the Appendices, We believe that the TAIL quote can be ruled out because the guaranteed cost quote of $513,4,% is only slightly less than the maximum cost under the Hobbs- Brook program ($521,871) and is more expensive than the maximum cost under the Gallagher program ($303,937), Both the Hobbs-Brook and the Gallagher •nms allow for significant savings based on good loss experience (Hobbs- pr 9ri Brooks minimum $278,106; and Gallagher, minlmut-0 - $178,937). It is our recommendation that interviews be conducted with representatives from the Hobbs-Brook Agency and the Gray Insurance Company, and the Gallagher, organization to determine answers to questions concerning each quotation noted in the appendices, Depending on the City's decision concerning the Workers' Compensation insurance, an interview should also be hold with TEIA to get clarification on the issue of whother the program is certain to remain In 'orce, and certain coverage issues. On an overall program basis, we believe that the Gallagher program represents the best choice for, the City because of Gallagher s proven experience in pr•oviding this type of program. Out- main concern with the Hobbs-Brook quote • is the ability of the Gray Insurance Company to provide acceptable services and to be able to respond to claims incurred within the term of coverage into the indefinite future. if the City is satisfied concerning the abilities of the services provided by the Gray Insurance Company and depending on how the Property Insuanco expertise of the Arkwright-Boston is valued, the Hobbs- Brook quote tivould bo the best choice. It is essential to again stress, however,, that in our opinion the quotations received ar•e not sufficiently detailed, and are in such varying formats, that it would be difficult to recommend that any quote be accepted without clarification being received In addition to the items included in the analyses of the quotes, we feel that the following issues, which were not addressed in the bid specifications, should also be included in the clarification process; Nonsudden Pollution - We believe that Nonsudden Pollution coverage is important for the Citv with respect to chlorine storage tanks, fuel oil storage tanks, and the sewage treatment plant, and other mis- cellaneous exposures, Nonsudden Pollution coverage is not commonly provided in standard Liability contracts, We recommend that coverage provisions for pollution be closely reviewed with the bidders. Mr. John Maxwell -7- September 19, 1983 Auto Physical Damage - We believe that Automobilo Physical Damage coverage for catastrophe losses (e,g, a number of vehicles parked at the same location being destroyed by the same occurrence) be purchased, Coverage for this exposure should be verified with each of the bidders. "XCU" Coverage - Coverage for the standard General Liability hazards of explosion, collapse, and underground property damage should be included in the Liability insurance programs quoted by all bidders. Employee Benefits Liability - We recommend that the Liability coverage should include coverage for liability arising out of the administration of employee benefits programs, Products Liability - Products Liability exposures exist with respect to the sale of water, electricity, and the resale of equipment which has been owned or manufactured by the City. Broad Products Liability coverages with no limitations or exceptions should be provided. Owned and Nonowned Boat Coverage - The City has both owned and nonowned boat exposures. Coverage f)r these hazards should be verified. Nonowned Aircraft - Coverage for liability arising out of the use of nonowned aircraft is an incidental exposure should be covered in the City's Liability insurance program, Fire Legal Liability - The City leases certain buildings for which the City is responsible for damage. Coverage for the City's responsibility for damage to property in its care, custody, or control should be clarified. Paramedics and EMT's - Liability coverage should be provided for malpractice suits brought against paramedics and ENIT's. Mutual Aid Agreements Coverage should be verified for Liability under Mutual Aid Agreements. Fireman's Professional - Coverage should be verified for Fireman's Professional Liability exposures. Ambulance Conversion to Hazardous Material Disposal Vehicle - Coverage for Liability arising out of the use of this vehicle should be verified. • 1 Nir, John Maxwell .8- September 15, 1983 Business Interrur)tlon - It appears that BusIness Interruption is not provided in these quotes We believe significant Business Interruption exposures exist with respect to revenue producing functions such as electricity, water, etc, This exposure should be reviewed and the need for Insurance considered, Inverse Condomnatlon - In the Hobbs-Brook quote, inverse Condemnation is covered by the SIR but excluded by the excess insurance. In the Gallagher quote, an Inverse Condemnation exclusion endorsement is included on the sample policy. Inverse Condemnation coverage is normally very difficult to purchase, An attempt should be made to structure coverage as broad as possible for Inverse Condemnation with these two bidders (Gallagher has given an informal commitment to removing the Inverse Condemnation excluslon) Note - There are some risks which are uninsurable Examples are patent violation, violation of copyrights and illegal acts committed with the knowledge of or at the direction of officials of the City of Denton, City officials should recognize these limitations in any contract of insurance and be prepared to seek legal defense and to pay liability imposed by the courts without recourse to Insurance, Conclusion It is our opinion that with clarification of the above listed items and the notes and questions included on the individual quotation analyses, that the City can make: a competent decision as to the awarding of the proper Insurance program based upon the current quotations received, We will welcome the opportunity to be of further assistance in implementing any of the above recommendations, If you have any questions, please do not hesitate to call. Very truly yours,_... Brent R. Clark, CPCU, ARM BRC/Ic cc: Charles R. Lee, CPCU, ARM John NI, Stubbs • M « • APPENDIX I COMPARISON OF QUOTES BASED ON RECOMMENDED ALTERNATIVES Coro~ldte__~rogram Quotes TML Hobbs-Brook Gallagher Minimum $278,106 $178,937 Losses (not Plus Auto, GL, Police Plus Property and including policy Prof, & WC Loss or up Casualty Losses of up to deductibles) to $50,000 per occur- $50,000 per occurrence rence and $293,765 and $325,000 aggregate aggregate Maximum 5521,871 $503,937 Plus policy deductibles on Property and Public Officials Guaranteed Cost $513,456 Par tial_Quotes Denton Insurance Center Texas Employers Property $ 92,859 Workers' Compensation Minimum $ 73,477 Maximum $205,735 Conventional Retro with Self-insurance pool- guaranteed discount (5so), individual risk treatment. 2S,o superimposed dividend Losses plus 15% to 20°0 and premium deferred expense loading on paid features, basis, or Guaranteed Cost $220,431 NOTES 1. Substantial differences in retentions, deductibles, coverages and limits. Coverage terms not verifiaole based upon quotes received. 2. Guaranteed cost quotes subject to deductibles and additional premiums, APPENDIX 11 sc i Il; lu1 la._ ~I r _li l~ i.L.N1. i c>.N Ilohbs•Nrook IS11t1 VIII III l3hol' IsIli1 Avorrlllo 5-Yong 5(1,001) 11or or.uurronco 50,000 1101, Ouvorrimco 11.11. I usros (l lini teo "'cll_,:I1?a--~yr13iui{)_Er?.1 ~._t.t'j.,.S)(~Q_QI111r~)11ti.4n S,t11iy~~ii),_I~Nli.l S:u $!~u (LI-I, At? Lo 1.1abIIiLy SlIII SIR $VIO/oncorronoo Intl, ho Iow Auin 11,0, SIR SIR Not. covorod Ino l, boIow ColloI'll l 1.Inil ilil.y Rlli SIR $500/ocou1,rolluo Intl, bolOw Worko.rs' Corrlp(IllBai.1 )11 %Ili Sill I I1'Fit. NoI I a r $I'!I, 1112 Poll lio 01'1'1c:inlla Slit 000/25,0(10 01'0111) Sl1It,8 SIR $I,Ono/tiewwrollco -(1- a1,000 Indlvidllal SOILS OLhur 1&-0 SIR SIN $1,0(1,(1/ocvoI,rorico -0- ProporLy $5o,000 OOnoI'll Ling I'll ciIIty Slit $1,ooo/occit rronoo $ 1o,Ooo (Est. 1 $ 7,9no Al l 061101- I ixod Cost $2/(3, 100 $)I'a. 1 6513,1196 Nol.nilwd Loss o0sod oil $173,6112 $114,Gh2 $I,(Itlo no 11roporl.y Avornyo 5-Yoar Lossos and doductIblos un other linos pl)1s AoLO i'llysiellI oamnyo I-sLimaLod C usl. 111190(1 $1191,!111! $39.{,919 5523,+1'156 o0 'i-Your Loss History (Assurn0s $2,500 dodool.Iblo INo Lo ; Oroll Lor so0sit.IVI l.y n0 Proport'y 1.ons) 1.0 Y1,oporLy NO I'obl is OI'ricin ls I labiIII.y Iossos bot lowor or1'octivo rlyy roya Lo ) • r ! • All PFNDIX I II S{:I!_f,l)11L[:... (Lf L I fill ti 11oll>_s-tlrogk Qa (.1v(IIlui, fill. PIoPal'(.y $o!),ow,ll o (I) $1itl,9lltl,tlll0 oath (6)(10) $111.689,1196 lass, oonh locatloo (Instill ILy $h,lloll,ooo (2) $!i,noo,ooo (2)(11)(7)(9)(9) $I,Ono, ooo {2)(rll (Over %M) (Over SIM) Auto IIahiIILy IIle ludod Includod Inr.ludod Auto Physical Oamago Includod Included Not. cnvnrod Cerio ra l I i nb l I I t.y I rlc l oiled I Ile l udod I fin l ndod PuhIIO orf, IVIaI $`)Io0o,onf,1 (2)(3) Inctndnd $I,wn,mm OLhOr F&O Includod Ili SIR Program lnclodod Included Workers' COlnpcnsaLloll Inr,ludad Ill Slit Prograin $'i,l1tl0,t111f1 (2) SL11tutery (Ovor SIN) $10o,ooo Itmploynrs i.tabillLy I'xcoss $15,nnn,nnn I,rress (li){!,) AddIt.IonnI I Imits Avnllnbin Not, Quo Lod All Prlmnvy Including ror $91111 por inI I1 ion Airport Opernto rs (1) $GO,nOn,{lull on gonorntiog fal III .y, sowngo Lroalmilliq plan, Ilbrnry, polico dopnrt.rnonL, rnunir,ipnl hulldfng at 21'i I., Mrkiruloy and pro IficnLIOn plrlnl., $`i,f10o.0110 on 11 11 0Lh0 r. Arkw r•Ight-Bo 6ton, Dofooso Cosl.s inclnolod in I Irnll.s of L I a h I I iLy, (3) Ilarb(I r, (h Illvnrso condoaelnl.Ioil Ixr.luded, Ho I-1,11 RIvor, IoLo rnnl.1onnl SorpItis I Ines, and W. S. I"Ire, Adtnlnisl,ral,ivo sorvlco provided by oray Insuralwo Co, (G) Flood and FnO.bqunko annual oggru(InLo of $10,1)00,000. O110s not. tnrlutlo 1101101' and Mncl ivory. ( 1) Incroasod I iml l,s avai Iablo I'or $5uo por rat I I ion. (11) 1loyds of London, Ilolinod Mmrica, Prot.ecLivo Nal.1on111, Coni.ury Indamnll.y. Service provided by Calinghor-Bassol.L. (91 i±clndos Blackonl./nrowneel.. (Ill) Crirno Is. only provided in Lho Foss hoed, no oxmiss 11P111taabl«, APP~,NDIX_IV Texas Municipal L_q4,9_49 Primary Casualty $171,237 Guaranteed Cost (1) Reduction for Deductibles -13,453 $500 GL & AL -21,241 $2,500 GL & AL 57,534 $50,000/5325,000 (GL, AL & E&0} - Workers' Compensation (2)(3) 229,769 Property ($1,000 Deductible) 125,905 Deductible Credits - 5,666 $5,000 -24 299 $50,000 Total Estimated Cost with $500 AL & GL and $1,000 Property Deductibles $513,456 (4) NOTES; (1) No deviations from specs detailed, $1,000,000 CSL limits, $1,000 deductible on Personal Injury and E&0 coverages. (2) Two plans available. Figure- above is for Standard Discount-Dividend plan currently in force, Alternate quote provided for pooled paid-loss retro; 7510 Aggregate Stop Loss for Grou Significant Upside Risk (3) Excess provided by U.S, Fire. Risk control by Hartford Specialty, claims by GAB, J&H Servicing Contractor. Equifax/Atwell, Vogel & Sterling or, premium audits. (4) No quote for Excess. Very little detail given. APPENDIX V Gallagher All Lines SIR Program (1)(2) Insurance Costs (3) $122,157 Service Cost(p) 56.780 178,937 Loss Fund (5) L A25 000 Maximum Cost $503,937 Minimum Cost $178,937 NOTES: (1) $50,000 SIR per occurrence, $325,000 aggregate applicable to all lines. (2) Item 6 under "Operation of the Plan" states that the SIR is 510,000- Contradictory. (3) Property limit is $50,500,000 "each and every loss,'l fleach and every location." Liability litm is $5,000,000 CSL. Increased limits for $500 per million. Auto Physical Damage is included. Workers' Compensation - $5,000,000, Flood and Earthquake - $10,500,000 annual aggregate, (A) Gallagher-Bassett Service Fee $41,780 Arthur J. Gallagher Risk Management Fee 15,000 (5) Loss Fund may be retained by the City Interest income accrues to the Fund. Other - Carriers on the Excess Program: Lloyds of London Rolland Ameircan A+13 Protective National A+11 Century Indemnity A+15 (Aetna Insurance Group) $5,000,000 limits on Wcrkers' Compensation applies to statutory benefits, - Crime is only provided in the Loss Fund; no excess insurance applicable. Quote only provides $5,000,000 of excess. Additional limits avail- ablc for $500 per million, B'rdckout/Brownout and Inverse Condemnation Excluded. APPENDIX VI Hobbs-Brook Conventional Coverages Property $ 20,679 (1)(2)(3) Public Officials Liability 21,127 4) 5) Excess Liability 22,068 (6) SIR Program (7) Service & Insurance 164,232 Loss Fund 293,765 ($50,000 min.) Minimum $278,106 Maximum $521,871 N07ES: (1) Net after return of unabsorbed premium, Annual payment is $30,092. Arkwright-Boston, i. (2) Limits: $60,000,000 por occurrence on generating facility, sewage treatment plan, library, police department, municipal building at 215 E. McKinney, and purification plan, $5,000,000 applies to all locations and to automatic coverage. Not clear if limits are blanket or applicable to each location, (3) Deductibles: 550,000 generating facility 2,500 all other locations 2,500 property in transit 2 , 500 EDP (4) Public Official Limits and Deductibles: 55,000,000 CSL including Defense Costs, Claims Made. Harbor A+ XIV, Deductibles: 510,000 each insured/$25,000 aggregate on group suits S 1,000 each insured on individual suits (5) Excluded: Claims other than money damages Inverse Condemnation (Covered in SIR) No First Dollar Defense (subject to deductible) • 1 ' } • (6) Limit $15,000,000. Excludes: Inverse Condemnation. Includes Excess of Airport Operators Liabilty, Carrier: First State Insurance Co, A+ Y,IV, (7) SIR Program: Includes Paramedics Malpractice, Law Enforcement Officers Liability, Workers' Compensation, Employers Liability, Automobile Liability, Auto Physical Damage, Comprehensive General Liability, Inverse Condemnation, Deductible: $50,000 per occurrence/$293,763 annual aggreate on three year basis based on payrolls of $11,016,973 $500 Auto P.D. on Commercial Vehicles $250 Auto P.D. on Private Passenger Limit: $5,000,000 CSL Carriers: North River, International Surplus Lines, U.S. Fire Services: Gray Insurance Company Deferred Payment allowed, Interest on Loss Fund accrues to Fund. APPENDIX U_II Denton Insurance Center; (1) Property (2)(3) S 92,859 (4) Workers' Compensation (Retro) (5) Minimum $ 73,477 Maximum 105,735 NOTES; (1) Hartford. Property and Workers' Compensation only, (2) Property; St~.idard Form including All Risk #222. Deviation from specifications not specified, (3) Deductibles: $100 and $250, Other; Deductible of $75,000 on Items #66-67 and $25,000 on Items #68-75. (4) Three year premium of $278,576 is divided by three First year . deposit of 5111,530,40 (monthly installments) is required. (5) Retro, 95% maximum and 5010 minimum with 25% superimposed dividend for effective 70'% maximum and 25% minimum. (States that dividend is guaranteed.) Allows 30°0' deferral of deposit premium based on standard premium, • APPENDIX VIII Texas Employers Workers' Compensation Only (1) Guaranteed Cost ,$'220,431 Self-Insurance Cost/Plus Plan (2)(4) Fees Claim (°o of losses) 7°0 Administration of standard) 300, plus increments up to $25,000 Safety (optional, °o of standard) 1,50 or 1040 Reinsurance ($150,000 SIR & 10000' S.L.) (3) 2.8% Estimated Expense Ratio (Not including Cash Flow) 15.10' to 20°0 NOTE: (1) Includes Employers Liability. No Broad Form All States, (2) Highly competitive Cash Flow Plan. Assuming losses of $102,245, estimated cost is $127,949 before Cash Flow benefits, (3) SeverAl Options available, (4) Needs clarification of catastrophe and stop loss provisions concerning whether reinsurance applies to both loss and expense. CEO ICA OIL A NTMIYY 5 % THIS 15 TO CSIrTIF'Y that the rntcrophetographs oppdulnq on this FlImoNlo CITY COUNCIL AGENDA PACKET -EMERGENCY ADDEMDUM 09/27/30 -and faros nq w if tw Kndlno w11h. CITY COUNCIL AGENDA PACKET CITY OF DENTON - 0ccuroto and complete roproduclions of the rocords of 4ornponY and CITY SECRETARY oc dollvorod In the roouler course of a wlnooc for pholobrophlnq. M Is further cortiflod lhol the mlcropholoorophlc procolroc wor+ oscornplis64 In o mennw end on Alm which me*#$ with reolulromonlo of the Nollen Clurwu of Stond•rr6 few portmononl mlcropholepropttie copy. j / . R- ecordr_CA"I„. I100MI YCCMMOLOGY AY (WOtK 4Dv"'w ' PLACEi &IA tWity+tlk Rnw State Arlington, Texas 76010