Interoffice Memorandum
DATE: October 23, 2024
TO: Mayor Jerry L. Demings and County Commissioners
FROM: Carrie Mathes, CFCM, NIGP-CPP, CPPO, C.P.M., Manager II, Procurement Division
CONTACT: John Petrelli, Director, Risk Management and Professional Standards
PHONE: 407-836-9636
SUBJECT: Approval of Amendment No. 10, Contract Y20-1061, Insurance Broker Services for Commercial Insurance Program
ACTION REQUESTED:
title
Approval of Amendment No. 10, Contract Y20-1061, Insurance Broker Services for Commercial Insurance Program, with Arthur J. Gallagher Risk Management Services, LLC, in the amount of $147,000, for a revised estimated contract amount of $910,560.([Administration and Fiscal Services Risk Management and Professional Standards Division] Procurement Division)
body
PROCUREMENT:
This amendment will allow Risk Management to facilitate the addition of services to support the formation and annual maintenance of the County’s captive insurance program. Arthur J. Gallagher Risk Management Services, LLC, in conjunction with one of their subsidiaries, Artex Risk Solutions, Inc. will serve as consultant and will assist the County in the formation and maintenance of its captive insurance program.
FUNDING:
Funding is available in account number 5510-025-0328-3350.
APPROVALS:
The Risk Management Committee and the Risk Management Division concur with this
recommendation.
REMARKS:
On November 10, 2020, the Board authorized award of contract Y20-1061, Insurance Broker Services for Commercial Insurance Program to Arthur J. Gallagher Risk Management Services, LLC., in the estimated amount of $615,000 for a three-year term with two additional one-year renewal terms.
Captive insurance programs are an alternative to self-insurance in which a parent group or groups create a licensed insurance company to provide coverage for itself. Advantages of forming a captive include:
• Coverage tailored to meet your needs.
• Reduced operating costs.
• Improved cash flow.
• Increased coverage and capacity.
• Investment income to fund losses.
• Direct access to wholesale reinsurance markets.
• Funding and underwriting flexibility
These services will include formation, actuarial and captive management services.
Formation Services $31,500
Actuarial Services $15,000
Management Services $100,500
Over the past several years, premiums for the County’s commercial insurance policies have continued to climb. Some of the increase can be attributed to loss experience, but the largest portion of the increase is due to a hardening insurance market, especially the property and casualty markets. Global events have forced the insurance industry to withdraw from markets reducing available capacity and forcing substantial premium increases. In the last five years, the County has seen a 77% increase in insurance premiums. The County has explored the feasibility of having their own captive insurance program and has determined that it is in the best interests of the County to form one. Therefore, this amendment would allow Risk Management to facilitate the addition of services to support the formation and annual maintenance of the County’s captive insurance program.
Previous amendments to the contract are as follows:
Amendment No. 1: Additional terms were added to Exhibit A Scope of Services. Line items were added to Exhibit B fee schedule and increased the total contract by $34,000 for a revised estimated contract amount of $649,000.
Amendment No. 2: Renewed premiums (Not-to-Exceed $5,547,750) for the April 1, 2021 through March 31, 2022 service period were added to Exhibit A Scope of Services. The Contract amount remained unchanged. The Board approved this amendment on March 23, 2021.
Amendment No. 3: Renewed premiums (Not-to-Exceed $6,016,550) for the April 1, 2022 through March 31, 2023 service period were added to Exhibit A Scope of Services. The Contract amount remained unchanged. The Board approved this amendment on March 22, 2022.
Amendment No. 4: Renewed premiums (Not-to-Exceed $8,868,550) for the April 1, 2023 through March 31, 2024 service period were added to Exhibit A Scope of Services. The Contract amount remained unchanged. The Board approved this amendment on March 21, 2023.
Amendment No. 5: Added funding for Year 2 special project fee costs identified in Amendment No. 1 and additional risk profiles needed for the County’s insurance tracking system. The amendment increased the total contract by $35,000 for a revised estimated contract amount of $684,000. The Board approved this amendment on April 10, 2023.
Amendment No. 6: Additional funding for Year 3 special project fee costs identified in Amendment No. 1 and Tier 2 Cloud based software line item was modified. The amendment increased the total contract by $49,560 for a revised estimated contract amount of $733,560.
Amendment No. 7: Renewed the contract for the period of December 17, 2023 through December 16, 2024. The contract amount remained unchanged.
Amendment No. 8: Added funding for a feasibility study to explore the feasibility of the County forming its own captive insurance program. The amendment increased the total of the contract by $30,000, for a revised estimated contract amount of $763,560.
Amendment No.9: Renewed the contract for the period of December 17, 2024 through December 16, 2025. The contract amount remained unchanged.