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844-McLain-Broker Services AgrmSEP 13 BROKER SERVICES AGREEMENT (IIFP 99/00-25) between ARTHUR J. GALLAGHER & CO., duly authorized o Florida, whose address is 7380 Sand Lake Road, Suite 390, Orlando, Florida 32819, and M°Lain, Pierce and Associates, duly author/z. ed to conduct business in the State of Florida, whose address is 720 S. Park Avenue, Sanford, Florida 32772, hereinafter called the "BR.OKjERS" and City of Sanford, a pollIdeal subdivision of the State of Florida, whose address is City of Sanford~ 300 N. Park Avenue, Sanford, Florida 32771, hereinafter called the "CITY." WITNESSEl/I: WHEREAS, the CITY desires to retain the services of competent and-qualified contractors to provide broker services in THE CITY O1: SANFORD; and WHEREAS, the CITY has requested and received expressions of interest for the retention of services of contractors; and ~REAS, BP, OIGP,-S are competent and qualified to furnish broker services to the CITY 'and desires to provide its professional services accordi-g to the tcnns and conctitions stated herein, NOW, THEREFORE, in consideration of the mutual understandings and covenants set forth herein, CITY and Br<OKEES agree as follows: SECTION 1. SERVICES. CITY does hereby retain BROKERS to x~amish professional services and perform those tasks as outlined in their response to RFP 99/00-25 (Se~ Attactnnent A) incorporated herein and made part hereof. SECTION 2. AUTHORIZATION FOR SERVICES. Authorization for performance of professional services by the BROKERS under this Agreement shall be in the form of written Notice to Proceed issued and executed by the CITY. SECTION 3. COMPENSATION. (a) The CITY agrees that compensation to BROKERS for the professional services called for under this Agreement will be provided by the Insurance Companies said BROKERS will utilize for procurement of insurance coverages. No fees of any type will be paid for by the CITY for services rendered. Brokers, shall make all materials and records relating to professional services available to the City for inspection upon request. (b) CITY agrees to maintain services of said BROKERS for (3) three consecutive years with an annual option in year (4) four and in year (5) five. SECTI.ON 4. RESPONSIBILITY OF BROKERS. (a) BROKERS shall be responsible for the professional quality, technical accuracy and the coordination of all plans, studies, reports and other services related to the Risk Management Program(s) furnished by the BROKERS under this Agreement. BROKERS shall, without additional compensation, correct or revise any errors or deficiencies in their services. (b) Neither the CITIES review, approval or acceptance of, any of the services required shall be construed to operate as a waiver of any rights under this Agreement or of any cause of action arising out of the performance of this Agreement and the BROKERS shall be and remain liable to the CITY in accordance with applicable law for all damages to the CITY caused by the BROKERS performance or non-performance of any of the services furnished under this Agreement. SI~CTION 5. OWNERSHIP OF DOCUMENTS. All. deliverable reference data, survey data, plans and reports that result from the BROKERS services under this Agreement shall become the property of the CITY. No changes or revisions to the documents furnished by BROKERS shall be made by CITY or its agents without the written approval of BROKERS. SECTION 6. TERM. This Agreement shall take effect on the date of its execution by CITY and shall remain in effect for a period of three (3) years. At the option of the CITY, this Agreement may be renewed for two (2) additional terms of one (1) year each. SECTION 7. TERMINAITON. (a) The CITY may, by written notice to the BROKERS, terminate this Agreement, in whole, or in part, upon a 90-day notice because of the failure of the BROKERS to fulfill BROKER Agreement obligations. Upon receipt of such notice in writing, the BROKERS shall: (1) immediately discontinue all services affected unless the notice directs otherwise, and (2) deliver to the CITY all plans, studies, reports, estimates, summaries, and such other information and materials as may have been accumulated by the BROKERS in performing this Agreement, whether completed or in process. (b) If the termination is due to the failure of the BROKERS to fulfill his Agreement prosecute the same to completion by Agreement be liable to the CITY for reasonable additional costs occasioned to the CITY thereby. The BROKERS shall not be liable for such additional costs if the failure to perform the Agreement arises out of causes beyond the control and without the fault or negligence of the BROKERS. CI Y m e~the , r strikes, freight embargoes, and unusually severe weather; but, in every case, the failure to perform must be beyond the control and without the fault or negligence of the BROKERS. (c) If, after notice of termination for failure to fulfill Agreement obligations, it is determined that the BROKERS had not so failed, the termination shall be deemed to have been effected for the convenience of the CITY. In such event, adjustment in the Agreement price shall be made as provided in subsection (b) of this Section. (d) The rights and remedies of the CITY provided in this clause are in addition to any other rights and remedies provided by law or under this Agreement. SECTION 8. EQUAL OPPORTUNITY EMPLOYMENT. BROKERS agree that it will not discriminate against any employee or applicant for employment for work under this Agreement because of race, color, religion, sex, age, national origin, or disability and will take steps to ensure that applicants are employed, and employees are treated during employment, without regard to race, color, religion, sex, age, national origin or disability. This provision shall include, but not be limited to, the following: employment, upgrading, demotion or transfer; recruitment advertising; layoff or termination; rates of pay or other forms of compensation; and selection for training, including apprenticeship. SECTION 9. ASSIGNMENT. This Agreement, or any interest herein, shall not be assigned, transferred, or otherwise encumbered, under any circumstances, by the parties hereto without prior written consent of the opposite party and only by a document of equal dignity herewith. 4 SECTION 10. SUBCONTRACTORS. In the event BROKERS, during the course of the work under this Agreement, requires the services of any subcontractors or other professional associates in connection with service covered by this Agreement, BROKERS must secure the prior written approval of the CITY. If subcontractors or other professional associates are required in connection with the services covered by this Agreement, BROKERS shall remain fully responsible for the services of subcontractors or other professional associates. A// subcontracts shall include a provision making the CITY a Third Party Beneficiary of the contact. SECTION 11. INDEMNIFICATION OF CITY. BROKERS shall indemnify and hold harmless and defend CITY, its officers, agents, and employees from and against any claim, demand or cause of action of whatsoever kind including the payment of attorney fees and costs or nature arising out of, allegedly arising out of, or related to the performance of services under this Agreement by BROKERS, its officers, agents or employees. SECTION 12. INSURANCE. (a) General. The BROKERS shall at the BROKER'S own cost, procure the insurance required under this Section. (1) The BROKERS shall furnish the CITY with a Certificate of Insurance signed by an authorized representative of the insurer evidencing the insurance required by this Section (Professional Liability, Workers' Compensation/Employer's Liability and Commercial General Liability). The CITY, its officials, officers, and employees shall be additional named insured under the Commercial General Liability policy. The Certificate of Insurance shall provide that the CITY shall be given not less than thirty 5 (2) (3) (4) (30) days written notice prior to the cancellation or restriction of coverage. Until such time as the insurance is no longer required to be maintained by the BROKERS, the BROKERS shall provide the CITY with a renewal or replacement Certificate of Insurance not less than thirty (30) days before expiration or replacement of the insurance for which a previous certificate has been provided. The Certificate shall contain a statement that it is being provided in accordance with the Agreement and that the insurance is in full compliance with the requirements of the Agreement. In lieu of the statement on the Certificate, the BROKERS shall, at the option of the CITY submit a sworn, notarized statement from an authorized representative of the insurer that the Certificate is being provided in accordance with the Agreement and that the insurance is in full compliance with the requirements of the Agreement. In addition to providing the Certificate of Insurance, if required by the CITY, the BROKERS shall, within thirty (30) days after receipt of the request, provide the CITY with a certified copy of each of the policies of insurance providing coverage required by this Section. Neither approval by the CITY or failure to disapprove the insurance furnished by BROKERS shall relieve the BROKERS of the BROKERS full responsibility for performance of any obligation including BROKERS indemnification of CITY under this Agreement. (b) Insurance Company Requirement. Insurance companies providing the insurance under this Agreement must meet the following requirements: (I) Companies issuing policies other than Workers' Compensation 'must be authorized to conduct business in the State of Florida and prove same by maintaining Certificates of Authority issued to the companies by the Department of Insurance of the State of Florida. Policies for Workers' Compensation may be issued by companies authorized as a group self- insurer by Section 440.57, Florida Statutes. (2) In addition, such companies other than those authorized by Section 440.57, Florida Statutes, shall have and maintain a Best's Rating of "A"- or better and a Financial Size Category of "VI" or better according to A.M. Best Company. (3) If, during the period which an insurance company is providing the .;, insurance coverage required by this Agreement, an insurance company shall: 1) lose its Certificate of Authority, 2) no longer comply with Section 440.57, Florida Statutes, or 3) fail to maintain the Best's Rating and Financial Size Category, the BROKERS shall, as soon as the BROKERS has knowledge of any such circumstance, immediately notify the CITY and immediately replace the insurance coverage provided by the insurance company with a different insurance company meeting the requirements of this Agreement. Until such time as the BROKERS has replaced the unacceptable insurer with an insurer acceptable to the CITY the BROKERS shall be deemed to be in default of this Agreement. (c) Specifications. Without limiting any of the other obligations or liability of the BROKERS, the BROKERS shall, at the BROKERS sole expense, procure, maintain and keep in force amounts and types of insurance conforming to the minimum requirements set forth in this Section. Except as otherwise specified in the Agreement, the insurance shall become effective prior to the commencement of work by the BROKERS and shall be maintained in force until the The amounts and types of insurance shall conform to the following Agreement completion date. minimum requirements. (1) Workers' Compensation/Employer's Liability. (A) BROKERS insurance shall cover the BROKERS and its subcontractors of every tier for those sources of liability which would be covered by the latest edition of the standard Workers' Compensation Policy, as filed for use in Florida by the National Council on Compensation Insurance, without restrictive endorsements. In addition to coverage for the Florida Workers' Compensation Act, where appropriate, coverage is to be included for the United States Longshoremen and Harbor Workers' Compensation Act, Federal Employers' Liability Act and any other applicable federal or state law. (B) Subject to the restrictions of coverage found in the standard Workers' Compensation Policy, there shall be no maximum limit on the amount of coverage for liability imposed by the Florida Workers' Compensation Act, the United States Longshoremen's and Harbor Workers' Compensation Act, or any other coverage customarily insured under Part One of the standard Workers' Compensation Policy. (C) The minimum amount of coverage under Part Two of the standard Workers' Compensation Policy shall be: $100,000.00 (Each Accident) $500,000.00 (Disease-Policy Limit) $100,000.00 (Disease-Each Employee) (2) Commercial General Liability. (A) The BROKERS' insurance shall cover the BROKERS for those sources of liability which would be covered by the latest edition of the standard Commercial General Liability coverage Form (ISO Form CG 00 01), as filed for use in the State of Florida by the Insurance Services Office, without the attachment of restrictive endorsements other than the elimination of Coverage C, Medical Payment and the elimination of coverage for Fire Damage Legal Liability. (B) The minimum limits to be maintained by the BROKERS (inclusive of any amounts provided by an Umbrella or Excess policy) shall be those that would be provided with the attachment of the Amendment of Limits of Insurance (Designated Project or Premises) endorsement (ISO Form CG 25 01) to a Commercial General Liability Policy with amount of coverage specified ,for each project as follows: LIMITS $Three (3) Times the Each Occurrence Limit $300,000.00 General Aggregate Personal & Advertising Injury Limit Each Occurrence Limit $300,000.00 (3) Professional Liability Insurance. The BROKERS shall carry limits of not less than FIVE HUNDRED THOUSAND AND NO/100 DOLLARS ($500,000.00). (d) Coverage. The insurance provided by BROKERS pursuant to this Agreement shall apply on a primary basis and any other insurance or self-insurance maintained by the CITY or 9 the CITIES officials, officers, or employees shall be excess of and not contributing with the insurance provided by or on behalf of the BROKERS. (e) Occurrence Basis. The Workers' Compensation Policy and the Commercial General Liability required by this Agreement shall be provided on an occurrence rather than a claims- made basis. The Professional Liability insurance policy must either be on an occurrence basis, or, if a claims-made basis, the coverage must respond to all claims reported within three (3) years following the period for which coverage is required and which would have been covered had the coverage been on an occurrence basis. (f) Obligations. Compliance with the foregoing insurance requirements shall not relieve the BROKERS, its employees or agents of liability from any obligation under a Section or any other portions of this Agreement. SECTION 13. EMPLOYEE BENEFITS. Coverage to be afforded as outlined in RFP 99/00-25 (Attachment A). SECTION 14. REPRESENTATIVE OF CITY AND BROKER. (a) It is recognized that questions in the day-to-day conduct of performance pursuant to this Agreement will arise. The CITY, upon request by BROKERS, shall designate in writing and shall advise BROKERS in writing of one (1) or more CITY employees to whom all communications pertaining to the day-to-day conduct of the Agreement shall be addressed. The designated representative shall have the authority to transmit instructions, receive information and interpret and define the CITIES policy and decisions pertinent to the work covered by this Agreement. (b) BROKERS shall, at all times during the normal work week, designate or appoint one or more representatives of BROKERS who are authorized to act on behalf of BROKERS 10 regarding all matters involving the conduct of the performance pursuant to this Agreement and shall keep CITY continually advised of such designation. SECTION 15. ALL PRIOR AGREEMENTS SUPERSEDED. This document in- corporates and includes all prior negotiations, correspondence, conversations, agreements or understandings applicable to the matter contained herein and the parties agree that there are not commitments, agreements or understandings concerning the subject matter of this Agreement that are not contained or referred to in this document. Accordingly, it is agreed that no deviation from the terms hereof shall be predicated upon any prior representations or agreements, whether oral or written. SECTION 16. MODIFICATIONS, AMENDMENTS OR ALTERATIONS. No modification, amendment or alteration in~ the terms or conditions contained herein shall be effective unless contained in a written document executed with the same formality and of equal dignity herewith. SECTION 17. INDEPENDENT CONTRACTOR. It is agreed that nothing herein contained is intended or should be construed as in any manner creating or establishing a relationship of copartners between the parties, or as constituting the BROKERS including its officers, employees, and agents, the agent, representative, or employee of the CITY for any purpose, or in any manner, whatsoever. The BROKERS are to be and shall remain an independent contractor with respect to all services performed under this Agreement. SECTION 18. EMPLOYEE STATUS. Persons employed by the BROKERS in the performance of services and functions pursuant to this Agreement shall have no claim to pesion, workers' compensation, unemployment compensation, civil service or other employee rights or 11 privileges granted to the CITIES officers and employees either by operation of law or by the CITY. SECTION 19. SERVICES NOT PROVIDED FOR. No claim for services furnished by the BROKERS not specifically provided for herein shall be honored by the CITY. SECTION 20. PUBLIC RECORDS LAW. BROKERS acknowledges CITIES obligations under Article 1, Section 24, Florida Constitution and Chapter 119, Florida Statutes, to release public records to members of the public upon request. BROKERS acknowledge that CITY is required to comply with Article 1, Section 24, Florida Constitution and Chapter 119, Florida Statutes, in the handling of the materials created under this Agreement and that said statute controls over the terms of this Agreement. SECTION 21. NOTICES. Whenever either party desires to give notice unto the other, it must be given by written notice, sent by certified United States mail, with return receipt requested, addressed to the party for whom it is intended at the place last specified and the place for giving of notice shall remain such until it shall have been changed by written notice in compliance with the provisions of this Section. For the present, the parties designate the following as the respective places for giving of notice, to wit: FOR CITY OF SANFORD: Mayor 300 N. Park Avenue Sanford, Florida 32771 FOR BROKERS: Arthur J. Gallagher & Co. McLain, Pierce and Associates 7380 Sand Lake Road, Suite 390 720 S. Park Avenue Orlando, Florida 32819 Sanford, Florida 32772 12 SECTION 22. RIGHTS AT LAW RETAINED. The rights and remedies of the CITY, provided for under this Agreement, are in addition to any other rights and remedies provided by law. SECTION 23. COMPLIANCE WITH LAWS AND REGULATIONS. In providing all services pursuant to this Agreement, the BROKERS shall abide by all statutes, ordinances, rules, and regulations pertaining to, or regulating the provisions of, such services, including those now in effect and hereafter adopted. Any violation of said statutes, ordinances, rules, or regulations shall constitute a material breach of this Agreement, and shall entitle the CITY to terminate this Agreement immediately upon delivery of written notice of termination to the BROKERS. SECTION 24. CONFLICT OF INTEREST. (a) The BROKERS agree that it will not engage in any action that would create a conflict of interest in the performance of its obligations pursuant to this Agreement with the CITY or which would violate or cause others to violate the provisions of Part III, Chapter 112, Florida Statutes, relating to ethics in government. (b) The BROKERS hereby certifies that no officer, agent or employee of the CITY has any material interest (as defined in Section 112.312 (15), Florida Statutes, as over 5%) either directly or indirectly, in the business of the BROKERS to be conducted here, and that no such person shall have any such interest at any time during the term of this Agreement. (c) Pursuant to Section 216.347, Florida Statutes, the BROKERS hereby agree that monies .received from the CITY pursuant to this Agreement will not be used for the purpose of lobbying the Legislature or any other State or Federal Agency. 13 IN WITNESS WHEREOF, the parties hereto have made and executed this Agreement for the purposes stated herein. Date: ~I41X) ARTHUR J. GALLAGHER & CO. ny:~,~..4..)f.~/ Glenn R. Tobey, Area President Date: September 6, 2000 BMy~LA~OCIATES Chester A. Pierce, President Date: 14 ATTACHMENT A BROKER SERVICES MARKETING AND INSURANCE COVERAGES BROKER SERVICES Marketing Strategy In order to determine the best advantageous insurance markets to provide the services requested by the City, a History of Losses and Exposures of t he City is paramount. 1. Who will insure the environment liability? 2. Who can provide incidental medical malpractice for EMT? 3. Will the insurance company allow the County to select their own legal defense, or will it be assigned by the company? 4. Who can provide Florida Wind capacity at reasonable deductible levels? 5. Who can offer the most advantageous Managed Care arrangements for Workers' Compensation? '- There are only five (5) examples of probably one hundred (100) scenarios we at Gallagher consider before approaching any market for insurance coverages. The Loss Analysis we conduct, not only demonstrates premium to loss ratio's, but specifically provides type of loss, by what department, by part of body. This information is crucial in determining what insurance markets may be approached. Exhibits A, B and C are hypothetical examples of what we present to insurance underwriters for the best possible program. 2 Timing In theory for a Public Entity client, the Brokers completed proposal should be in the hands of the City sixty days prior to expiration. This allows two (2) full weeks for staff to review and recommend to the board. Based on the board's agenda items, it allows three (3) board meetings to vote on staffs recommendation. This also means updated underwriting data should be sent to the City by the broker on July 1 of each year. This allows staff forty-five days to compile the requested information. Once received by the broker, it allows us forty-five days to prepare the underwriting proposal, meet with underwriters and prepare the final proposal. In many cases three or four insurance companies may be involved, especially with Florida Property Coverage. With on broker working on all areas in insurance, there should be no problem meeting these time frames. An annual timetable has been developed on Exhibit D. This is further elaborated on in Section 6, Stewardship Reports. We know ideal conditions can not always be met. With the relationship we have with a number of underwriting companies, we have been able to accomplish our clients goals and needs in as little time as three weeks. 3 Client Meeting and Meeting with Underwriters It should be noted that we at Gallagher encourage meeting with underwriters. By building a closer relationship between client and underwriter can only enhance renewal terms and conditions. Underwriters also get a better appreciation of what City staff faces on a day-to-day basis. We at Gallagher meet with underwriters on a frequent basis. It builds trust and assurance that the underwriters know we at Gallagher know City exposures. We further encourage at least monthly meetings with our clients to discuss ongoing situations at the City. We provide periodical updates of the marketplace and can provide updated information which relates to City business. We also recommend that we be brought in on claim involvement. Through our expertise in policy language and interpretation, we can assist in equitable claim settlement. The attached letter, Exhibit E, from Seminole County School Board supports our involvement. Major Insurance Carriers by Line of Coverage Arthur J. Gallagher & Co. is one of the leading brokers in the country who provides insurance programs to Public Entities. In stating that our Corporation has developed a Corporate Solvency Committee to monitor the fmancial stability of insurance companies. Attached, Exhibit F, indicates our corporate guidelines which indicates we must use a Best Rated insurance company which is A-6 or better. Them are insurance companies who might be able to provide lower pricing, however, their rating structure is less than A-6. If our client elects to purchase from that company or companies, we must obtain a sign-off letter from the client. Therefore, we do not recommend insurance companies that are not rated by Best with an A-6 or lower rating. The only exception is the Underwriters of Lloyds of London (not rated by Best) with policyholders surplus in excess of 23 Billion U.S. dollars. CLAIM ADMINISTRATION Claims Administration Our team effort have access to the following list of "TPA", Third Party Administrators. 1. Gallaghcr Bassett Services, Inc. - A division of Arthur J. Gallagher & Co. 2. United Self Insured Services - A large, local finn in Orlando 3. Humana - A large, local firm in Orlando 4. Crawford and Company 5. Professional Administrators 6. IAS 7. Commercial Risk Management 8. Johns - Eastern 9. GAB 10. Willis-Coroon Administrative Services 11. Sewell, Todd & Broxton All of the above firms have clients in the Public Entity Sector. The first four (4) fn'ms have the most experience in the Public Entity Sector, especially here in Florida. Humana, primarily focuses on Workers' Compensation coverages. The following criteria will be required by all TPA Service Companies. 3 Claims Management Services · Litigation Management · Subrogation Management · Settlement Management · Rehabilitation Management · Reserve Management · Investigation Management · Managed Care Management Not only are these companies involved in large claims handling, but are also involved in the day to day handling of all claims. To track each claim, reports are issued on a monthly basis. Claims Management Renorts · Reports by Coverage · Reports by Department · Accurate Reports · Timely Reports · Sdex Facs · Comprehensive Data Reports · Ad Hoc Capabilities · Specific Excess Reports · Aggregate Excess Reports Gallagher Bassett Services, Inc. THIRD PARTY ADMINISTRATION SERVICES Workers Compensation The activities outlined below form the basic steps through Which all workers compensation claims progress. Receipt of Employers First Report of Injury by Gallagher Basserr Claim is coded - Type of accident - Source of accident - Cause of accident - Nature of loss - Pa~t of body Total Experience is established - Indemnity - Medical - Expense - Rehabilitation File is set up - File physically erected - Data input into the RisX;Facs system - State form mailed to Industrial Commission - Medical reports requested - Client contacted - Index Bureau processing - Investigate as necessary - Calculate-benefits Receipt of Important Additional Information from Client Complete investigation of claim Conduct independent medical exam Evaluate total experience Determine recoveries i0 Gallagher Bassett Services, Inc. THIRD PARTY ADMINISTRATION SERVICES Receipt of Medical Information · Accept or deny claim · Payment of lost time benefits · Payment of medical benefits · Rehabilitation · Request for additional medical information · Evaluate total experience Receipt of Legal Documents · Assign case to legal counsel · Discuss case with claimant's attorney · Evaluate total experience · Discuss options with client and their attorney · Accept or deny claim Final Disposition · Receive final medical information · Evaluate for permanent disability/total experience · Discuss settlement/denial with client as needed · Close file Liability The activities outlined below form the basic steps through which all progress. Receipt of Liability Acord Form Claim is coded - Type of accident - Source of accident - Cause of accident - Nature of loss liability claims 11 Gallagher Bassett Services, Inc. THIRD PARTY ADMINISTRATION SERVICES Total experience is established - Loss reserve - Expense reserve File is set up - File physically erected Data entered into the Risx-Facs system Client contacted Investigate as necessary Receipt of Important Additional from Client Complete investigation of claim On-site investigation as required Contribution, subrogation determination Re-evaluate total experience Receipt of Legal Documents · Assign case to legal counsel · Discuss case with claimant's attorney and request status reports · Re-evaluate total experience Final Disposition · Receive final claim information · Discuss settlement/denial with client as needed · Close file Property The activities outlined below form the basic steps through which all property claims progress. Receipt of Property First Report Form Claim is coded File is set up - File physically erected - Data entered into the Risx-Facs system - Investigate as necessary - Contact client - Appropriate reporting is provided to the client and if necessary, to their excess carrier 12 Gallagher Bassett Services, Inc. THIRD PARTY ADMINISTRATION SERVICES Receipt of Important Additional Information from Client Complete investigation of claim (coverage verification} Establish reserve Determine recoveries (salvage/subrogation} Issue appropriate reports Final Disposition Verification of claim details Negotiate value settlement with client Close loss Submit documents for final payment issuance C. Claims Branch Workload and Responsibility: The average inventory by adjuster, by line of coverage, is as follows: Property and Liability Senior Claims Adjuster: 170 Claims Typically, the Sr. Claims Adjuster has the ability to handle the more complex liability and property claims. Workers' Compensation Medical Only Processor: Indemnity Team: 300 Claims 200 Claims 13 Additional Third Party Claims Administration Most TPA utilize a "team concept" in managing indemnity claims arising out of a Workers Compensation program. The team will usually consist of a supervisor, senior adjuster as well as a licensed claims adjuster. This concept allows for the senior adjuster to focus on the more complex issues involved in managing a Workers Compensation claim with the adjuster providing support on more routine issues at hand. The team concept all provides our client with the assurance that an adjuster who is familiar with the program is available at all times should questions arise. Additional Services offered by all TPA are as follows: A.) C.) D.) E.) F.) G.) Information Management Loss and Claim Experience Reports Account Coordination Banking Managed Care Prescription Drug Loss Control Services We have included information in the following pages on Genex, a managed care provider, loss reports from Gallagher Bassett and Loss Prevention Strategy. 14 C:: E: E r- E: C:: O 0 0 r- E I:: 0 E LLI :::] " ~D __1 ~- :~ <(: ~ c .J ._ .,_. 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GALLAGHER & CO. - ORLANDO Loss Control/Prevention Strategy We have found that be organizing a consistent, uniform loss control program, the chances of producing meaningful results are far greater than random activities. Accidents will occur until causes are addressed. A disciplined, managed, loss control system that anticipates and prevents accidents can turn the expense of losses into Risk Management Program cost savings. We advocate a pro-active Loss Control program rather then re-active. This approach helps develop and implement a structured Loss Control Program, with flexible options to help deal with past losses and the effects of change. The focus of a pro-active Loss Control program is a constant' cycle of information gathering, analysis, evaluation and decision making. The steps involved in the process are: Identify and evaluate loss exposures - through surveys, loss reports, analysis and reviews of the current program. Analyze and evaluate options to address losses. A focus will be made to fit Seminole's culture and organizational structure. Develop strategies and implement cost-effective "Action Plant" to reduce losses. Monitor the activities and results of the implemented "Action Plan". Adjust strategies and goals where necessary. With the commitment of concerned management to a sound "Action Plan", the following benefits from this approach can be realized. Safety is increased Risks are reduced Loss exposures are controlled Accountability is developed and maintained Severe losses are limited The probability and frquency of accidents' are reduced Gallagher Bassett Services, Inc. RISK CONTROL CONSULTING SERVICES LOSS CONTROL SERVICE OPTIONS SURVEYS ANDINSPECTIONS These services are designed to identify and evaluate the impact of loss exposures and risks on an organization. This process helps pdodtize those areas which can most economically benefit from Loss Control Aclivities. Audits and surveys may also be used to monitor the effecliveness of Loss Control or Safely Programs thai are currently In - place. Self-Inspection Forms/Programs Safety Audits On-site Loss Control Surveys Safety Policy/Procedure/Program Review Comprehensive Safety Evaluations Properly Surveys Fire Exposure Audits Construction Plan/Specification Review Business Interruption Analysis Disaster Plan Review Regulatory Compliance Audits Security System Analysis Fleet Analysis Chemical Safety Analysis Accident Investigation Special Studies Human Factors Analysis Workplace Ergonomic Assessment Report Ergonomic Analysis Job Observation Job Safety Analysis Police/Security Liability Analysis Liability Assessment Profile Policy/Procedure Review Industrial Hygiene Personnel/Area Monitoring Noise Monitoring Process Hazard Evaluations Environmental Risk Assessment Properly Transfers Underground Storage Tanks Indoor Air Pollution Ration Monitoring Gallagher Bassett Services, Inc. PROGRAM DEVELOPMENT AND IMPLEMENTATION These services are designed to empower an organization to manage its own risks and loss exposures by providing the 'tools" for Loss Control. These tools include programs, procedures, guidelines, safety manuals and other documentation. Self Inspection Programs Hazard Recognition Programs Slip/Trip/Fall Prevention Programs Accident Investigation Programs OSHA Compliance Programs Hazard Communication Injury/Illness Record keeping Self-monitoring Audit Program Safety Programs Safety Policies Safety Procedures Safety Manuals Fleet/Driver Safety Programs Employee WellnesslStress Reduction Programs Workers Compensation Control Programs Return to Work Programs Back Strain/Injury Control Uability Control Programs Police Security Athletic Padicipation Errors and Omissions · Directors and Officers Sexual Misconduct Property Loss Control Programs Fire Prevention Secudty Arson Prevention Vandalism Control Property Conservation PREMIUM/LOSS ALLOCATIONS Premium/Loss Allocations We have developed a charge-back system which can apply per department for your total insurance costs program. This system also identifies the high risk areas of loss whereby increased measures of additional loss prevention training, seminars are recommended. This charge-back system can be utilized by the City if you elect to employ once we have all the underwriting information for the City. This WILL BE part of our overall proposal. We will work with your risk management department on our system. Basically, percentages of premium and loss dollars are charged to each department based on exposure and prior loss history. It is a effective program of safety awareness for department heads and supervisors. If the City has implemented a charge back system, we will review and recommend any improvements, if warranted. 17 STEWARDSHIP REPORTS Stewardship Reports A comprehensive annual E&O policy review is completed each year, byline of coverage, by the producing broker and assistant. The branch manager is also required to sign off on these reports. Sample attached. We have a computerized software program to track and date work performance and length of time, if requested. The two main features of our Stewardship Reports are: ( 1 ) Service Issues (2) Education and Training The following pages detail each coverage section which will be tailored for the City of Sanford's specific needs and exposures. 18 Arthur J. Gallagher & Co. - Orlando STE IVA RDSHIP R EPOR F Name of Account: Name of Employee: PROPERTY SERVICE , Assist in coverage determination. · Coordination of quota share/layered policies. · Check for coverage gaps/non-concurrency. · Negotiate manuscript policies. · Assist mortgagees with certificates and policies. · Contract/lease review for insurance requirements. · Arrange client/carrier meetings. · Review property values with insureds annually prior to renewal. · Follow-up on Builders Risk construction schedules for occupancy and completion. · Request a signed Statement of Values from the insured. · Illustrate creative approaches to difficult placements by using techniques such as primary/excess, quota share layering and deductible buybacks. · Review insured's contracts (leases, etc.). · Use E & O Checklist to make sure client gets coverage that carrier quoted to them. · Specification Design - help prospects and clients design coverage specifications for marketing their program. · Send letter of confirmation when insured requests changes. · Confirm additional insureds/mortgagees with insured prior to adding to policy. · Send copies of certificates to insured for their records. · Provide client with a comprehensive schedule of coverages for easy reference. · Set up generic letters of recurring situations to expedite processing (generic letter to inform client that certificate was mailed). · Ability to place difficult values with Gallagher Intermediaries. · Negotiate multiple year deals with underwriters if advantageous to client. · Coastal Property market development. · Maintain premium breakdown by division. PROPERTY EDUCATION/TRAINING · Educate insured on policy deductibles. · Educate and recommend blanket coverages where possible. · Educate client as to coverage for additions, newly acquired exposures. · Explain to insured exactly how loss will be settled. · Develop a standard letter to make clients aware of warranties in policy. · Educate the insured on co-insurance. · Discuss appropriate information from John Liner and other insurance publications. · Understand lab burn test. · Send insured information that would be of interest to their business. · Send newsletter. · Conduct seminars on relevant topics (include other AJG divisions where appropriate, e.g., AMSEC). · Arrange for client to participate in industry programs/seminars. 2{~ GENERAL LIABILITY SERVICE ISSUES · Explain premium basis Audit vs. Flat charge. · Identify exposures and explain impact of Risk Retention and Transfer. · Certificates: * Review vendors coverage for certificate holders * Update certificate list for insured * Monitor certificates for insured so exposures can be passed on. · Update loss runs on a scheduled basis and review with insured. · Set up network of specialized service providers. · Review insured's contracts with suppliers, customers, lessors, distributors and lessees. Review leases and hold harmless agreements of insured. Assist with Disaster planning for liability events. Recommend actuaries. Develop quarterly service plan. Premium allocation by profit center. Provide educational seminars on current hot topics. Research coverage issues and disseminate to all clients. Coordinate with TPA. Alternative funding methods. Offer AJG Drug Testing Program to those insureds who have a need. Quote higher umbrella limits. Confirm that underlying limits meet Excess/Umbrella requirements. Provide claims kit with Company specific claim reporting information. Make sure punitive damages are covered and check that Umbrella/Excess policy follows form. · Send confirmation letter when clients request changes. · Give timely articles on Auto and GL. · Review certificates of insurance provided to client by others. · Subscribe to the client's trade journals - point out interesting articles. 21 WORKERS COMPENSATION SAFETY AND LOSS CONTROL · Help decide where to focus loss control efforts, based on frequency and severity parameters. · Forecasting - help trend and develop to arrive at expected losses. · Safety Program - help with design, implementation and monitoring. · Attend loss control and claims management meetings with client. · Demonstrate long-term cost savings from loss prevention expenditures. · Assist in creating safety manuals, newsletters and brochures. · Help establish pre-employment physical protocol. · Consult with index Bureaus for "repeaters". · Assist with OSHA compliance. Review OSHA logs. · Ensure proper use of loss control for hazard identification and analysis. · Review claims to determine problem areas. · Be a catalyst for Safety Incentive Programs. · Always quote at least one option that is loss sensitive. · Pro-active employer/employee communications after claims. · Implement program for accidents involving motor vehicles. · Encourage client to do regular walk-through of work areas - check on employees use of safety gear, safeguards on machinery, proper lifting techniques. · Work with client on ideas for building employee morale to reduce fraud. · Visit insured locations with claims representative before loss occurs. · Assist in obtaining safety equipment discounts. · Assist in identifying fraudulent claims and be pro-active in helping to seek solutions. · Suggest client-specific safety and loss control activities based on prior losses. · Assist in establishing safety committee. · Investigate segregation of plant areas for possible code reduction. WORKERS COMPENSATION SAFETY AND LOSS CONTROL (continued) · Help decide where to focus loss control efforts, based on frequency and severity parameters. · Recommend pre-placement services. Can also dovetail with employers responsibilities under ADA. · Recommend ergonomic studies. · In chemical related or other high hazard risks, sell GB loss control assistance. AUTO SERVICE ISSUES · Run MVR's on prospective and current employees. · Provide a c!aim report to be kept in vehic!e in event of accident. · Fax ID cards to client on the effective date of coverage and mail originals. · Review and/or recommend physical damage based on age and value of vehicle. · Create standard form for client to provide driver's information, vehicle info, change of exposure units. · Suggest the implementation of miles recorded and time frame involved for trucking and buses for maintenance checks. · Conduct physical audit of company vehicles to determine: * Correct I D * Two way radio * Telephone * Vehicle improvements * Vehicle tool inventory Report to be kept in vehicle in event of accident. 24 WORKERS COMPENSATION EDUCATION/TRAINING · Teach client how WC works, what is covered and, equally important, what is excluded, and how claims process works. · Educate insured on competitors practices, reserves, etc. · AJG - attend, encourage insured to attend WC hearings- · Furnish NCCi and other literature to client. · AJG - educate personnel regarding options for WC, i.e. self-insurance, pooling, self-insured funds, etc. · Be aware of laws and benefits by state and make available to client (from National Chamber of Commerce). · Assist with Regulatory Compliance when appropriate. · Update client on legislative changes affecting WC. · Update client on "24 hour" opportunities. · Basic classes for clients of various ways they can lower their insurance costs (i.e. drug free, managed care, dividends, etc.). · Present educational seminars/workshops. 25 WORKERS COMPENSATION OTHER · Self-Insured Services - keep client informed on new regulations, assessments, etc. · Assist and coordinate the work of independent actuaries hired by client. · Provide Re-insurance services-(expertise: NY and London offices). · Assist in determining cost effectiveness of a loss limitation charge. · Create alternative premium funding methods. · Facilitate direct contract between insured and underwriter. · Studies conducted to determine self-insured qualifications. · Coordination of ergonomic and industrial hygiene studies. · Provide documentation of marketing research and marketing strategies. · Monitor to be sure all Employer Liability limits meet Umbrella carrier minimum underlying limits. · Intra-agency checklist for producers and CSR's to use on accounts. · FCCPOP credit - make sure contracting risks get the credit by sending mailing to clients with qualifying SIC codes. · Explain pros and cons of WC funds. · Offer alternative market options. · Review foreign WC including travel. · Provide summary of WC results that buyer can use for his management. · Check for compliance with disability laws in the 6 states. · Offer GB services on an unbundled basis where appropriate. · Explore WC group/association captive. · Assist in development/management of an award program. · Assist in obtaining contractors premium credits. · Assist in PPO/Managed Care development. · Coordinate company/excess aggregate recovery. · Index STD to WC benefits. · Establish in advance procedures on how to handle close-out of policy. Issues - run off claims, - Subrogation Who/How handled. · OSHA, ADA, Family Medical Leave. RISK MANAGEMENT ADVISORY SERVICES Our team receives and has access to many periodicals, insurance manuals and reference material. We have attached a list of the most prominent. We will provide the City from time to time, information which could be pertinent in the Cities day-to-day insurance program. A.) Recently, we have received numerous articles on the changing Property Marketplace. Prices are hardening while capacity is still plentiful. This trend however we are seeing gives us concern to the stable markets versus the in and out companies who want to make a quick profit then leave two years later. The attached 1999 NCCI Workers Compensation rates effective January 1, 1999 shows a 15 to 18 % increase in City department codes. A large deductible or protected self- insurance program is an alternative to these increases. c.) The attached claim bills passed by the State legislature shows increase activity in the Award of Dollars excess of Sovereign I immunity Limits per State Statue 762.28. This could support the idea of adequate limits for General Liability and Public Officials Liability coverages. Plus, Florida Statute 762.28 does not apply to Federal Claims such as Civil Rights Violations and forms of discrimination. D.) Contractual Risk Transfer: The Cities approach to contractual risk transfer can be considered a success if it meets the following criteria. We will assist the City in these areas of contract review and advise our professional opinion. Are the risks retained appropriate and affordable? · Is the risk an element of the overall transaction and negotiation? Is it incorporated at the onset7 · Is the indemnity agreement, and other pertinent conditions so onerous that contract negotiations drag on unnecessarily delaying the transaction? · Is the contractual conditions allocating risk onerous that a court disallows their operation at a future point in time. · Are the insurance requirements clear, in order to be interpreted at the time the contract7 · Is the insurance and other supportive information in place if a loss occurs? · Is there a thorough insurance monitoring process in place to keep the transferee in compliance with the insurance requirements? · Is the pertbrmance of the contract process monitored and regularly evaluated? 47 The contractual risk transfer process operates smoothly where there is an appropriate level of knowledge and skills to protect the interests of each party to the contract negotiation. Most important is knowledge of the business transaction which the contract memorializes. An experienced attorney's knowledge of legal issues, statues, and contract construction techniques is essential. A risk management professional and the broker, knowledgeable of risk management principles, insurance coverages, and the insurance marketplace are equally essential to the success of the process. Specific Cases We Have Reviewed and Evaluated * Pipeline Crossing Agreements · Sports Training Center · Florida Power and Light Building · Model Conflict of Interest Clause · Model and Indemnification and Hold Harmless Clause · Model Insurance Clause for Contracts Involving Intellectual Property and/or Advanced Technologies · Architectural Services for Public Safety Building · R.W. Beck Insurance Coverage · Lease Agreement - Security at Park · Site Security · Uniform Waterway Markers · Railroad Cable License Agreement · Professional Engineering Services Agreement for Water and Wastewater Master Planning · Franchise solid Waste Haulers · Drainage Inventory · Advertising Benches Agreements · Hold Harmless Agreement 48 OTHER RISK MANAGEMENT SERVICES RISK MANAGEMENT SERVICES Arthur J. Gallagher & Co.'s risk management services are available as a complete, totally-integrated system or on a select, stand-alone basis. PROPER TYICASUAL TY Brokering and Consulting Proprietary Insurance Programs for Commercial, Industrial, Institutional and Governmental Risks Primary and Excess Placements Reinsurance Worldwide Market Access International Program Capabilities Direct Access to Lloyd's, London and Bermuda Insurance Markets Self-Insured Programs Association Programs Risk Retention Groups Pool Design, Consulting and Management Captive Design, Consulting and Management Captive Domicile Management Rent-a-Captives Surety Bond Specialists Executive Protection Products Claims Advocacy Loss Control Supervision Claims Management Services Reserve Management Recoveries Management Litigation Management Settlement Management Self-Insured Qualifying National Account Coordination ClaimLine -- Toll-Free Claim Reporting Managed Care Services Preferred Provider Organizations (PPOs) -- Hospital, Outpatient Care and Retail Pharmaceutical Networks Wholesale Prescriptions and Medical Equipment Program Automated State Fee Scheduling Usual, Customary and Reasonable Bill Review Services Hospital Bill Audits Medical Case Management Vocational Rehabilitation Light Duty and Return-to-Work Programs Utilization Review and Injury Management Programs Dental Review Services 24-Hour Process Managed Care Organizations Risk Control Consulting Services Risk Assessments Employee Health and Safety Transportation and Fleet Safety Fire Protection Engineering Liability Client Training Industrial Hygiene Ergonomics continued~' ARTHURJ. GALLAGHER & CO.