City Council
Report
City Council Meeting: May 10, 2022
Agenda Item: 3.D
1 of 3
To: Mayor and City Council
From: Gigi Decavalles-Hughes, Director, Finance Department, Risk Management Subject: Approval of First Modification to Agreement with Alliant Insurance Services, Inc. for Property Insurance Brokerage Services
Recommended Action
Staff recommends that the City Council authorize the City Manager to negotiate and execute a first modification to agreement #10433 in the amount of $267,000 with Alliant Insurance Service, Inc. for property insurance brokerage services. This will result in an eight-year amended agreement with a new total amount not to exceed $692,000, with future year funding contingent on Council budget approval.
Summary
The City has utilized the services of Alliant Insurance Services, Inc. (Alliant) to underwrite, negotiate, and secure its property insurance coverage. This type of insurance coverage is critical for the organization, as it protects the City’s facilities and vehicles, valued at over $1.3 billion, against risks such as fire, floods, and earthquakes.
The current property insurance broker agreement with Alliant is set to expire at the end of the current fiscal year. Alliant agreed to extend the agreement for three years at the current annual rate with no year-to-year increases. Staff believes that such a modification to the agreement would be prudent and cost-effective for the City given the current inflationary environment.
Discussion
The Risk Management Division of the Finance Department is responsible for ensuring the City has sufficient insurance in place to cover all liability, workers’ compensation, and property losses. In order to ensure that the City has access to the broadest range of high-quality property insurance coverage at the most competitive price, Risk 2 of 3
Management staff has relied on a professional insurance brokerage firm to procure the coverage. In addition, only professional brokers can secure difficult, but much needed, earthquake coverage for City buildings.
Alliant has been the City’s property insurance broker for the last 30 years. The company is considered a leader in the public entity insurance industry and is responsible for designing the Alliant Property Insurance Program (APIP). The program was developed specifically to meet the extensive needs of America’s municipalities, hospitals, and nonprofit organizations. Most cities and counties in California participate in APIP; the program annually insures over $450 billion worth of public entity property across the country. The City has participated in APIP since its inception in the mid-1990s and can only continue to do so as Alliant’s client. The program provides numerous advantages for the City, such as:
• APIP’s size and market share can almost always ensure the City obtains the best coverage at the most competitive price, and it can better weather market swings. • APIP provides ample policy limits of $1 billion in all-risk coverage and a low deductible of $100,000 per occurrence for most losses.
• APIP offers more comprehensive coverage than traditional property insurance policies. For example, it provides municipal bond and tax revenue interruption coverage, builders’ risk insurance at no cost for projects valued at $25 million or less, and trained animal coverage (e.g., police dogs, patrol horses, etc.).
On February 28, 2017 (Attachment A), Council approved an agreement with Alliant for property insurance brokerage services following a competitive selection process. With the agreement set to expire on June 30, 2022, Alliant approached staff about extending the agreement. After some negotiation, Alliant agreed to not increase its annual brokerage fee for the next three years. Given Alliant’s proven track record of securing property insurance coverage for the City through its proprietary program, staff believes that it will be in the City’s best interests to extend the contract for an additional three years rather than to go through a new procurement process. 3 of 3
Past Council Actions
Meeting Date Description
February 28, 2017
(attachment A)
Authorize agreement with Alliant Insurance Services, Inc. following RFP process.
Financial Impacts and Budget Actions
Staff seeks authority to approve funding from the Self Insurance, Risk Management - Administration Fund to increase the amount of the agreement with Alliant Insurance Service, Inc. for property insurance brokerage services. The annual cost for the extension of the agreement is $89,000, which is the same as the cost for FY 2021-22.
Future year funding is contingent on Council budget approval.
Contract Modification Request
Agreement #
Current
Authorized
Amount
Modified
Request
Amount
Dept Account #
Total Revised
Contract
Amount
10433 $425,000 $267,000 75300001.534540 $692,000
Prepared By: Oles Gordeev, Risk Manager
Approved Forwarded to Council
Attachments:
A. Attachment A - Authorize Agreement with Alliant Insurance Services, Inc.
B. OAKS INITIATIVE FORM 4.20.22
C. 5.5.2017 Alliant Professional Services Agreement