Review of Broker Insurance Services RFP

Transcription

1 Review of Broker Insurance Services RFP Presented to the Omaha Public Schools Board of Education P. Scott Dye Baird Holm LLP February 19, 2015

2 Background OPS has used the same two Insurance Brokerage firms for more than 20 years: Harry A. Koch Company United Educators Liability Insurance Services, Excess Workers Compensation, and Cyber Liability. Davis Companies Property, Fiduciary Liability, Crime and Officer Bonds. OPS moved to self insurance model for Worker s Comp in 2005 and General Liability in 2011 to save premium costs; Historically, OPS brokerage firms have been paid by the selected carrier on a percentage commission basis;

3 Background (con t) Insurance Brokerage Service providers assist their clients in: Assessing insurance needs and risks; Preparing insurance applications; Encouraging carriers to submit quotes; Evaluating quotes from prospective carriers; Recommending insurance placement; and Claims management.

4 Background (con t) There has not been a Bid, RFP or RFQ for Insurance Brokerage Services since the early 1990s; No statutory requirement to bid these services; We are only required to bid in construction context; Board is free to do as it pleases as long as it is not arbitrary and capricious. After questions were raised by the Board during the approval of the Insurance Brokerage Services Agreements, the Board directed staff to undertake a Request for Quote process for ; April 21, 2014;

5 Background (con t) Bid -- Here is what we want. Tell us what we have to pay; RFP Give us a proposal for services and the price you will charge; RFQ Tell us your qualifications to do the work. We will select best qualified and negotiate a price;

6 Background (con t) Staff prepared a request for quote process for insurance brokerage services based on flat fee rather than commission; Essentially an RFP/Bid hybrid process; Theory is that broker should represent OPS and not be focused on commission; Bid as single fee and as separate fee for each category of insurance coverage; Initial two (2) year agreement with two (2), two (2) year extensions for a total of six (6) possible years; Hope is that premiums will go down more than the cost of the broker fee since there are no commissions;

7 RFP/BID Submissions Harry A. Koch Company $68,000 per year, total cost of $408,000. Davis/Gallager Agencies $112,000 to $129,839 per year, total cost of $724,462. Aon Risk Services Central, Inc. $120,000 to $135,050 per year, total cost of $757,070.

8 RFP/BID Submissions (con t) Four staff members conducted independent review and grading of RFP/Bid submissions: Harry A. Koch Company rated as the highest quality bid with a score of 137, Davis/Gallager Agencies second highest with a score of 130, and Aon Risk Services third with a score of 126; As per OPS practice, given significant difference in cost between low bidder and second low bidder, the two low RFP/bid submissions were contacted to confirm no misunderstandings or problems with process;

9 RFP/BID Submissions (con t) Megan Neiles-Brasch directed BH to undertake this process on OPS behalf. Spoke directly with Lisa Davis of the Davis Companies and reviewed additional materials submitted by her regarding industry pricing practices; Spoke with Scott Durbin of the Harry A. Koch Company for further explanation of their fixed price proposal;

10 Conclusions Koch RFP/Bid response is compliant with the RFP documentation; Koch intends to perform all services required of it in the RFP documents for the fee quoted; Reasons expressed by Koch for the amount of the fee quote satisfactorily explained the rationale for the amount of the quote; There is no basis that we can find for disqualifying the Koch RFP/Bid response;

11 Conclusions (con t) commission cost to the District was: $80,640 to Koch; $85,578 to Davis for a total of $166,218; flat fee cost to the district will be: $68,000 Net savings of $98,218 in ; Board should ask Insurance Brokerage Service provider to evaluate whether additional premium savings are achieved upon completion of each yearly cycle; Process appears to have achieved Board s initial goal of maximizing savings and value to OPS;