CITY COUNCIL STAFF REPORT
June 4, 2024 {{section.number}}f
AUTHORIZATION FOR THE CITY MANAGER TO EXECUTE A MULTI-YEAR
PROFESSIONAL SERVICES AGREEMENT FOR BENEFIT BROKER SERVICES
WITH HUB INTERNATIONAL
RECOMMENDATION:
Authorize the City Manager to execute a three-year professional services agreement with HUB International for benefits insurance broker services including assisting in administering group insurance plans, conducting compliance reviews, preparing requests for proposals for new insurance carriers, and soliciting proposals from insurance markets, and authorize the City Manager to execute one-year contract extensions as deemed appropriate.
BACKGROUND:
The City of Coronado utilizes a consultant firm to provide employee benefits insurance broker services. Benefit insurance broker services include assisting the City in long-range employee benefit goals and strategies, the implementation and communication of new programs or changes to existing programs, and researching and providing timely recommendations to the City on any new developments in the employee benefits law, employee benefit programs, and health insurance reform on an ongoing basis, among other benefit related services. The City does not have a professional services agreement in place with our current benefits broker, Burnham Benefits.
The City issued a Request for Proposal (RFP) in November 2023 to solicit for a new multiyear agreement. Five firms, Burnham Benefits Insurance Services, Keenan & Associates, HUB International, McGriff, and Alliant, responded to the RFP. All were selected to provide a presentation to a selection committee of City staff to demonstrate competence and professional qualifications for providing insurance benefit broker services and answer questions. Although the cost of providing services was considered as part of the analysis of the five firms, the committee also assessed specialized experience directly relating to the scope of services, the firms’ compliance review services, responsiveness to customer service, communication, and the ability for the firms to effectuate cost containment measures for the City.
The selection committee carefully considered the proposals and presentations that were made by the five firms. Based on their extensive knowledge of the public sector, their ability to conduct thorough competitive vendor/market analysis, and their ability to negotiate provider and insurer agreements and renewals, City staff recommended HUB International.
ANALYSIS:
The cost of benefits has been steadily increasing for several years, both in medical and ancillary benefits. HUB International prides itself on its ability to leverage its size as one of the largest privately-held brokerages to provide valuable resources to its clients, which include a strong negotiating position for benefit rates and carrier agreements. HUB International has extensive experience with public sector agencies including cities that have multiple bargaining groups. Additionally, they have an excellent benefits compliance consulting practice which will support the City in ensuring compliance with existing and future benefit plans, as well as advising the City on any federal, state, or local mandated compliance requirements relevant to City programs, benefit plans, and insurance plans.
HUB International is highly recommended by each of their references. Current HUB International clients expressed their utmost satisfaction with HUB’s ability to aggressively pursue cost-saving measures for their agency, outstanding communication and customer service, and ability to provide invaluable resources to both the employer and employees.
FISCAL IMPACT:
Benefits brokers are compensated by earning commissions on employee benefit lines of coverage. The City’s benefits carriers pay the benefits broker commissions; the City does not directly pay a benefits broker. HUB International will receive up to $50,000 in commissions on all employee benefit lines of coverage (excluding voluntary/employeepaid benefits) for every calendar year during the term of the agreement. If approved, based on historical enrollment, the cost to the carriers may increase by about $775 per month over the current commissions paid. If the carriers choose to pass along some or all of the cost to the City, we may see a small increase in premiums during the next plan year. Given HUB’s track record for negotiating lower premiums, it is likely that any increase in commission costs to the carrier will be more than offset by the reductions in negotiated plan premiums.
City paid benefit premiums are paid from the Employee Benefits Fund (10310000). The customer service, strong compliance consulting practice, and human resources consultation provided by HUB International will continue to support the City in providing an exceptional employee benefits program.
ALTERNATIVE:
The City Council could direct staff to execute an agreement with a term of less than three years or find alternative providers for insurance benefit brokers.
CALIFORNIA ENVIRONMENTAL QUALITY ACT:
Not Applicable.
PUBLIC NOTICE:
No notice required.
ATTACHMENTS:
1. HUB International Agreement for Professional Services Submitted By: Administrative Services Department / John Kim