Local agents to try for city contract

Wed. October 01, 2008; Posted: 07:50 PM

The city of Garden City decided to competitively bid its property and liability insurance package and brokerage services. The two bidders: Arthur J. Gallagher, headquartered in Itasca, Ill., and Rutter/Cline/Associates Inc., based at 312 N. Eighth St.

As the incumbent, Rutter/Cline bid $411,584 for the city's 2003 insurance package. Arthur J. Gallagher bid $357,396, winning the low bid and coming in $17,396 more than the city's 2003 budget estimate of $340,000 for insurance.

The city has been with the Illinois-based insurance company since, but Rutter/Cline and other local insurance agents are looking this year to possibly get back in the game, vying for a spot as the city's property and liability insurance agent.

When the city went competitive in 2002 for insurance, city representatives stated they'd open up the process every three years. City Manager Matt Allen met Sept. 16 with local insurance agents -- including Doug Keller, of Keller-Leopold Insurance Agency, 302 Fleming St., and Ric Gudding, president/owner of Rutter/Cline, as well as James Charlesworth, with Charlesworth & Associates, of Overland Park, the independent insurance consulting firm the city works through during the proposal process -- to discuss the process.

The proposals are due to the city by noon Nov. 25.

According to Allen, the city was seeing greater-than-average increases in its insurance costs before and in 2003, and the city's insurance policy had never been competitively marketed. So with those reasons, combined with others, Allen said city staff thought insurance should be treated like other purchases in the city and put out for proposal or bid.

In competitive years, the city pays up to about $75,000 for the firm, Allen said, to help the city navigate the waters of the competitive bid process.

As the city searches for the best price and product, Allen said, the city's tried to improve as a customer, as well, through having an informational database ready with information underwriters typically ask for; doing a better job of managing the city's risk, including getting employees needed training and minimizing claims; and building in language that gives local agencies priority if they choose to approach the city with a bid.

Allen said that while it's never adversely affected a claim or service, the city's seen turnover in agents through Arthur J. Gallagher and that it would be nice to always know who the city's dealing with.

The city does recognize the value of keeping things local, he said, but ultimately, the city is seeking great coverage and service at a low price.

A local provider

According to the city and Charlesworth, local agents "will be given priority related to market assignments. In addition, although premium will not be the sole determining factor in the city's insurance selection, for purposes of evaluating the costs and ranking proposals, the city will apply the same local preference policy which has been adopted by the City Commission and approved for capital projects which do not receive federal funds."

The policy provides a business in Finney County with the opportunity to meet the lowest cost proposal if the cost of its initial proposal is within 1 percent for acquisitions $250,000 or less; or within .5 percent for acquisitions more than $250,000.

Rutter/Cline had the city's account six years ago. At that time, according to Gudding, there was an entity called the Finney County Insurance Board that consisted of local independent insurance agents, and the city, Finney County, USD 457 and Garden City Community College all were served by insurance handled by local agents on the board.

"It had always been done that way," Gudding said.

But when Charlesworth came into the picture, the consultant set up proposal specifications to comply with, and Rutter/Cline was the high bidder.

The city initially saved about $54,000 with the switch.

The successful bidder split up the package among several companies, selling the city separate policies, Gudding said, which is one way to save cost. Rutter/Cline chose to go with St. Paul.

"It had a negative effect, no question," Gudding said of losing the account.

But six years later, he said, Rutter/Cline's still around. Gudding said he feels the provider will have a chance to gain back the account.

"We're right across the street," he said.

A go-between

The city retained Charlesworth & Associates to assist with renewing and obtaining property and liability insurance, and Charlesworth said numerous cities use a firm because they feel they have an obligation to taxpayers to solicit other offers for insurance and they don't have the staff with the expertise to navigate through the process.

The firm is the go-between, handling correspondence between the city and insurance providers.

In the end, when all of the proposals are in, the firm places all of the bids in a comparable spreadsheet and makes sure the city has all of the information it needs to make an informed decision.

Charlesworth hopes to have the request for proposal submitted to agents by the end of the month.

He said Arthur J. Gallagher has done a good job for the city and that with changes in technology, a provider can, for the most part, function effectively and efficiently anywhere in the United States. But, Charlesworth said, he and the city feel there's a value-added dimension a local agent can bring, and neither likes seeing the money leave town.

But the city also feels there's an obligation to spend tax dollars in a reasonable manner, Charlesworth said, and since 2003, that's meant buying from Arthur J. Gallagher.

When it's all said and done, Charlesworth said, the process will be fair and transparent.

"It's all gonna be on the table" he said, and the governing body will have the facts to make an informed decision.

Keller would like to see the account return to Garden City.

Three of the major underwriters -- St. Paul, EMC Insurance Companies and Trident -- are represented locally among agents, he said, adding he feels the job can be done locally.

To see more of The Garden City Telegram or to subscribe to the newspaper, go to http://www.gctelegram.com. Copyright (c) 2008, The Garden City Telegram, Kan. Distributed by McClatchy-Tribune Information Services. For reprints, email tmsreprints@permissionsgroup.com, call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA.

More News:   Market Updates | Stock Alerts | All Trading News | Stock Index