HomeMy WebLinkAboutRESPONSE - RFP - P668 RISK MANAGEMENT INSURANCE CONSULTANTAAAPPLIED
RISK
SOLUTIONS, INC.
12200 E. Brianvood Avenue, Suite 205 @ Englewood • Colorado • 80112 o (303) 790-1725 • FAX (303) 790-1731
March 16, 1998
Mr. James B. O'Neill II, CPPO
Director of Purchasing and Risk Management
CITY OF FORT COLLINS
256 W. Mountain Avenue
Fort Collins, CO 80521
RE: RISK MANAGEMENT CONSULTANT PROPOSAL NO. P-668
Dear Mr. O'Neill:
We appreciate the opportunity to offer the attached proposal for services.
We hope you and Mr. Ellenburg find the proposal complete and in meeting with the City's
standards. We like to be thorough. There are numerous technical processes included that are
unique to ARS. These ensure high levels of information pertinent to sound decision making.
Further, to ensure that there are no unresolved issues connected with this engagement, we wish to
emphasize ARS's "follow through" commitment on all implementation services. Whether it be
long negotiations, numerous follow-up letters on deficiencies from the compliance review, or
meetings with the City to discuss findings or direction, these are included within our fee cap.
ARS will not allow any issues to remain open that are the subject of this proposal. We will also
present and support all findings and recommendations in clear concise wording that continually
anticipates the City's information needs.
Our goal is to work very closely with the City during the process a has been done in the past
Should you have any questions, please feel free to call. We look forward to discussing this
proposal further with you, and hope to hear from you soon.
Sincerely,
P LED RISK SOLUTIONS, INC
J mes M.�Graham, CIC
rincipal
City of Fort Collins, Colorado Confidential
We have developed and maintain a comparison of terms of the leading liability writers
for cities and the broad property writers. We will assess the City's coverage from both
a customary and a needs basis. We believe this level of detail is unique to ARS
Step Two — Report Development and Issuance
Our report will include, but not be limited to:
✓ Important coverages existing in current policies.
✓ Coverage enhancements and approximate costs.
✓ Appropriateness of Limits and Retentions to determine coverage design
specifications.
✓ Review reasonableness of the City's property valuation methodology for trouble
shooting Specification & Plan Design.
✓ Itemized recommendations addressing cost and coverage -effective solutions.
✓ Recommendations covering other necessary improvements.
Here, and in the implementation of our recommendations, the City will greatly benefit
from our recent experience with the public entity marketplace.
Step Three - Broker Selection Criteria Review & Recommendations
In the RFP presented to us by the City, we were asked to assist by providing a review of
the City's broker selection criteria and suggestions on possible enhancements. Since we
spend a great deal of our time acting as professional insurance buyers, we have developed
a system that facilitates high levels of information for good decisions in broker selection.
In performing the services requested by the City, we would make available this system
and assist the City in its integrating it with the City current criteria, if appropriate. Our
systematic approach enables us to objectively measure broker qualities, some of the
information we obtain via our system is:
✓ Markets that they would select in order of preference if they were chosen to go to
market. This allows us to determine redundancies in markets as well as how well the
broker knows the marketplace.
✓ Broker's customary services and fee ranges. We don't like to be surprised with these
at proposal analysis time.
These are only two of the features of our system.
Step Four — Broker Selection Via Scoring Process
Once the brokers submit proposals, we plan to assist in the scoring of the responses. This
will allow us direct knowledge of the nature of the brokers' qualifications as presented in
the responses. This allows us to form our recommendations on the marketing approach
to take.
APPLIED RISKSOLUTIONs, INC. 7
City of Fort Collins, Colorado Confidential
Step Five — Insurance Marketing Approach Assistance
We understand the City's past method of approaching the marketplace and that it
anticipates continuing with this means. We also acknowledge that the City desires a
recommendation from the selected consultant as part of the desired scope of work. We
will provide such recommendation following our audit and in tandem with the broker
screening process to ensure full consideration of all the pertinent facts. This will allow
the City position to be supported and understood by all that may have concerns or
questions. In forming our recommendation, the following techniques will be considered.
It is important to note that the "Qualified Competitive Quotes" process that the City
anticipates using is the most common for governmental entities. The advantages of this
methodology are presented following our brief description of the different techniques.
Appointment — An outright appointment is made without competitive bids. This is the
cleanest method.
Broker's Proposal — Selected brokers are requested to present a conceptual proposal for
an insurance program, without approaching any markets. This is done following or in
tandem with a broker screening process. Then generally one, sometimes two brokers are
sent into the marketing with exclusives on specific lines of coverage.
Qualified Competitive Quotes — The insured selects two or three brokers, giving written
specifications to each, authorizing them to negotiate in specific markets to avoid conflict.
Each broker can submit a list of companies he plans to use, listed in order of preference.
The insured checks the list and gives letters of authorization to each broker for those
companies he appears best able to represent. Where companies appear on more than one
list, the broker placing it highest on his preference list may be authorized to use it.
Unrestricted Competition — Any firm is allowed to quote on written specifications.
Sometimes the bid procedure is advertised.
Advantages of the Qualified Competitive Quotes Technique
❖ Does not disturb the markets.
❖ Creates competition between underwriters and between brokers, probably with lower
premium.
❖ Eliminates an appearance of impropriety.
❖ Increases insured's exposure to new ideas and developments of other brokers.
Ensures a full market canvass and leaves little doubt of securing the best program
available.
There are several conditions that influence the use of a different technique. If these
conditions exist, this will be determined from the policy review and the broker screening.
This is why we are generally involved as a scoring participant in the screening process.
We are operating on the basis that we will assist in the broker selection process.
However, if you prefer to have us refrain from this activity, a fee reduction is in order.
APPLIED RISK SOL Ur/oNS, INC. 8
City of Fort Collins, Colorado Confidential
Step Six — Market Assignment Assistance
Since the broker's preferences should be known in screening the brokers, this process
will be easier due to fewer redundancies in the preferences presented. This will help
control the costs of this activity and facilitate greater enthusiasm when actual assignments
are made. As far our actual assistance in this step of the process, we will:
✓ Enter the broker market requests in our already prepared analysis spreadsheet.
✓ Assign markets via standard market assignment processes.
✓ Respond to any broker concerns.
✓ Reconcile any confusion or violations.
Step Seven — Coverage Sections Preparation
Following our review of audit report findings with the City, we will establish with the
City those areas needing modification the City wishes to pursue. These, as well as other
program design features will be established in the sections of the bid package that the
City has designated as our responsibility. These sections are the general coverage
conditions, program design, and coverage design sections. Further, we understand that
the City will be generating other portions of the specifications. We plan to be proactive
in assisting the City to whatever level necessary to ensure that a comprehensive bid
package is released. This is the reason we include Section VIII, which reflects the
information that we have found the market requiring to achieve a favorable result. In
summary for this step, we will:
✓ Review with the City a recent example of our fully developed Underwriting package.
✓ Make it available as a model to follow, if desired by the City.
✓ Review the information list in Section VIII and answer any questions the City has.
✓ Prepare and provide to the City the general coverage conditions, program design, and
coverage design sections for inclusion in the submission.
✓ Prepare and provide the cot and coverage analysis checklists for the markets to
include in their 1roposal to simplify and improve analysis comparisons
✓ Provide as boilerplate any of our standard sections should this be deemed helpful by
the City.
✓ Help obtain any information needed that the City is having difficulty in securing.
✓ Answer any questions that arise in the City's process of submission preparation.
✓ Review and help finalize the package prior to release.
As previously indicated, we typically develop specifications on a turn key basis, but
realize the City's desire to handle the majority of the work in-house. Please keep in mind
we desire to be helpful and supportive.
APPLIED RISK SOLUTIONS, INC. 9
City of Fort Collins, Colorado
Step Eight — Marketing Assistance
Confidential
In this step, we will:
✓ Field underwriting and program design questions.
✓ Place necessary follow-up calls to track carrier progress.
✓ Answer any questions that the City has and assist the City by advising it on broker
information requests.
Step Nine — Analysis of Proposals
This is perhaps the most important part of the study, since it directly leads to the
binding of the protection for the City. ARS recognizes this and takes great care in
analyzing and presenting the best alternatives. Our work on this step in the process
includes:
✓ Carefully analyze the proposals and provide the City a report covering our
analysis, including information on the most favorable bids and our
recommendations. Our analysis will also include the pro and cons for all major
alternatives.
✓ Conduct any final negotiations to achieve added improvements.
✓ Secure through negotiation specific levels of services, including low cost property
valuations, loss control, customize claims runs, and other valuable risk
management support determined to be appropriate.
✓ Lock in multi -year coverage and service arrangements fixing costs, where desired.
✓ Send an agreement letter to the successful participant outlining all terms and
conditions of the proposed program, including confirmation of all terms agreed to
in our negotiations and require signature as part of binding coverage.
Meetings
In conjunction to performing the above services, we anticipate three meetings with
the City at its offices. In addition to these meetings, we offer unlimited conference
calls and meetings at our office.
OPTIONAL RISK MANAGEMENT SERVICES
As an optional service, we will review policies for the City of Fort Collins and Poudre
Fire Protection District (PFPD) and Poudre Fire Authority (PFA) for compliance with the
letter of agreement, the program proposal, and bid specifications. Any deviations will be
summarized in a letter. We will assist the City. PFPD and PFA in achieving inclusion of
the omitted items until completion
APPLILUKISKNOLUTIONS, INC. 10
City of Fort Collins, Colorado Confidential
III. MISCELLANEOUS INFORMATION
0 We accept the City's contract as noted in Section XI.
0 We carry professional liability insurance in the amount of $1,000,000 as indicated in
Section XI. We have never been named in a lawsuit.
0 We will not contract any portion of the scope of work.
0 We have no conflicts of interest. We will be objective.
APPLIED KISK SOLUTIONS, INC.
City of Fort Collins, Colorado
IV. COST
Confidential
ARS will provide the comprehensive risk management services outlined in our proposal
for a fee not to exceed $8,225, however, it is conceivable that we will be able to do the
study for less. Below is our estimated fee range by Step. We provide detailed monthly
statements breaking out our time. Therefore, both parties keep tabs on the time. We find
that this allows the entity to be more accountable for its role and at the same time save
money on consulting fees.
Estimated Fees
Hours
Consulting Services:
Step One- -Program Audit
8
$1000
Step Two -Report Development and Issuance
6
$750
Step Three -Broker Selection Criteria Review &
-Recommendations
3
$375
Step Four -Broker Selection Via Scoring Process
4
$500
Step Five -Insurance Marketing Approach Assistance
3
$375
Step Six -Market Assignment Assistance
3
$375
Step Seven -Coverage Sections Preparation
5
$625
Step Eight -Marketing Assistance
6
$750
Step Nine -Analysis of Proposal
15
$1875
Meetings (3)
6
$750
Total Consulting services:
59
$7375
Clerical services:
20
$700
Expenses:
Mileage (3 meetings at the City)
$150
Copying
Included
Total Fee Estimate and project maximum: $8225
Optional Risk Management Services
Compliance review $500
Fees are payable through an initial retainer of $2,500 the remainder to be billed as
incurred. We will render monthly statements itemizing our work effort, and payment is
due in 10 calendar days.
Our fee estimate contemplates an open line of communication between ARS and the City.
It also contemplates that necessary analysis data will be compiled and provided to us on a
timely basis.
APPLIED RISK SOL UTIONS, INC. 12
City of Fort Collins, Colorado Confidential
V. FEE SCHEDULE & PROJECT TEAM
The following ARS personnel will be dedicated to your account.
Consultants Hourly Rate Anticipated Participation
James Graham $125 75%
Terry Wilbur $125 25%
Clerical Staff
Jennifer Johnson $35 50%
Ann Graham $35 50%
Our biographies are provided in Section X.
APPLIED KISK SOLUTIONS, INC. 13
City of Fort Collins, Colorado Confidential
VI. CHANGES ON CURRENT COVERAGES
Given the limited information from Attachments A & B, the City's and PFA's current
coverages we have identified several changes that the City of Fort Collins or Poudre Fire
Authority or Poudre Fire Protection District should consider in marketing the current
insurance program. These changes encompass endorsements or exclusions that should or
should not be included in the policies. Most of these changes tie into our focus and
philosophy in coverage design, which is to alleviate the need, the best we can, to envision
all loss scenarios to ensure proper coverage. There are many insurance provisions in
standard policy forms that are designed to trip the buyer based on technicalities. These
provisions are contrary to policyholder expectations and many of our comments address
these types of provisions.
Direct Supervision and Control Limitations in Persons Insured Sections — which limit
coverage for moonlighting and mutual aid agreements. These need to be deleted.
2. Eliminate the requirement of tying property covers to the Statement of Values.
3. Eliminate standard exceptions to the Replacement Cost provisions of:
• Property of others in the City's care, custody and control,
• Tenant betterments and improvements on leased property, and
• Carpeting, cloth awnings and outdoor furniture.
4. Amend the auto liability coverage to afford coverage for "commandeered vehicles".
5. Modify "property not covered" section to include coverage for the following:
• The Cost of excavations, grading, backfilling or filling, loss to underground pipes
flues and drains.
• Loss to building and personal property if building is unoccupied or vacant for
more than sixty consecutive days before the loss or damage.
• Loss to pilings, piers, warfs or docks.
• Loss to bridges, roadways.
6. Ensure that the definition of EDP equipment includes communication equipment.
7. Make sure the valuation on computers is amended to apply on an upgrade
replacement cost basis.
8. Pursue the addition of an annual aggregate stop -loss retention on property coverage.
9. Under Boiler and Machinery coverage secure a higher limit on hazardous substance
coverage of $500,000 vs. the current $100,000 limit.
10. Make sure that Building Ordinance coverage is included in the property policy.
11.In connection with Building Ordinance coverage, ensure the inclusion of the
Extended Period of Recovery endorsement.
X« JZu nl3A JULUJJUNS, INC. 14
City of Fort Collins, Colorado
Confidential
12. Amend the definition of flood, so that water damage caused by back-up of sewers and
drains, wind driven rain, and seepage around doors and windows is covered under the
property policy and not subject to the higher flood deductible.
13. As to liability protection:
• Pursue public officials errors and omissions on an occurrence basis.
• Secure unlimited aggregate coverage for general liability and law enforcement
liability coverages.
14. For Poudre Fire Protection District, obtain pollution exception language to cover
limited pollution for such things as:
a. "Emergency operations" conducted away from premises owned by, or rented to, you
or any fire department, hazardous materials unit or first aid, ambulance or rescue
squad qualifying as an insured under this policy; or
b. "Training operations;" or
c. Water runoff from the cleaning or equipment used in "emergency operations"; or
d. "Bodily injury" or "property damage" caused by heat, smoke or fumes from a
hostile fire:
• At or from premises you own, rent or occupy; or
• At or from any site or location in connection with operations described in a), b),
or c) above.
A hostile fire means one, which becomes uncontrollable or breaks out from
where it was intended to be.
e. Coverage for BI and PD for chemical spraying, paint, sewer backup or, water
chemicals.
15.Obtain as an extension to the Public Officials policy coverage for the policy setting
and supervision on a Board level for the operation of an airport.
16. Additional liability concerns that need to be resolved are:
• Secure as a modification to the failure to perform or breach of contractual
obligation exclusion found in the Public Officials policy coverage for violation of
an employment contract.
• Make sure the Law enforcement exclusion under the typical Public Officials E&O
policy does not exclude policy setting for law enforcement activities.
• With respects to the exclusion in the Public Officials Liability policy that states
willful violation of any statute, ordinance or regulation committed by or with the
knowledge or consent of the insured are excluded, make sure that this applies only
upon final adjudication and also that an exception is granted to provide coverage
for the falsely accused and other insureds that are viewed as being vicariously
responsible for such things as sexual molestation.
• Review the practicality of securing replacement cost coverage on vehicles with
the City and emphasize the importance of at least having replacement cost on
APPLIED RISK SOL UTIONs, ING 15
City of Fort Collins, Colorado
Confidential
emergency vehicles including fire trucks and rescue units owned by Poudre Fire
Protection District and Poudre Fire Authority.
• Pursue the addition of cash flow protection on the City's Excess Workers
Compensation policy. This levels out the cash flow impact of the payment of
larger claims by establishing a maximum payment amount per claim for any one
year.
• Delete any commutation clauses applying under the Excess Workers
Compensation policy.
• Ensure full protection for "Other States Coverage" under the Excess Workers
Compensation policy.
• Determine if any volunteer's coverage is to apply under the Excess Workers
Compensation policy. Colorado statutes give the City this option, if adopted by
resolution.
• Amend the definition of a claim under the Public Officials E&O policy to cover
EEOC actions.
APPLIED RISK SOLUTIONS, INC. 16
APPLIED
RISI(
SOL UTIONS, INC.
12200 E. Briarwood Avenue, Suite 205 • Englewood • Colorado • 80112 • (303) 790-1725 • FAX (303) 790.1731
PROPOSED INSURANCE
CONSULTING SERVICES
FOR
CITY OF FORT COLLINS, COLORADO
(Proposal No. P-668)
Prepared
March 16, 1998
City of Fort Collins, Colorado Confidential
VII. PROPOSED TASK & TIMETABLE
We are excited with the opportunity to be of service to the City. We understand and
appreciate the City's desire for a firm commitment of Consulting resources and
adherence to a timetable. To show that we understand the City's needs we offer the
attached timetable. The City's desired timetable is of course paramount.
APPLIED RISK SOLUTIONS, INC. 17
City of Fort Collins, Colorado
1999 P&C INSURANCE MARKETING
TASK & TIMETABLE
Preparation:
1. Consultants meeting with Client to Discuss Project
2. Renewal Information Request List to Client
3. Gather Renewal Information
4. Preparation of Renewal Bid Package
Broker Selection:
5. Public Notice & Special Invitation to Select Brokers
6. Broker Screening Packets Released
7. Response from Agents/Brokers Due
8. Scoring & Broker Selection
Marketing:
9. Request Market Assignments from Brokers
10. Receive Market Requests from Brokers
11. Assign Markets
12. Release Bid Package
13. Underwriting Information Rev. by Underwriters
14. Underwriters Release Indications
15. Negotiations
16. Final Quote Due Date
Report on Results And Negotiations:
17. Brokers Analyze Quotes & Prepare Proposals
18. Final Proposal Due Date
19. Renewal Meeting
20. Proposal Analysis
21. Written report with Recommendations Issued to Client
22. Client's Review of Report and Recommendations
23. Coverage Agreement Letter
24. Implementation of Selected Program
POLICY COMPLIANCE REVIEW:
25. Review Insurance Program For Compliance
6/24/98
6/29/98
6/30/98 to 8/13/98
8/13/98 to 9/16/98
7/4/98 to 8/3/98
8/3/98
8/17/98
8/18/98 to 8/25/98
8/27/98
9/10/98
9/15/98
9/16/98
45 days
NA
NA
10/31/98
l l/l/98 to 11/21/98
11/21/98
I 1 /22/98
11/22/98 to 12/6/98
12/6/98
12/6/98 to 12/11/98
12/13/98
1/l/99
3/2/99
Confidential
APPLIED RISK SOLUTIONS, INC COFC/t&t
City of Fort Collins, Colorado Confidential
VIII. LIST OF INFORMATION NEEDED TO PERFORM SERVICE
1. Complete copies of all commercial policies.
2. Property Statement of Values, including property address, type of construction, year
build, fire protective devices, number of stories, FEMA flood zone, and occupancy.
3. Description of Property Valuation Methodology used.
4. A copy of most recent applications used for coverage pertaining to policies now in
force. (Secure these from your broker, if possible.)
5. Copy of the Insurance Proposal for last renewal prepared by broker.
6. Copy of the Insurance Summary prepared by broker.
7. Copies of any mutual aid agreements.
8. Copy of broker's most recent proposal for services and fee schedule.
9. An Application for Public Entity including Public Officials that will need to be
completed
(We will supply blank application.)
LIST OF INFORMATION NEEDED FOR COMPREHENSIVE
SPECIFICATIONS
1. Five -years of insurance company loss runs for all lines of coverage.
2. Five-year premium history. (You may need to secure from your broker(s)).
3. Vehicle Schedule, including year, make, model, VIN number, and cost new. This can
be provided by department. For Trucks and Truck -Tractors (other than pick-ups)
provide GVW & GCW respectively. For any buses or passenger vans provide
passenger capacity.
4. Drivers Listing and copy of City's drivers' license review process/procedure.
5. Provide schedule of detached signs including location and description.
6. Mobile equipment and miscellaneous property floater schedules.
7. Electronic data processing hardware & software schedules.
8. Audited Annual Financial Report and the most recent quarterly financial statements.
9. Latest budget as adopted.
10. Safety, Loss Control, and Employee Manuals.
11. Copy of the most recent actuarial report on self -insured programs.
APPLIED RISK SOLUTIONS, INC. 18
City of Fort Collins, Colorado Confidential
12. Copy of TPA agreement and all supporting schedules.
13. Provide five years of county loss information for losses paid and either not covered
by insurance or inside the retained limit.
14. Copies of brochures for Parks and Recreation Programs and Public Health Programs.
15. Mayor, City Council Members and Other Key Management Biographies and
Organizational Chart (if not included in financial statements or budget).
16. Copies of any waivers required of volunteers or participants in any City programs.
17. A one to one and one-half page write-up providing background information on the
City. (An example is attached.)
18. Listing of all liability (general, auto, and public officials) claims of $25,000 or more
against the City along with a one -paragraph description of the incident/claim. This
should cover a minimum of five years, ten or more years is preferred.
19. Copies of last five years State of Colorado, Workers' Compensation Program, Payroll
Statement that are filed with the Department of Labor and Employment. This report
is filed every six months.
20. Photos or illustrations of buildings having combined building and contents limits
greater than $300,000. You may include all properties.
21. Applications that will need to be completed:
• Employee Dishonesty including employee classification schedule.
• Pollution Liability and/or Underground Storage Tank Liability (if coverage
needed)
• Airport Coverage
(We will supply blank applications.)
APPLIED RISK SOLUTIONS, INC. 19
City of Fort Collins, Colorado
IX. REFERENCES
Mr. Jeff Tetrick
Chief Financial Officer
Colorado Compensation Insurance Authority
720 S. Colorado Blvd., Suite 100 N Tower
Denver, CO 80224-9303
(303) 782-4573
Confidential
Activity: For the past six years James has served as the Authority's out -
source risk manager.
Mr. Rodney Weeks
Assistant Director of Business Services
Aurora Public Schools
82 Airport Blvd.,
Aurora, CO 80111
(303) 344-4100
Activity: Prior to APS' having its own risk manager, James Graham served
in this role on an out -source basis. James also served as Pool manager for the
liability pool that APS belongs to.
Ms. Kate Tremblay
Risk Manager
Larimer County, Colorado
112 N. Howes
PO Box 1190
Ft. Collins, CO 80522-1190
(970)498-7362
Activity: ARS is currently assisting the County on its tri-annual bidding.
Mr. James Tydings
Risk Manager
City of Boulder, Colorado
PO Box 791
Boulder, CO 80306
(303) 441-3020
Activity: As indicated earlier, we assisted the City in 1995/96 on a similar
study to the City of Fort Collins and again in 1997 on its renewal.
APPLIED RISK SOL unoNS, ING 20
City of Fort Collins, Colorado
X. BIOGRAPHIES
James M. Graham, CIC
Confidential
James is President of Applied Risk Solutions, Inc. With sixteen years of insurance and
risk management experience, James has a strong and diverse knowledge of coverages and
risk exposures relating to commercial property and liability insurance.
For the past eleven years, James has specialized in the design of cost- and coverage -
effective insurance programs, as well as non -insurance risk transfer mechanisms. In this
capacity, he performs insurance and exposure analysis, designs and publishes formal bid
specifications, coordinates broker selection and the insurance marketing, analyzes bids,
reports results, and implements the program.
James has designed and audited self-insurance programs for liability and workers'
compensation pools and trusts, qualified self-insurance plans, high deductible and self -
insured retention plans, and cash flow retrospective rating plans. He has also consulted
for numerous entities on the feasibility, design and implementation of alternative market
programs, including captives, pools and trusts.
Prior to forming Applied Risk Solutions, James worked for nine years as Senior Vice
President/Senior Consultant of a large independently owned risk management consulting
firm which specializes in Alternative Risk Financing Techniques. James also spent five
years with leading insurance carriers, including Kemper, where he received recognition
for technical excellence in underwriting. His experience also includes facultative
reinsurance negotiation, claims handling, auditing, loss control engineering and pricing
for a large and diversified portfolio of commercial accounts.
James is a graduate of Hastings College with Bachelor of Arts degrees in Psychology and
Business Administration. He has completed the Insurance Institute of America's
Insurance Program, has received the Certified Insurance Counselor (CIC) designation,
and is presently pursuing the Associate in Risk Management (ARM) designation. James
is an eight year member of the Society of Risk Management Consultants, and is a
graduate of Colorado Association of Commerce and Industry's (CACI's) 1996 Class of
50 for Colorado.
APPLIED RISK SOLUTIONS, INC. 21
City of Fort Collins, Colorado Confidential
Terry J. Wilbur, CPCU, ARM
Terry joined Applied Risk Solutions, Inc. after working in the commercial insurance and
risk management business for twenty-three years. Terry brings solid risk management,
underwriting and agency experience to his consulting position. This experience well
equips him in working on risk management programs for ARS clients.
In Terry's commercial underwriting and management positions with three leading
insurance carriers, he has underwritten all property and liability lines of coverage, as well
as, fidelity and surety bonds. The scope of his underwriting duties included a wide
variety of commercial accounts, including a number of large complex risks. Through his
insurance company experience, Terry acquired effective knowledge in premium auditing,
loss control, and claims management, which are areas essential to effective risk
management.
Terry is in the unique position to have worked on the retail side of the insurance industry,
in addition to the Company side. Terry's experience as an insurance producer and as a
technical consultant to the producers and customer service representatives in an insurance
agency provides an invaluable insight into agency operations and the interactions of the
agency with the insurance carrier. Given the necessity of computer automation within an
effective agency, Terry has acquired considerable experience with computer hardware
and software, including word processing, spreadsheet and database applications,
insurance agency management software, and various premium rating software programs.
His working knowledge of LAN's, modems, faxes, data file transmissions, scanners and
tape backups ensures efficiency and continuity in the consulting services afforded ARS
clients.
Terry's experience as an underwriter and extensive educational background in insurance
has provided him with an extensive knowledge in the construction and redesign of
standard insurance forms to eliminate the gaps found in them. He has working
knowledge of other risk management and financing techniques. Terry has recently
served as an instructor for the Certified Insurance Services Representative (CISR)
program for the Professional Independent Insurance Agents of Colorado. Terry has
completed the professional study and examinations for the following insurance
designations: Chartered Property and Casualty Underwriter (CPCU), Associate in Risk
Management (ARM), Associate in Management (AIM), Associate in Underwriting (AU),
Associate in Fidelity & Surety Bonding (AFSB), and Associate in Marine Insurance
Management (AMIM).
APPLIEDRisKSOLmoNs, ING 22
City of Fort Collins, Colorado Confidential
XI. ADDITIONAL TERMS, CONDITIONS & EXCEPTIONS (CONTRACTUAL)
We have reviewed the City's contract and find it fully acceptable. In addition to agreeing
to the provisions contained in the City's agreement, we offer the following assurances.
Subcontracts
No subcontracts shall be made with other party for furnishing any of the work or services
herein described unless such subcontractor is approved as part of the initial contract. Any
subcontract entered into after the award of the initial contract will be submitted to client
and approved in writing prior to initiation of any work by subcontractor. In either case,
client will have the right to review the qualifications of any proposed subcontractor and
to establish safeguards to avoid any conflict of interest.
Changes in Scope
If any changes in requested services cause an increase or decrease in cost of, or the time
required for, the performance of any part of the work under the contract, a mutually
satisfactory adjustment shall be made in the contract price or delivery schedule, or both,
and the contract shall be modified in writing accordingly.
Non -Solicitation Warrant
ARS warrants that no person or selling agency has been employed or retained to solicit or
secure this contract upon an agreement or understanding for a current or prospective
commission, percentage, brokerage, finders, contingent, or other fee. ARS further
warrants to perform this contract solely for the City for the contract price, and to avoid
any possible conflict of interest or any act that might tend to give an advantage to any
prospective carrier or prospective insurance producer. The City shall have the right to
annul this contract without liability if it is determined that ARS has breached or violated
these warranties.
Availability of Records and Audit
ARS agrees to maintain books, records, documents, and other evidence pertaining to the
costs and expenses of this contract (hereinafter collectively called "records") to the extent
and in such detail as will properly reflect all net costs, direct and indirect, of labor,
materials, supplies, and services, and other costs, and expenses of whatever nature for
which reimbursement is claimed under the provisions of this contract. ARS agrees to
make available at its offices at all times during the period set forth in this invitation any
of the records for inspection, audit or reproduction by any authorized representative of
the City. Except for documentary evidence delivered to the offices of the City, ARS shall
preserve and make available to persons designated by the City records for a period of
three (3) years from the date of final payment under this contract or until all audit
questions have been resolved, whichever period of time is longer.
APPLIED RISK SOL UTIONS, INC. 23
City of Fort Collins, Colorado
Disclosure
Confidential
ARS will keep as confidential, information concerning the business of the City, its
financial affairs, its relations with its employees, as well as any other information which
may be specifically classified as confidential by the client. The foregoing shall not apply
to:
• Information which the City has released in writing from being maintained
in confidence.
• Information which at the time of disclosure is in the public domain by
having been printed and published and available to the public in libraries
or other public places where such data is usually collected.
• Information which, after disclosure, becomes a part of the public domain
as above defined, through no act of the consultant.
All disclosures will be presented to the client contact for expressed written permission
prior to release.
Non -Assignability of Contract
The contract is not assignable by ARS either in whole or in part.
Professional Liability Insurance
ARS has professional liability insurance in the amount of $1,000,000 each claim to cover
its consulting services. If desired a certificate of insurance will be afforded the City
immediately following ARS's award of the business.
APPLIED RISK SoL unoNs, INC. 24
City of Fort Collins, Colorado
XII. PROOF OF INSURANCE
(Certificates of insurance will be provided per the City's RFP.)
Confidential
APPLIED RISK SOLUTIONS, INC. 25
City of Fort Collins, Colorado
Section
Confidential
TABLE OF CONTENTS
Description page
I.
PROPOSED INSURANCE CONSULTING SERVICES....................1
Overview of Prospect and Requested Services
Overview of ARS and Applicable Experience
II.
STATEMENT OF SERVICES PROPOSED ....................................
5
Step One - Program Audit
Step Two - Report Development and Issuance
Step Three - Broker Selection Criteria Review & Recommendations
Step Four - Broker Selection Via Scoring Process
Step Five - Insurance Marketing Approach Assistance
Step Six - Market Assignment Assistance
Step Seven - Coverage Sections Preparation
Step Eight - Marketing Assistance
Step Nine - Analysis of Proposals
III.
MISCELLANEOUS INFORMATION REQUESTED ....................
11
IV.
COST.................................................................................................12
V.
FEE SCHEDULE & PROJECT TEAM
13
............................................
VI.
CHANGES ON CURRENT COVERAGES .....................................
14
VII.
PROPOSED TASK & TIMETABLE
17
...............................................
VIII.
LIST OF INFORMATION NEEDED
18
..............................................
IX.
REFERENCES..................................................................................
20
X.
BIOGRAPHIES
.................................................................................21
XI.
ADDITIONAL TERMS, CONDITIONS & EXCEPTIONS
(CONTRACTUAL)...........................................................................
23
Subcontracts
Changes in Scope
Non -Solicitation Warrant
Availability of Records and Audit
Confidentiality
Non -Assignability of Contract
Professional Liability Insurance
XII. PROOF OF INSURANCE................................................................ 25
APPLIED RISK SOLUTIONS, INC.
City of Fort Collins, Colorado Confidential
I. PROPOSED INSURANCE CONSULTING SERVICES
We are pleased to present this proposal. In this section, we will present an overview of
our understanding of the City's needs, our proposed services, current market conditions,
and our firm and related experience.
Overview of Prospect And Requested Services
ARS's conversation with Mr. Stewart Ellenburg and the request for proposals was
invaluable in our preparation of this proposal. Our full understanding of the City's needs
is critical to ensuring satisfaction. The City implements, monitors, and affects changes in
its risk management program through the City risk management office. We acknowledge
that the City's Risk Manager also manages PFA's insurance program and this program is
also within the scope of this engagement. The City is seeking a long-term program
subject to a marketing validation and consulting assistance every five years. It is now
time for the City to have an outside assessment of the insurance program and conduct a
program bidding.
We are proposing a process involving accepted auditing practices to determine the
appropriateness of the current protection and services afforded the City; present findings;
and provide recommendations on improved coverage, alternative structures or programs,
and standard levels of broker service and fees, where appropriate, to ensure the existence
of a quality program. A bidding will then be effected to achieve the needed changes. We
will provide recommendations and support. The City will make the final determination.
We are very motivated and will meet the City's timeframe.
The City's structure of the study and timing is desirable, because of the substantial
changes occurring, both in the traditional insurance market and alternative market (self-
insurance). The key changes pertinent to the City are:
• Broader coverages and services available from Commercial Carriers.
(Details provided in Section VI.)
• Higher levels of cost competitiveness, especially on property.
• Increased number of alternatives for achieving different levels of self-
insurance and risk transfer.
• More service and insurance/reinsurance providers entering the public entity
market.
• Increased emphasis on relationships, making it easier to achieve
improvements without biddings.
These changes are very positive to the insurance buyer. There are now at least ten strong
liability markets. We don't want to oversimplify the exposures to loss of a City, or its
relationships; however, more carriers now recognize the scope of Governmental
Immunity and the broad protection provided. Other public entities have improved
coverage and saved significant premium dollars from the market in the past three years.
We can and will quantify these opportunities for the City in our study.
APPLIED KISK SOLUTIONS, INC.
City of Fort Collins, Colorado Confidential
Overview of Applied Risk Solutions, Inc. and Applicable Experience
Applied Risk Solutions, Inc. (ARS) is a four -person, multi -client risk management
consulting firm, specializing in the development and implementation of risk financin
strategies for property and casualty exposures of medium to large businesses and public
entities. We do not sell insurance, nor do we earn commissions from insurance
companies. We also refrain from buying insurance or reinsurance direct, and from
managing self-insurance programs. We are advisors compensated on a fee basis by our
clients, thereby eliminating the conflict of interest. ARS has been in business for three
years. We are project consultants and are therefore in the market frequently. We know
what is available and appropriate.
Of specific interest to the City, is the following experience:
❖ City of Ft. Collins — James Graham has assisted the Ciry in the past with coverage
specification design, marketing process oversight, proposal analysis and compliance
reviews. ARS has also provide suggestions on miscellaneous concerns over the past
couple of years that the City has had.
❖ City of Fort Morgan — In 1994 and 1997, James Graham served as the lead
consultant in marketing the City's property and liability insurance program. He re-
structured the program design, and achieved substantial cost and coverage
improvements.
❖ Cityof Blackhawk - In 1994, James reviewed the City's exposures and coverages
and issued a comprehensive report providing recommendations on cost and coverage
appropriateness to the City.
❖ Adams County —In 1997, ARS performed an insurance policy analysis that resulted
in the substantial improvement of coverage to track with market changes and
developed a risk management cost allocation system.
❖ City of Boulder — In 1995196, ARS performed a study almost identical to this one
requested by the City of Fort Collins. Also in 1997, we provided renewal assistance
to the City.
❖ Latimer County-- Presently, ARS is performing a study almost identical to the one
requested by the City.
Our references are found in Section IX.
ARS understands the Colorado Governmental Immunity Statute. We will discuss how
this protection currently influences coverage and the acts of buyers and sellers. Our
recap of governmental immunity is provided as Attachment I on the next page.
We fully support the City goals and will provide assistance that meets all requirements
specified in the City's RFP This is our promise to You and it is backed by a satisfaction
guarantee. James Graham, founder of ARS, will perform a majority of the work with
some support possible from Terry Wilbur, CPCU, ARM. Our biographies are included
in Section X.
APPLIEDKISK VOLUTIONS, LNG 2
City of Fort Collins, Colorado Confidential
ATTACHMENT
GOVERNMENTAL IMMUNITY AND TORT REFORM
This section is intended to provide a quick overview of how current Colorado case law,
tort reform, and governmental immunity legislation impacts the liabilities facing public
entities in Colorado. The courts and the legislature in Colorado have established a highly
developed governmental immunity statute, and have limited the liability of public
entities. As of January 1, 1993, the limitation set forth as a result of this statute is as
follows:
The maximum amount that may be recovered by plaintiffs is $150,000/person and
$600,000/accident per 824-10-114.
A public entity cannot be liable for punitive or exemplary damages unless the resulting
injury was caused willfully or wantonly by the entity's employees. (The legislature has
limited exemplary damages available to an amount equal to the actual compensatory
damages.)
Sovereign immunity applies to the public entities except in areas that are waived per 824-
10-106. Some applicable areas where sovereign immunity are waived are:
• Motor Vehicles
• A dangerous condition of any public building
• Swimming Facility
• Certain dangerous conditions of public highways, roads or streets
• The operations of certain utilities
• Operation of Public Hospital, Correction Facility or jail
The legislature further strengthens the Governmental Immunity Act by redefining
"Dangerous Condition" to mean "the physical condition of a facility or use thereof which
constitutes an unreasonable risk to the health or safety of the public":
"...This definition coupled with the restatement under HB 1205 of Premises Liability will
curtail negligence suits. HB 1205 brought back the old categories of trespasser, licensee,
and invitee..."
The Governmental Immunity Act has a very beneficial feature in 824-10-109, which
limits the time for notice:
"...Any person claiming to have suffered an injury by a public entity or by an
employee thereof while in the course of such employment shall file a written
notice as provided in this section within one hundred eighty (180) days after the
date of the discovery of the injury, regardless of whether the person then knew
all of the elements of a claim or of a cause of action for such injury.
Compliance with the notice provisions of this section shall be a jurisdictional
prerequisite to any action brought under the provisions of this article, and
failure of compliance shall forever bar any such action."
APPL/ED RIsK SOL moNs, INC
City of Fort Collins, Colorado Confidential
This notice requirement will assist in determining claims against the entity and reduce the
possibility of extensive "incurred by not reported" claims (the plague of the occurrence
policy form). In addition, this section allows for a 90-day "cooling off' period for
investigation, settlement, or denial before a lawsuit can be filed. By combining these
actions with the redefined statute of limitations in SB 69, which makes the time limit for
bringing most Tort actions either one or two years, we have further reduced the
possibility of extensive "incurred but not reported" claims.
It is important to keep in mind, however, that the City of Fort Collins is still subject to
tortuous acts that fall under federal laws (EPA, OSHA, Civil Rights, etc.) and acts that
occur out of state. The only protection provided in the Governmental Immunity Act for
these cases concerns federal causes of action brought in state courts. These federal cases
must meet the provisions of the act. However, if the federal cause of action is brought in
federal court, the act does not apply. Suits arising out of termination of employees,
reduction in force, labor issues, discrimination in hiring, etc. and most of the civil rights
causes of action should be covered by the City of Fort Collins' Public Officials Liability
coverage form.
The issues concerning tortuous acts out of state are a little more complex, but the
principal loss cause area would be auto bodily injury claims to third parties who are
residents of the state where the accident occurred.
APPLIED RISK SOLUTIONS, INC. 4
City of Fort Collins, Colorado Confidential
II. STATEMENT OF SERVICES PROPOSED
Our proposed risk management approach coincides with the specified approach of the
City. Our scope of work includes, at a minimum, the following requested services
(underlined items denote broadening and/or edification of the services to be provided):
1. Recommend the best process to use to approach the insurance markets.
2. Review the City's RFP criteria for broker selection and make
recommendations if needed Once proposals are submitted, assist with
broker selection.
3. Assist with market assignments to brokers.
4. Review current insurance programs and make recommendation for program
enhancements.
5. *Prepare general conditions, plan design. and covelage specifications
sections for bid specifications, along with cost and coverage worksheets to
facilitate a thorough12rQposal analysis
*Note: We do not propose actual policy language as this may restrict
coverage. Carriers are responsible for policy language, so that any
ambiguities are reconciled in favor of the City. We will troubleshoot
proposed policy language during our proposal analysis.
6. Field underwriting questions, after specifications are released.
7. Analyze insurance bids and prepare written recommendations within two
weeks after the bid opening.
We are available, well qualified, and motivated to perform the requested services. To
ensure that the process is effective we offer our standard timetable modified to apply to
the City coverage anniversary. This can be further modified to service the needs of the
City. We offer it to show our level of commitment and attention to detail.
Details on our services and approach are broken down into nine parts that are covered in
the following sections. These sections are arranged in the order that we suggest they
occur.
0 Step One - Program Audit
0 Step Two - Report Development and Issuance
2 Step Three - Broker Selection Criteria Review & Recommendations
0 Step Four - Broker Selection Via Scoring Process
0 Step Five - Insurance Marketing Approach Assistance
0 Step Six - Market Assignment Assistance
0 Step Seven - Coverage Sections Preparation
0 Step Eight - Marketing Assistance
0 Step Nine - Analysis of Proposals
APPLIED RISK SOLUTIONS, INC. 5
City of Fort Collins, Colorado
Confidential
Step One - Program Audit
We understand that the City does not wish to have ARS perform a risk analysis. In our
typical approach, we would perform an exposure analysis, since this is an advisable
prerequisite to coverage design. However, the City has not requested this. Therefore, we
will describe the process to contrast it to what we are proposing. In an exposure analysis,
we gather information from various sources and interact with City personnel. Our
analysis typically begins with the following and may require additional procedures,
depending on the results of our findings.
➢ Conduct interviews to identify, analyze, and quantify the City's property and
casualty exposures, both operational and contractual. Interviews will include
visits with: Director of Finance, City Attorney, and the Risk Manager.
➢ Inspect the physical premises and City operations for further exposure
identification.
➢ Review claims experience to determine the cost and coverage effectiveness of
the current program.
➢ Review sample contracts, such as, the leases on real and personal property,
agreements for hazardous and non -hazardous waste disposal, concessionaire
agreements, construction agreements, etc. Our review would focus on
insurance requirements and risk transfer clauses.
As you have requested, we will review all of the City's policies for coverage and pricing
efficiency, and address gaps and overlaps, based on completion of an exposure
questionnaire that we have developed for Cities, and our familiarity to the City and other
municipalities. Compiling the substantive questions from all the leading carrier's
applications has developed our exposure questionnaire. This is available on disk and is
Microsoft Word compatible. We recommend the City use this as the underwriting
submission application. This survey will also help us with our coverage assessment and
program design work. We will evaluate the appropriateness of overall program design,
and comment on coverage enhancements, the level of opportunity for their inclusion in
the policies, and their approximate cost. We understand the City has secured the
following coverages:
- Property and related coverages
- Fidelity and Crime
- Boiler & Machinery
- Excess Liability *
- Excess Workers ' Compensation
- Volunteer Insurance
- Special Events Policy
- Loss of Sales Tax Revenue
- Law Enforcement Liability
* Note: This protection includes General Liability, Automobile Liability, Police
Liability, and Public Officials Liability.
We will review policy coverage in conjunction with the Governmental Immunity Statute
to determine: where it dovetails with Governmental Immunity, provides contingency
coverage in the event governmental immunity is amended or overturned, and the level of
protection afforded for claims falling outside the immunity statutes, such as federal, out-
of-state liability, contractual liability, and breach of contract type actions.
x1-r1.1Gu ARNA 3ULUI70NS, INC. 6