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CITY OF GLENDALE, CALIFORNIA
REPORT TO THE CITY COUNCIL
AGENDA ITEM
Report: Insurance Broker of Record for City’s Benefits Programs, Award of Contract
1. Motion Authorizing City Manager to execute a Professional Services Agreement with Alliant Insurance Services, Inc. and appoint them as the Insurance Broker of Record for all benefits programs. This agreement would span a five-year term, with the option to extend for two additional one-year periods.
2. Resolution of Appropriation
COUNCIL ACTION
Item Type: Consent Calendar
Approved for December 19, 2023 calendar
EXECUTIVE SUMMARY
The City currently has approximately 1,374 employees who are eligible for medical, dental and vision insurance benefits. These benefits, along with their levels, are determined by resolution from the City Council or agreements with relevant bargaining units.
Recently, the City conducted a thorough evaluation of its employee benefits programs.
This assessment highlighted the need to restructure these programs. The primary objectives of this restructuring are to enhance benefit levels, reduce costs, and eliminate redundant services, all while ensuring the highest quality of benefits for employees at the most economical price.
To accomplish these goals, the City’s staff requested proposals for a broker. The broker would be tasked with researching and evaluating alternative benefit programs.
Additionally, upon awarding the contract, the broker is expected to negotiate plan designs and costs with providers/carriers, coordinate with Third-Party Administrators, aid in implementing new benefit programs, and deliver excellent customer service to both the City and the participants of its benefit programs.
After an extensive review of proposals from six firms, the evaluation team recommends choosing Alliant Insurance Services, Inc. as the City’s new Insurance Broker of Record. 2{{section.number}}c
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RECOMMENDATION
Approve the City to enter into a Professional Services Agreement with Alliant Insurance Services, Inc. appointing them as the Insurance Broker of Record for all benefits programs and approve a resolution of appropriation for the cost of early transition and winding down the existing agreement with the City’s current broker. This agreement would span a five-year term, with the option to extend for two additional one-year periods.
BACKGROUND
For the last 14 years, the City has been in partnership with Keenan and Associates, serving as the insurance broker. The City provides medical insurance to approximately 1,374 employees through Anthem Blue Cross or Kaiser. Employees have the choice of five plans: Anthem Prudent Buyer PPO, Anthem California Care HMO, Anthem High Deductible, Kaiser Traditional HMO, and Kaiser Deductible HMO. These plans offer coverage options for individuals, two-party groups, and families. Additionally, the City offers a suite of other benefits including dental and vision insurance, life and accidental death and dismemberment insurance, long-term disability, COBRA, and a flexible spending account.
The City’s insurance broker plays a vital role in annually negotiating rates with each carrier. These rates are typically influenced by factors such as claims experience and inflation. Historically, any changes to medical premiums, whether increases or decreases are shared equally between the employees and the City, with each bearing 50% of the cost.
Over the period from June 2016 to June 2021, the average rate increases were as follows: Anthem PPO experienced an average increase of 3%, while Kaiser’s average increase was around 6%. In June 2022, there was a notable change with Anthem PPO premiums rising by 29%, while Kaiser premiums decreased by 5%. More recently, in June 2023, the Anthem PPO premiums increased by 2%, and Kaiser premiums went up by 13%.
The significant rise in Anthem’s premiums in June 2022, attributed largely to the pandemic’s impact, prompted concerns from all bargaining units. They questioned the City and its broker about this spike and future expectations. In response, the City arranged for Keenan and Associates to discuss these issues with the Health Benefits Committee, which includes representatives from each bargaining unit and the City’s Human Resources, Finance, and Management Services departments. The bargaining groups, representing their employees, urged the City to explore the feasibility and costs of joining the CalPERS medical benefits program. Over eleven months, the City, Keenan, and the Health Benefits Committee engaged in multiple meetings and consultation, including two sessions CalPERS and examined historical CalPERS medical premiums and their potential impacts. After consulting with two actuaries, it was concluded that transitioning to CalPERS now would result in higher costs for the same or lower level of medical benefits for employees.
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As a result, in August 2023, the City initiated a Request for Proposal (RFP) process to explore different Insurance Broker programs and the city received six proposals from Alliant Insurance Services, USI Insurance Services, Burnham Benefits, Keenan and Associates, McGriff Insurance Services, and Brown and Brown.
ANALYSIS
The City undertook a comprehensive evaluation process for responsive proposals. This assessment was conducted by a diverse evaluation panel, including five City staff members from three departments, one bargaining association representative from the Health Benefits Committee, and an external Benefits Manager from another city. The evaluation criteria were multifaceted encompassing the quality of the proposal, the company’s and staff’s qualifications, experience and capabilities, and their proficiency in providing or identifying quality, cost-effective options. This also included access to pooling and the total cost of services. The panel paid particular attention to each firm’s ability to research, develop, and present alternative benefit programs, innovative plan/rate designs, and their network of insurers or providers within the local market.
During the review process, the committee meticulously discussed and unanimously scored the top three firms out of the six proposals received. These top contenders were then invited to present to the panel, introducing their teams and answering follow-up questions, after which the panel independently confirmed their scores for each proposal.
Although pricing was relatively comparable across all firms, the top three stood out with a robust portfolio of public sector clients. The two leading firms distinguished themselves with superior expertise, experience, and a detailed plan for the City’s transition to their services. Alliant Insurance Services, Inc. emerged as the frontrunner.
It notably presented an alternative risk-sharing pool distinct from CalPERS aimed at controlling losses and offering effective risk management solutions. Alliant excelled in articulating their strategy for fostering a health-focused culture in the workplace.
Furthermore, as the largest public entity broker and consultant in California, Alliant provides a comprehensive suite of services including alternative plan designs, organizational development, compensation consulting, and workforce strategy and analysis. Finally, Alliant understood the importance that a benefit program can play in a total rewards strategy with the City’s recruitment and retention efforts. They provided solid examples of benchmarking specific to local cities and public agencies and described their approach to monitoring the latest trends so that the City’s benefit program can evolve to meet the needs of a rapidly changing workforce demographic.
The criteria for evaluating the proposals were defined by the following dimensions and their respective weightings:
•Adherence to the RFP Requirements: 5%
•Qualifications, Expertise, and Experience: 35%
•Work Plan/Approach/Completion of RFP Questionnaire: 35% •Client References: 10%
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•Pricing/Cost Method: 15%
Based on these criteria, the top-scoring firms were Alliant Insurance Services, Inc., USI, and Burnham Benefits. Each firm’s performance was assessed by seven raters, with a maximum score of 30 points. The scoring breakdown for each firm is as follows:
Firm Rater
1 Rater
2 Rater
3 Rater
4 Rater
5 Rater
6 Rater
7 Average
Score
Alliant
Insurance
28 24 28 29 22 28 26 26.42
USI 27 20 27 28 18 27 24 24.42
Burnham
Benefits
25 21 25 28 15 25 21 22.85
Upon approving the Professional Services Agreement with Alliant Insurance Services, Inc. the City will issue a written notice to our existing broker. In accordance with their contract, the current broker requires a 90-day notice period. However, the City intends to request an early release from the termination clause, enabling Alliant to immediately begin negotiations with our carriers on premium rates. This early transition will incur costs due to winding down the existing agreement. Consequently, staff proposes an appropriation of $60,000 from the Medical Fund’s net position to manage these costs.
STAKEHOLDERS/OUTREACH
The Request for Proposal was uploaded to the City of Glendale’s website for public access and emailed to ten firms.
FISCAL IMPACT
The early transition to Alliant Insurance Services, Inc. will incur costs due to winding down the existing agreement, which were not included as a part of the FY 2023-24 budget. Therefore, staff is requesting for an appropriation of $60,000 from the Medical Insurance Fund net position.
The appropriation request is outlined below:
Requesting Appropriation
Amount From (Account
String)
To (Account String) Funding Source
$60,000 27900-6160-HRD-
0000-P0000
43110-6160-HRD-
0010-P0000
Medical Insurance
Fund
The contract term with Alliant Insurance Services, Inc. will cost $273,000 annually and shall be included as a part of the annual budget.
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ENVIRONMENTAL REVIEW (CEQA/NEPA)
This item is not subject to CEQA review.
CAMPAIGN DISCLOSURE
In accordance with the City Campaign Finance Ordinance No. 5744, the following are the names and business addresses of the members of the board of directors, the chairperson, CEO, COO, CFO, Subcontractors and any person or entity with more than 10% interests in the company proposed for contract in this Agenda Item Report:
CEO- Tom Corbett
President – Greg Zimmer
COO – Peter Carpenter
CFO – Ilene Anders
Business Address: 18100 Von Karman Ave. 10th Floor, Irvine, CA 92612
ALTERNATIVES
Alternative 1: Approve a resolution of appropriation and a Professional Services Agreement with Alliant Insurance Services, Inc. which means continuing and appoint them as the Insurance Broker of Record for all benefits programs.
Alternative 2: The City Council may consider another alternative not proposed by staff.
ADMINISTRATIVE ACTION
Prepared by:
Paula Adams, Chief Human Resources Officer
Approved by:
Roubik R. Golanian, P.E., City Manager
EXHIBITS/ATTACHMENTS
Exhibit A- Scope of Work and Obligations of the Parties