Title
Recommendation to Approve Amendment to the Agreement with George Hills Company to Extend the Term by Five Years and Increase the Compensation for a Total Five Year Expenditure Not to Exceed $404,300 for Third Party Claims Administration Services. (City Attorney 712)
Body
To: Honorable Mayor and Members of the City Council
From: David L. Rudat, Interim City Manager
EXECUTIVE SUMMARY
The Risk Management Division of the City Attorney’s Office currently administers general liability and property claims through third part administrator (TPA), George Hills Company (George Hills). The current contract expires November 15, 2018. Staff has renegotiated a five year contract with George Hills with compensation not to exceed $404,300.
BACKGROUND
Prior to November 2013, the City of Alameda (City) administered the general liability and property claims in-house. In-house liability claims adjustment services included processing, establishing loss reserves, investigating claims, accounting, providing loss summaries and loss-run reports and assisting the City Attorney in the evaluation, and management of claims from inception through disposition. On July 11, 2013 the City Attorney’s Office issued a Request for Proposals (RFP) for General Liability Claims Handling and Administration. Ten companies responded.
Ultimately, George Hills, a long-established Northern California provider of third-party liability claims administration for public entities for over 30 years was selected. George Hills has handled claims administration for the City since November 15, 2013. In addition to administrating the City’s claims, George Hill’s administers in excess of 500 claims annually for over 40 California cities. George Hills’ administration of the City’s claims has been handled efficiently, promptly and at a reasonable cost. The City Attorney’s Office is, therefore, recommending that Council authorize an amendment to their agreement, which will allow them to continue as the City’s third party liability claims administrator for another five years.
DISCUSSION
Annually, George Hills investigates and adjusts up to 100 claims per year on behalf of the City. This includes investigation of pre-litigation third party liability claims, accounting, providing loss summaries and loss-run reports, establishing loss revenues and assisting the City Attorney’s Office in the evaluation, management and defense of claims from inception through disposition.
George Hills’ annual administration fee and claims management costs are reasonable and the most consistent with the City’s needs. The original cost from five years ago was $80,000 annually, which was negotiated to less than $65,000 per year. The current increase represents approximately 3% per year over a five year period starting in 2019.
George Hills will also continue to provide a team to process the City’s general liability third party claims with a dedicated Executive contact liaison, Client Services Manager, Supervisor, Senior Claims Adjuster, Claims Processor and IT technical assistant to manage business servicing and data analysis needs. They also provide claims management software support to enable City staff to work collaboratively with the claims adjuster for more efficient resolution of the liability claims and report documentation.
FINANCIAL IMPACT
The funds for this contract are budgeted in the Risk Management Program (Fund 712) of the City Attorney’s Office. George Hills has proposed a five year flat administration fee. The fee for year one will be $76,500. The fee for year two will be $75,800, the fee for year three will be $80,500, the fee for year four will be $83,000, and the fee for year five will be $85,500, for a total compensation not to exceed $404,300.
The City Council previously approved the original contract as presented below:
|
Contract |
Approval Date |
Authorized Amount |
Expended to Date |
|
Original Contract 2013-2018 |
11-15-2013 |
$308,400 |
$308,400 |
|
1st Amendment 2018-2023 |
Proposed |
$404,300 |
- |
|
Total |
|
$712,700 |
$308,400 |
MUNICIPAL CODE/POLICY DOCUMENT CROSS REFERENCE
This action is consistent with the City’s policies and Municipal Code.
ENVIRONMENTAL REVIEW
This action is exempt from the California Environmental Quality Act (CEQA) because it is not a project which has a potential for resulting in either a direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment, pursuant to CEQA Guideline section 15378.
RECOMMENDATION
Approve an amendment to the contract with George Hills to extend the term by five years and increase the compensation for a total five year expenditure not to exceed $404,300 for third party claims administer services.
Respectfully submitted,
Janet C. Kern, City Attorney
By,
Lucretia Akil, Risk Manager
Financial Impact section reviewed,
Elena Adair, Finance Director
Exhibits:
1. Original Agreement
2. Amendment