RANSMITTAL LETTER FOR BOARD MEETING OF DECEMBER 6, 2012
COMMITTEE ON Procurement
Mr. David St. Pierre, Executive Director
Title
Issue purchase order and enter into two agreements for Contract 12-RFP-22 Broker Services to Obtain Property and Other Insurance Coverage for a three-year period, with an option to extend for an additional two years, with Mesirow Insurance Services, Inc. in an amount not to exceed $238,500.00 and Willis of Illinois, Inc. in an amount not to exceed $340,000.00 Account 101-25000-601170 Requisition 1342554, 1352825
Body
Dear Sir:
Authorization is requested to issue purchase orders and enter into two separate agreements for Contract 12-RFP-22 Broker Services to Obtain Property and Other Insurance: 1) with Mesirow Insurance Services, Inc. for casualty lines of insurance and related services (workers' compensation, general liability, public officials' liability, employment practices liability, law enforcement/police professional liability, umbrella/excess liability), and 2) with Willis of Illinois, Inc. for property insurance and related services (property, flood, earthquake, windstorm, business interruption/time element, excess property). The broker services are to obtain coverage for property and other insurances.
Request for Proposal 12-RFP-22 was advertised on July 4, 2012, and 60 companies were notified. Proposals were requested by 25 companies, resulting in four firms: Aon Risk Services Central, Inc.; Arthur J. Gallagher Risk Management Services, Inc.; Mesirow Insurance Services, Inc.; and Willis of Illinois, Inc., submitting bids on August 10, 2012.
An evaluation committee consisting of personnel from the Human Resources Department (including Risk Management and Safety), the Law Department (including Claims), and the Procurement and Materials Management Department, evaluated the proposals based on understanding of the project, proposed approach to the work, technical competence, and the ability to meet the District's requirements. It was the consensus of the committee that all four proposers were qualified to perform the work.
All firms were interviewed, and each was invited to submit a best and final offer. Upon completion of this process, Mesirow Insurance Services, Inc. received the highest rating overall as well as for casualty specific coverages and services, and Willis of Illinois, Inc. received the highest rating for property specific coverages and services.
Mesirow Insurance Services, Inc. (Mesirow) is a well-established financial and insurance brokerage services firm, with more than forty years in the insurance industry. An independent, employee-owned organization, Mesirow has a dedicated practice for public entity business and handles the largest book of taxing body clients in Illinois, including more than 136 public entity clients serviced out of its Chicago office. Mesirow has significant experience handling casualty insurance programs for public entities with complex risk profiles and is extremely well suited to provide casualty brokerage services to the District. Mesirow will assist the District in identifying and evaluating its exposures to loss, and in the preparation of underwritings submissions. Mesirow will conduct financial modeling and analysis, as warranted, including such things as loss analysis, retention analysis, total cost of risk analysis and program comparisons. Loss analysis will focus on trends and the identification of root causes. Mesirow will provide supporting services, as warranted, such as benchmarking, contract review, return-to-work/light duty program development, safety program audit, development of claims metrics, and training.
Willis of Illinois, Inc. (Willis) is the third largest risk management and insurance brokerage firm globally. Willis has been serving the insurance industry for nearly 130 years, has a significant presence in the Chicago area, and handles insurance programs for more than twenty other large wastewater clients. With a dedicated property practice comprised of 80+ professionals in the U.S., Willis brings superior expertise and services to bear for property insurance and related risk consulting and is extremely well suited to provide property brokerage services to the District.
Based on the recent appraisal of the Stickney and Calumet Water Reclamation Plants, insurable property values for the District will most likely exceed $8 billion. This is a significant property program and effective treatment requires the expertise and resources of a firm like Willis, which has reason to attract and retain experts used to dealing with risks of this magnitude and complexity.
Willis will work with the District to understand its total values at risk and to design an optimal program for the cost-effective protection of assets. In support of this, Willis engineers will visit selected District facilities to gather underwriting information, assist in property risk assessment and work with the District to develop insurable value estimates for those District assets not yet appraised. Willis also uniquely offers and will conduct catastrophe risk (Cat) modeling, and flood mapping and exposure review. Cat modeling assists in understanding both the maximum foreseeable loss (MFL) and the probable maximum loss (PML), and is used to assist in determining appropriate limits, retentions and pricing. Willis' flood mapping and exposure review services will assist the District in understanding its risk in this key area and will facilitate decisions on risk retention versus transfer. For entities that operate on or near waterways, it is critical to understand the exposure to flood. This risk is treated very specifically by insurance policies and can be quite complex to insure. It is getting even more attention now, following the impact of Hurricane Sandy. Willis will also provide supporting services, as warranted, such as property benchmarking, construction contract review, insurance policy/wordings review, and loss history and exposure analysis.
The Affirmative Action Section has reviewed the proposals by Mesirow Insurance Services, Inc. and Willis of Illinois, Inc. and has concluded that both entities are in accordance with the District's Affirmative Action Policy.
In view of the foregoing, it is recommended that the Director of Procurement and Materials Management be authorized to issue a purchase order and enter into an agreement with Mesirow Insurance Services, Inc. for professional broker services, in an amount not to exceed $238,500.00, and to issue a purchase order and enter into an agreement with Willis of Illinois, Inc. for professional broker services, in an amount not to exceed $340,000.00.
The estimated expenditures for 2013, 2014 and 2015 for Mesirow Insurance Services, Inc. are $79,500.00, $79,500.00 and $79,500.00, respectively. The estimated expenditures for 2013, 2014 and 2015 for Willis of Illinois, Inc. are $110,000.00, $113,300.00 and $116,700.00, respectively. Funds for the 2013, 2014, and 2015 expenditures will be budgeted in Account 101-25000-601170 and will be contingent on the Board of Commissioners' approval of the District's budget for those years.
Requested, Denice E. Korcal, Director of Human Resources, DEK:RAJ
Recommended, Darlene A. LoCascio, Director of Procurement and Materials Management
Respectfully Submitted, Barbara J. McGowan, Chairman Committee on Procurement
Disposition of this agenda item will be documented in the official Regular Board Meeting Minutes of the Board of Commissioners for December 6, 2012