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HomeMy WebLinkAbout10 Workers Comp Insurance Renewal Agenda Item # 10 TRUCKEE DONN Pubhc Utility District ACTION To: Board of Directors From: Mary Chapman Date: July 01, 2009 Subject: Consideration of the Award of the 2009-2010 Worker's Compensation Insurance Renewal 1. WHY THIS MATTER IS BEFORE THE BOARD Board approval is required for expenditures of more than $15,000. 2. HISTORY State Compensation Insurance Fund (SCIF) has provided worker's compensation insurance to the District for many years. SCIF is a non-profit enterprise and has proven to be stable and reliable for the District's needs. SCIF is also considered the insurer of last resort. When a company has too high of an experience modifier (too many injury claims), it is usually not insurable by private worker's compensation carriers. Last year, the District's experience modifier was 174%. This is a high experience modifier number which made the District uninsurable by worker's compensation carriers other than SCIF. 3. NEW INFORMATION This year (2009-2010), the District's experience modifier has dropped from 174% to 138%. As a result of the drop, Keith Grand of Marsh Risk and Insurance Services was asked to solicit proposals from other insurance carriers to cover the District's workers compensation requirement. Mr. Grand was able to obtain three proposals (see attached summary). Since the limits of coverage are defined by California State Law, all policy limits are the same. Mr. Grand has recommended that the District renew our insurance with United States Fire Insurance Company. Their proposal is considerably less than SCIF. Please refer to the attached letter from Mr. Grand for his comments. Marsh Risk and Insurance Services will earn a 10% commission from the carrier. This amount is already included in the premium and will be paid to Marsh by the insurance company. 4. FISCAL IMPACT There is currently $324,122 in the FY09 budget for worker's compensation insurance. Should the Board select the staff recommendation of United States Fire Insurance Company in the amount of $192,574, there would be a budget savings of $74,720 for the rest of the FY09 budget year with additional savings in the first six months of FY10. 5. RECOMMENDATION Approve the placement of the District's worker's compensation insurance for the 2009-2010 policy year with United States Fire Insurance Company for an estimated amount of $192,574 with the understanding that this amount will vary due to changes in actual payroll numbers. 0( rmc�,U Mary Cha an Michael D. Holley Administrative Services Manager General Manager TRUCKEE DONNER PUBLIC UTILITY DISTRICT Worker's Compensation Insurance Proposals Policy Period 7/1/09 - 6/30/10 Insurance Carrier Proposed Premium United States Fire Insurance Company $192,574 National Union Fire Insurance Company AIG $223,758 Liberty Mutual Insurance Company $236,247 State Compensation Insurance Fund $256,773 Keith Grand Vice President MARSH Marsh Risk&Insurance Services 345 California Street,Suite 1300 San Francisco,CA 94104-2679 MARSH MERCER KROLL California Insurance License#0437153 GUY CARPENTER OUVER WYMAN 415 743 7571 Fax 415 743 8037 Keith.Grand@marsh.com www.marsh.com June 26, 2009 Mary Chapman Administrative Services Manager Truckee Donner Public Utility District 11570 Donner Pass Road Truckee, CA 96160 Subject: District Workers' Compensation Renewal 7-1-09 Dear Mary: Marsh is recommending that renewal of your workers' compensation insurance be placed with US Fire Insurance Company effective 7-1-09. US Fire is a member company of the Crum & Forster Insurance Group and is rated A (excellent) by AM Best Company. Marsh has a long history with US Fire for workers' compensation and other lines of coverage and has been favorably impressed with their underwriting expertise, loss control services, claims handling and aggressive pricing of insurance. Their loss control representative has already completed a satisfactory telephonic survey with District representatives and you have been separately provided a menu of their loss control services included with their renewal quotation. Streamlined and convenient claims reporting and related claim data services are available 24/7 online. Their system also gives you the ability to custom design reports from your own loss data, to facilitate your prevention efforts. We have verged that the District's current occupational health medical facility is part of US Fire's Medical Provider Network, so no change is needed in accessing medical care for work comp injuries/illnesses. US Fire is interested in establishing a long-term, stable relationship with their clients and will make available to you their considerable loss control resources, to improve the safety and well-being of District employees. Their responsiveness during our marketing process demonstrates their strong interest in writing your coverage. Their underwriting office in San Francisco is just a couple of blocks from ours. Marsh will be compensated via 10% commission paid to us by the insurer, already included in the premium quoted, which will avoid having to revise our existing broker services agreement with the District. Attached is a listing of services we will perform in connection with your workers' compensation coverage. MARSH MARSH MERCER KROLL GUY CARPENTER OLIVER WYMAN Page 2 June 26,2009 Mary Chapman Truckee Donner Public.Utility District Thank you for the opportunity to provide a quotation for renewal of your workers' compensation insurance. Please let us know if you have any questions. Best regards, Keith Grand Vice President doc marl MARSH MnRSH MERCER KROLL 4VVCN" TCR WVE-1— The following sets forth the terms upon which Marsh Risk provided written notice by you of the applicable &insurance Services("Marsh")will provide services to carrier and policies. you: The total number of hours of property and casualty 1 Services claims services described In this paragraph provided Marsh will act as your insurance broker and/or risk by Marsh to you in a calendar year shall not exceed management consultant with respect to the Imes of 25. in the event such claims services exceed such insurance listed In the attached letter. Marsh shall provide hourly allotment,Marsh reserves the right to seek to you the following services(the"Services"): additional compensation. Pre-Market(np Services Marsh may utilize the services of intermediaries to place (a) Conduct an initial strategy discussion in advance of your Insurance,subject to your approval. each placement (b) Assist you in assessing your risks and In developing Marsh will not serve as your insurance broker,but only as insurance specifications which Marsh will submit to your risk consultant,with respect to placements with insurers ineligible insurers.In those circumstances,Marsh's non- (c) Recommend potential insurers U.S.aMtiates shall provide the brokerage Services. Markatina and Placement Servlcee 2. Compensation. (d) Solicit quotes from insurers that you select Marsh shall be compensated for its Services through (a) Negotiate on your behalf with Insurers commissions from insurers. Prior to each placement by (f) Assist you in evaluating the options received from Marsh.Marsh shalt disclose to you and obtain your insurers approval of any commissions to be collected by Marsh or (9) Use best efforts to place insurance for you,but only its affiliates. after you have authorized Marsh to bind coverage for you Marsh can provide additional services at an additional cost. The cost and scope of additional services(see Services related to Marsh placements Appendix A)will be agreed in advance and reflected in an (h) Deliver confirmation of coverage once it is placed amendment to this Agreement or a separate agreement. (€) Follow up with insurance carriers to obtain policies and/or endorsements In the case of local placements made by Marsh's non-U.S. {j) Review policies and endorsements for conformity with affiliates on behalf of you or your non-U.S.subsidiaries, agreed terms and coverages Marsh's non-U.S.affiliates may make disclosures to and (k) Provide coverage summaries obtain approvals from your local operating management. (1) At your request,issue certificates or memoranda of insurance and/or auto identification cards Any commissions collected by Marsh or its affiliates shall (m) Review premium and exposure audits,rating be considered fully earned at the time of placement. If you adjustments,dividend calculations and loss data terminate a policy before it expires,Marsh will retain the In) Provide you with invoices,except in the case of direct commission It has collected except that,if Marsh places billing by insurers.Remit premiums to insurers and, the replacement policy,Marsh will return any unearned where applicable,remit taxes and fees to the relevant commission. authorities,following receipt thereof from you (o) Monitor published financial information of your current If you ask Marsh to access non-U.S.markets not insurers and alert you when one of those insurers falls anticipated at the Effective Date,you agree to negotiate in below Marsh's minimum financial guidelines good With the additional costs of Services relating to those placements. Claims-Related Services (p) Provide the following claims-related services: If there is a significant change In your operations or risks • Evaluate coverage applicability on all Marsh placed that affects the nature and scope of your insurance business program and/or service needs,both parties agree to • Assist you in the development of settlement renegotiate Marsh's compensation in good faith. strategies • Assist you with Insurer negotiations 3. Term and Termination. • Assist you with litigation management issues that The term of this Agreement is one year starling on the impact claim settlements Effective Date and may be extended in writing. • Excluding Workers Compensation,Primary Auto Either party may terminate this Agreement upon 90 days' Liability/Physical Damage and non-complex prior written notice. If Marsh terminates this Agreement, Primary General liability claims,prepare loss Marsh's compensation will be adjusted pro-rota to reflect notices to insurers and notify insurers of claims; the duration of the Agreement. if you terminate this provided that your Marsh claims advocate is Agreement,Marsh's compensation will be deemed fully Informed In writing by you of the claim,with details earned. of the claim,and Marsh has placed the applicable policies or the Marsh claims advocate has been 2 MARSH CMnR511 MCRCER NROCI C,VYCRkI'L'NIEN WVFk WYIAAN The obligation of Marsh and Its affiliates(Including Its UK warranty that Insurance can be placed on terms affiliates)to provide Services to you will cease upon the acceptable to you.Marsh will not take any action to effective date of termination,unless otherwise agreed in replace your insurers unless you instruct Marsh to do so. writing.Marsh will assist you in arranging a smooth transition process,subject to recelpt by Marsh of all Marsh will not be responsible for the adequacy or amounts due to Marsh from you. effectiveness of any insurance programs or policies Implemented by another broker,or any acts or omissions 4. Taxes and Fees. occurring prior to Marsh's engagement. Marsh may place insurance for you that may require the payment of insurance premium taxes(including U.S. In no event shall either party to this Agreement be liable federal excise taxes),sales taxes,use taxes,surplus or for any indirect,special,incidental,consequential or excess lines and similar taxes and/or fees to federal,state punitive damages or for any lost profits arising out of or or foreign regulators,boards or associations.You agree to relating to any services provided by Marsh or Its affiliates. pay such taxes and fees.Marsh will remit any taxes and The aggregate liability of Marsh,its affiliates and its and fees that it collects from you to the appropriate authorities, their employees to you or your affiliates arising out of or relating to the provision of services by Marsh or its 5. Your Responsibilities. affiliates shall not exceed$10 million. This provision You shall be solely responsible for the accuracy and applies to the fullest extent permitted by applicable law. completeness of all Information that you furnish to Marsh and/or insurers,and you shall sign any required 8. Miscellaneous. application for Insurance. Marsh shall not be responsible The laws of the State of New York govern this Agreement. to verify the accuracy or completeness of any Information that you provide,and Marsh shall be entitled to rely on that Each party to this agreement,on behalf of itself and its information. Marsh shall have no liability for any errors, affiliates,agrees that any dispute,claim or controversy deficiencies or omissions in any Services provided to you, arising out of or relating to this Agreement or the provision Including the placement of Insurance on your behalf,that of services by Marsh or its affiliates shall be resolved by are based on Inaccurate or incomplete Information binding arbitration pursuant to the Commercial Arbitration provided to Marsh. You understand that the failure to Rules of the American Arbitration Association then in provide all necessary information to an insurer,whether effect.The arbitration shall be conducted by a panel of intentional or by error,could result in the Impairment or three arbitrators,with each party selecting one arbitrator voiding of coverage. and the two arbitrators selecting the third arbitrator.If the two arbitrators are unable to agree upon the third You will review all policy documents provided to you by arbitrator,the third arbitrator shall be selected by the Marsh. American Arbitration Association.Each of the arbitrators shalt have at least fifteen years of insurance industry 6. Other Revenue. experience.Judgment upon any award rendered by the If Marsh assists you with obtaining premium financing, arbitrators may be entered In any court having jurisdiction. Marsh may receive compensation from the finance company that provides the premium financing. Marsh It is the intent of the parties that the provisions of this shall provide to you information relating to Marsh's and its Agreement shall be enforced to the fullest extent permitted affiliates'arrangements with and interests in the premium by applicable law. To the extent that the terms set forth in finance companies to be considered by you and the this Agreement or any word,phrase,clause or sentence is compensation that Marsh and its affiliates would receive found to be illegal or unenforceable for any reason,such from these companies for your placements. word,phrase,clause or sentence shall be modified or deleted in such manner so as to afford the party for whose Marsh eams and retains interest income on premium benefit it was Intended the fullest benefit commensurate payments held by Marsh on behalf of insurers between the with making this Agreement,as modified,enforceable,and time Marsh receives these payments from you and the the balance of this Agreement shall not be affected time Marsh remits these payments to the insurers,where thereby,the balance being construed as severable and permitted by applicable law. independent. 7. Disclaimers:Limitation of Liability. This Agreement and Its written amendments and Marsh does not speak for any insurer,is not bound to appendices constitute the entire understanding between utiltze any particular insurer and is not authorized to make Marsh and you,and supersede all other agreements or binding commitments on behalf of any insurer,except understandings,related to Its subject matter.Marsh may under special circumstances which Marsh shall endeavor modify this Agreement upon written notice to you. to make known to you. Marsh shall not be responsible for the solvency of any insurer or Its ability or willingness to Neither party will have any liability for any failure or delay pay claims,return premiums or other financial obligations. In performing because of a force majeure event. Marsh does not guarantee or make any representation or 3 MARSH MAR511 M[R{ER RROLL �L GVt'(MPEN1tR w"Eaw YMAH Appendix A-Additional Services Additional Services are available for separate compensation and shall be agreed upon in advance and addressed by amendment to this agreement or by separate agreement(in certain cases with affiliates of Marsh).Such additional services include,but are not limited to: • Actuarial analysis of Workers'Compensation,General Liability,and Automobile Liability claims,or other lines of Insurance • Consulting relating to workers'compensation cost containment,including behavioral risk management,absence management,cumulative injury management,lean ergonomics,financial diagnostics,claims Inventory workout, vendor selection,retum-to-work,PastPerformer diagnostics,managed care,claim audits and custom cost containment solutions • Business Interruption and other claim valuation services offered by Marsh's Forensic Accounting practice • Environmental risk consulting services • Specialty consulting,including business continuity management,supply chain risk management,strategic risk assessments,and other MRC specialty practices • Speclalized/customized property risk consulting solutions,including business interruption and natural hazards modelinglconsulting,boiler and machinery specialized consulting,loss estimate studies,emergency response management solutions,fire protection engineering services,and property risk site evaluation and assessment services • Claims services other than those specified under Section 1,if any,Including claims management services,claims reporting as to lines of coverage or claims not included under Section 1,and property and casualty catastrophic claim response • Mass tort claims consulting and insurance archaeology research • Services in connection with loss portfolio transfers and alternative risk financing,including placements made in connection with such services • Captive insurance company feasibility studies • Establishment and administration of captive insurers • Placement of nonrecurring insurance,including,but not limited to: • "one-time"placements for construction projects • "one-time"placements for madne/cargo risks • "one-time^placements for surety • Placements for specific financial risks,such as trade credit • Placements involving significant quantitative or actuarial analysis or modeling • Placement of risks with financial institutions other than insurance carriers • Placements of risks not customarily accepted by Insurers • Employee benefits services • Pension plan consulting • Compensation consulting • Executive deferred compensation services • Risk management claims Information systems,including STARS and TrendTracker software programs,and related services • Enterprise Risk Management consulting • Strategic Risk Assessment • Provision of Marsh personnel on an out-sourced basis • Intellectual Property Consulting • SecurltyConsufting • Insurance-related mergers and acquisition due diligence services and transactional solutions • Placement and servicing of owner controlled insurance programs • Interactive on-line client services 4