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Consulting_Actuarial Servcies_Gallagher Benefit Services Amendment Dubuque THE CITY ©F - • ~T T ~ ~ All-America Citf- ~,J Masterpiece on the Mississippi ~` 1 .,~ ~ ~~ 2007 TO: The Honorable Mayor and City Council Members FROM: Michael C. Van Milligen, City Manager SUBJECT: Consulting and Actuarial Services Agreement -Gallagher Benefit Services DATE: June 10, 2008 Personnel Manager Randy Peck recommends City Council approval of the Amendment to the Administrative Services Agreement with Gallagher Benefit Services for benefit consulting and actuarial services at an annual fee of $24,255, effective July 1, 2008, through June 30, 2010. I concur with the recommendation and respectfully request Mayor and City Council approval. Michael C. Van Milligen MCVM/jh Attachment cc: Barry Lindahl, City Attorney Cindy Steinhauser, Assistant City Manager Randy Peck, Personnel Manager THE CITY OF Dui E Masterpiece on the Mississippi TO: Michael C. Van Milligen, City Manager FROM: Randy Peck, Personnel Manager Dubuque A~-AmedcaClly Zoa~ SUBJECT: Consulting and Actuarial Services Agreement -Gallagher Benefit Services DATE: June 3, 2008 I have received the renewal proposal from Gallagher Benefit Services for benefit consulting and actuarial services effective July 1, 2008. They are requesting to increase their annual fee from $23,100 per year to $24,255 per year, which is a 5% increase. This fee would be guaranteed for two years until June 30, 2010. Their current fee has been in effect since July 1, 2005. Bill Robinson of Gallagher Benefit Services has informed me that it may be possible to offset all or part of the fee increase through fully disclosed commissions from one or more of our current insured coverages. The only fully insured coverage is our life insurance plan. Standard Insurance, our life insurance carrier, would be willing to provide a commission to Gallagher Benefit Services in the amount of $1,200. Gallagher would pass along to the City the commission received by Standard Insurance. Gallagher Benefit Services does not accept commissions from Standard Insurance, nor does the City pay Standard Insurance a commission. I do not recommend that Gallagher Benefit Services pursue the commission option with Standard Insurance. In the alternative, I asked Mr. Robinson to explore with Standard Insurance the possibility of receiving a reduction in our life insurance premiums. Standard Insurance will reduce our life insurance rate by $.02 per $1,000 of coverage per month. This reduction will provide an estimated annual savings of $1,200, which more than offsets Gallagher Benefit Services' fee increase of $1,155. I recommend, and the Health Care Committee concurs, that we accept the proposed fee increase from Gallagher Benefits Services Inc. for benefit and actuarial consulting services in the amount of $24,255 per year with a guarantee that this fee will remain in effect until June 30, 2010. I recommend that the City Council pass a motion approving the Amendment to the Administrative Services Agreement with Gallagher Benefit Services for benefit consulting and actuarial services at an annual fee of $24,255 effective July 1, 2008 through June 30, 2010 and authorize the City Manager to sign the Amendment. RP:tlb Gallagher Benefit Services, Inc. May 27, 2008 Mr. Randy Peck Personnel Manager City of Dubuque 50 West 13th Street Dubuque, IA 52001-4864 A Subsidiary of Arthur J. Gallagher & Co. Re: Consulting and Actuarial Services Agreement Dear Randy: Our current Consulting and Actuarial Services Agreement with the City renews June 30, 2008. As required by that agreement, we are providing you with a 60 notice of our request for a fee adjustment. Our current agreement has been effective since July 1, 2005. It calls for an annual fee of $23,100. Due to increases in our costs of doing business and additional compliance service requirements, we are requesting a 5% fee increase effective July 1, 2008. The increase would make our annual fee $24,255. We will guarantee this fee for two years until June 30, 2010. Our request would modify Section III. B. 1 of our original service agreement signed by the City on November 5, 2002. All other provisions of the original agreement, including the Scope of Services (Section III A) remain unchanged. Gallagher Benefit Services and I, personally, appreciate our relationship with you and the City. We look forward to continuing this relationship into the future. If our fee proposal is acceptable, please indicate below and return this to my attention. Sincerely, William F. Robinson, Jr. Area Vice President Accepted on Behalf of the City of Dubuque: Michael C. Van Milligen Date 6/22/08 6399 South Fiddler's Green Circle Suite 200 Greenwood Village, Colorado 801 1 1-4949 303.220.7575 Fax 303.220.7010 City Manager C:ID000ME-1 itbluslLOCALS-14TemplXPgrpwise\Fee Increase 4.OB.doc