TO: Mayor and City Council
FROM: Philippe Eskandar, City Manager
BY: Lizette Guerrero, Human Resources Director
DATE: September 9, 2026
SUBJECT: APPROVAL OF A CONTRACT WITH USI INSURANCE
SERVICES LLC FOR EMPLOYEE BENEFITS BROKERAGE
AND BENEFIT PLAN SERVICES
STRATEGIC PLAN CRITICAL SUCCESS FACTORS
Fiscally Responsible and Transparent City Government
Efficient, Responsive, and Effective City Services
BACKGROUND
The City provides employee benefits as an important component of its overall compensation program. These benefits include medical, dental, vision, life insurance, disability insurance, and other supplemental benefits made available to eligible employees and, where applicable, their dependents.
The administration and procurement of employee benefit programs is a complex and specialized function. Since 2018, the City has utilized a Broker of Record, USI Insurance Services LLC (USI), to assist with evaluating benefit plans, negotiating with insurance carriers, analyzing renewal proposals, identifying cost-containment opportunities, assisting with regulatory compliance, and providing ongoing support to the City, other than CalPERS Medical coverage. The benefits broker serves as an intermediary between the City and insurance carriers and provides specialized expertise that is not otherwise available within the City's existing staffing structure.
As part of the City's annual benefits process, Staff works with the broker to review current benefit plans, analyze carrier renewals, evaluate available alternatives, and determine whether changes are necessary to maintain competitive benefits while managing costs.
Tony Chou, Mayor
Calvin Lo, Vice Mayor
Hunter Chang, Council Member
John Chou, Council Member
Gretchen Shepherd Romey, Council Member
DISCUSSION
Specialized Nature of Employee Benefits Brokerage Services Employee benefits brokerage requires specialized knowledge of insurance products, health plans, carrier underwriting practices, regulatory requirements, employee benefits administration, and the public-sector employment environment. A qualified broker must understand the City's existing benefit structure and be able to evaluate competing plan designs, negotiate with carriers, identify cost-saving opportunities, and advise the City concerning the financial and operational consequences of benefit changes.
Continuity and Institutional Knowledge
The City's benefits program is an ongoing operation. Each year the broker develops knowledge regarding the City's plan structure, employee population, renewal history, carrier performance, claims and service issues, negotiated rates, plan utilization, and administrative practices. Maintaining a successful broker relationship therefore has a measurable operational value.
The City’s experience with USI has been positive. Throughout the relationship, USI has demonstrated a thorough understanding of the City’s employee benefits program and has provided consistent, responsive, and professional service. The firm’s institutional knowledge, industry expertise, and established relationships with benefit carriers have been valuable in assisting the City with annual renewals, evaluating benefit options, negotiating competitive rates, and addressing benefit-related issues.
The total cost of the contract during the five (5) year term is not to exceed $75,000, plus 2 additional 1-year extensions at the City’s option at the same annual rate. The cost is compromised of the following:
• The annual contract amount shall not exceed $15,000 per year
FISCAL IMPACT & PROCUREMENT REVIEW
The Human Resources Department budget funds for Employee Benefits Brokerage services in the Other Contract Services Account (Account #101-10- 4150-0000), and sufficient funds for these services are included each fiscal year as part of the Department’s proposed operating budget.
The Finance Director has reviewed this report and determined this is in accordance with S.M.C.C. 02.06.05.B.2 as the best interests of the City are served by dispensing with competitive bidding, based on the administration and procurement of employee benefit programs is a complex and specialized function.
LEGAL REVIEW
The City Attorney's office has reviewed and approved as to form.
RECOMMENDATION
Staff recommends the Council approve a contract with USI Insurance Services LLC for Employee Benefits Brokerage services for a five (5) year term in the amount not to exceed $75,000, plus 2 additional 1-year extensions at the City‘s option at the same annual rate. If the City Council concurs with staff’s recommendation, an appropriate motion would be:
“I move to authorize the City Manager to execute a contract with USI Insurance Services LLC for Employee Benefits Brokerage services for a five (5) year term in the amount not to exceed $75,000 and to exercise options subject to satisfactory performance and budget allocation.”
ATTACHMENTS
1. Standard Professional Services Agreement with USI Insurance Services LLC.