HomeMy WebLinkAbout1998 01 12 Consent Item A
COMMISSION AGENDA
ITEM A
egular
Consent X
ormational
January 12. 1998
Meeting
MGR flVDEPT_
Authorization
REQUEST: City Manager requesting City Commission authorization to award a
bid for group life and accidental death and dismemberment
insurance.
--
PURPOSE: The purpose of this agenda item is for the City Commission to authorize
the award of a bid for group life and accidental death and dismemberment
insurance at a cost of $0.22 per $1000 of payroll.
CONSIDERATIONS:
At the October 13, 1997, City Commission meeting, the Commission
authorized the City Manager to bid the City's group life insurance at one
times the annual salary of employees up to a maximum coverage of
$50,000. The Commission also authorized the bid to include an option
for employees to purchase additional life insurance at group rates.
The City solicited bids for group term life and accidental death and
dismemberment insurance. The bid also included the options for
employees to purchase supplemental life and AD&D, and dependent
group term life.
On December 10, 1997, the City opened bids for group life and
accidental death and dismemberment insurance. Twelve bids were
received, evaluated, and references contacted.
The current annual cost for life insurance for 210 employees for $10,000
coverage is $7056. This cost is based in a rate of $0.28/$1000 of payroll.
The recommended insurance company, Anthem Health and Life, bid a
rate of $.022 /$1000 of payroll for group life and accidental death and
dismemberment.
Based on the life insurance coverage of one times salary up to a maximum
of $50,000, the annual payroll is $5M. Using the annual payroll figure of
$5M and the rate of $0.22/$1000 of payroll, the annual cost for group life
and accidental death and dismemberment is $13,200.
Anthem Health and Life will also insure retirees at the same group rate as
City employees. The other two low bidders group rates would increase
$0.01 to insure retirees. This equates to a rate of $0.24/$1000 of payroll
or $14,400 annually.
FUNDING:
There are funds in the FY 97/98 budget.
RECOMMENDATIONS:
City Manager recommending the Commission authorize the award for
group life and accidental death and dismemberment insurance to Anthem
Health and Life Insurance at a cost of $0.22/$1000 of payroll.
IMPLEMENTA TION:
Upon Commission approval.
ATTACHMENTS:
Memo of January 6, 1998 to City Manager
Bid Tabulation.
COMMISSION ACTION:
2
MEMORANDUM
To: Ronald W. McLemore, City Manager ,.../
From: John J. Drago, Administrative Assistant?
Date: January 6, 1998
Re: Group Life and Accidental Death and
Dismemberment Insurance Bids
On December 10, 1997, the city opened bids for group life and accidental death
and dismemberment insurance. Twelve insurance companies submitted bids.
Below is staff's analysis and recommendations.
REVIEW OF FINALIST'S PROPOSALS
The finalists were Anthem Health and Life Insurance Co., The Business Men's
Assurance Company of America (BMA), and ReliaStar Life Insurance Co. In
review of the finalist's proposals for group life and AD&D insurance for the City of
Winter Springs, three areas were identified for focus and comparison. They are:
. Ability to Meet the City's Specifications and Plan Design.
In the proposal section of the group life and AD&D specifications, the city
requested that the insurance company agree to hold the city harmless at all
times from and against any and all claims, liability, expenses, losses, etc. This is
a common request in the public sector today.
Anthem and ReliaStar agreed to this stipulation. BMA did not return the
appropriate city form agreeing to this stipulation.
Anthem, ReliaStar and BMA met all the city's plan design except the criteria for
plan portability. Anthem, ReliaStar and BMA provided for conversion of the
group plan to an individual plan.
All three insurance companies submitted plan designs for optional supplemental
life and AD&D and dependent life insurance coverage.
. Financial Stability/Insurance Leader in the Marketplace
The city required in the bid that the insurance companies had to meet five
minimum financial stability criteria. ReliaStar met four of the five rating criteria
and Anthem and SMA met three of the five rating criteria.
Anthem is licensed in 49 states and the District of Columbia. Anthem is a
Fortune 500 health care management and insurance company with 1996
revenues of $6.3 billion and assets of $5 billion.
ReliaStar has more than 80 years of experience in the design, implementation
and administration of employee benefit plans. ReliaStar is one of the nation's
largest group life insurers, with more than $100 billion of group life insurance in-
force. A Fortune ranking based on revenues (April 29, 1996) placed ReliaStar
as the twelfth largest publicly held life insurance holding company in the United
States.
SMA has more the 70 years in the employee benefits market. SMA is a member
of the Generali Group, one of the largest insurance organizations in the world.
SMA's 1996 assets were valued at $87 billion.
. Rates
Anthem bid a rate of $0.22 per $1000 of payroll. Using a yearly payroll of $5
million; the yearly premiums would be $13,200. Anthem agreed to insure retired
employees at the same group rate. Anthem bid a 2 year rate guarantee.
SMA bid a rate of $0.23 per $1000 of payroll. Using a yearly payroll of $5
million; the yearly premiums would be $13,800. SMA agreed to insure retired
employees, however, the new group rate would be $0.24 per $1000 of payroll,
which equates to a yearly premium of $14,400. SMA bid a 2 year rate
guarantee.
ReliaStar bid a rate of $0.23 per $1000 of payroll. Using a yearly payroll of $5
million; the yearly premium would be $13,800. ReliaStar agreed to insure retired
employees, however the new group rate would be $0.24 per $1000 of payroll,
which equates to a yearly premium of $14,400. ReliaStar bid a 2 year
guarantee.
REFERENCES
For the past 45 years, Anthem has provided group life insurance to the
employees of the National Aeronautical and Space Administration (NASA).
I contacted the City of Sweetwater, FL. Sweetwater has group life and dental
with Anthem for the past five years and has experienced no problems with their
service.
BUDGET IMPACT
The FY 97/98 budget allocated $20,000 for long term disability insurance. The
current yearly cost for group life insurance is $7,056. This totals $27,056 of
possible expenditures for both insurances.
The low bid for long term disability insurance is $15, 815, and the low bid for
group life and AD&D insurance is $13,200. This totals $29,015 for both
insurances.
The budget impact is an additional $1,959 to cover the cost for both insurances.
SUMMARY
As we look at the quantitative aspects as well as the qualitative aspects of this
bid, it becomes apparent that the City should award the bid to Anthem Health
and Life Insurance Company as the best responsible bidder.
Even though one reference was contacted, it appears that Anthem has a good
relationship with its customers. This is further supported by the fact that for the
past 45 years NASA has been a customer.
The implementation of this policy could be as early as February 16, 1998. There
will need to be some further decisions with Anthem as it specifically relates to the
contract.
RECOMMENDA TlON
The group life and accidental death and dismemberment insurance bid should
be awarded to Anthem Health and Life Insurance Company at a cost of $0.22
per $1000 of payroll.
Place the recommendations for award on the January 12, 1998 Commission
Agenda for a possible February 16, 1998 implementation date.
City of Winter Springs
Life Insurance Plan Comparison
Annual Cost
Based on a
$6nm Pa)l'oll
SMA Yes Yes $0.23 (without retirees
$0.24 (with retirees)
Re6aslar Yes 2 years 50% age 70 Yes $0.23 (without retirees $13,800
$0.24 (with retirees) $14,400
75% age 75
Lafayette Life Yes 2 years 50% age 70 Yes $0.25 $15,000
75% age 75
Medical Life Insurance Yes 2 years 35% age 65 Yes, $10,000 $0.25 $15,000
50% age 70
Met Life Not Provided 2 years 35% age 65 Yes $0.25 $15,000
50% age 70
Standard Yes 2 years 65% age 65 Yes $0.25 $15,000
5O%age 70
35% 75
Mutual ci Omaha Yes 2 years 50% age 70 Yes $0.28 $16,800
Re6ance Stardard Yes 3 years 50% age 70 Yes $0.29 $17,400
75% age 75
Canada Life Yes 2 years 50% age 70 Yes $0.31 $18,600
75% age 75
Humana Does not meet specifications $0.31 $18,600
Guarantee Life Yes 2 years 50% age 70 Yes $0.32 $19,200
75% age 75
" ......
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eonvwaion
Seat leII BenefIt
Waiver 01 'aynwnt
Aee....atM Death 8eMRt
ItnI cau.antee
PLAN 1 (&mpIoyw P.Id)
Reduction.
Age 70
Age 7
cau........ue (up to $10,000)
fItMe Per 11000 01 Payroll (without
btirwu, including AD&D)
Annual Ooat Bu. on elMNl Pa~oll
(withaut ReIJreea)
Rate Per S1oo0 aI Payroll CwIth
Itetir_. including AD&D}
Ann.... Co8t ..eel on 18MM Payroll
(wfth Ratt.....)
CITY OF YVlNTER SPRINGS
Plan 1
.... .Anth8,.,Heatlt1'..
':>.. :$0.22:':::.:.:'..
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8MA
A
AA
NR
AA.
Meets 3 out of 5
Yes
Yes
Yes
v..
2 years
50%
75%
Yes
$023
$13,800
SO.2<4
514,400
Reliaatar
A
AA-
A1
AA
Meets 4 out of 5
Yes
Yes
Yes
v..
2 years
50%
'm%
Yes
$0.23
$13.800
$0.241
$14,400