Agenda Packets - 1983/10/10 - Laserfiche WebLink

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TO: Mayor. & Council el,QlROM: Finance Director Treasurer Brager DATE: September 28, 1983 RE: INSURANCE & RISK MANAGEMENT SERVICES I recommend that the Council give serious consideration to contracting for insurance and risk management services. In this memo I shall comment on why I believe that the City should contract for insurance and risk management services and then discuss proposals that have been received for those services. An insurance and risk management consultant would assist the City in three basic areas: 1) determining the level and adequacy of present coverages; 2) preparation of specifications and assistance in bidding; 3) assistance in the handling of claims. In determining the level and adequacy of coverage an insurance and risk management consultant would review current City operations to determine the risks that should be insured against. Often as a result of this review, recommendations are made for modifying City operations for safety considerations and to reduce or eliminate risks that must be insured against. After a review of operations is completed the City's present insurance policies would be reviewed to determine if they are adequate to protect the City from the /- risks which are a consequence of City operations. At this point recommend- ations would be made as to the insurance coverages the City should have. Once the risks to insure against are identified and the insurance coverages needed to protect the City against those risks are determined the consult- ant would prepare specifications, assist in the review of proposals receiv- ed and make a recommendation for the award of the City's insurance contracts. After insurance contracts are awarded the consultant would assist in claims handling. One client reference I checked with stated, "we had a fire in one of our buildings. The consultant assisted us in handling the claim. Our claim settlement was greater than it would have been had we handled the claim ourselves". While many insurance agents could be considered insurance consultants and may claim to offer similar services, they are motivated primarily by economic considerations, i.e., their commissions which are a percentage of the total premiums paid. Prior to obtaining proposals I spoke with the Risk Managers of Hennepin and Ramsey Counties. They were of the opinion that an insurance and risk management consultant to be effective should not be an insurance agent and should be independent of any insurance company. Such a consultant would in their opinion, have much more expertise and competence than an agent. They reasoned that an agent can not spend sufficient time to develop expertise in risk management and risk control when an agents primary task is to sell insurance policies. We would, they advised, be best served by hiring a consultant that was independent of any insurance company and pay them a retainer. I obtained the names of two such Twin Cities based consulting firms from them.