Gallagher Benefit Services Consulting Agreement
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MEMORANDUM
June 24, 2005
TO:
The Honorable Mayor and City Council Members
FROM:
Michael C. Van Milligen, City Manager
SUBJECT: Consulting and Actuarial Services Agreement - Gallagher Benefit Services
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 $23,100, effective July 1, 2005,
through June 30, 2007.
I concur with the recommendation and respectfully request Mayor and City Council
approval.
f1/J (!,,/1JJj
Mic ael C. Van MlllJgen
MCVM/jh
Attachment
cc: Barry Lindahl, Corporation Counsel
Cindy Steinhauser, Assistant City Manager
Randy Peck, Personnel Manager
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Memorandum
June 23, 2005
TO: Michael C. Van Milligen
City Manager
FROM: Randy Peck tf)
Personnel Manager (f\:J
SUBJECT: Consulting and Actuarial Services Agreement - Gallagher Benefit Services
I have received the renewal proposal from Gallagher Benefit Services for benefit consulting and
actuarial services effective July 1, 2005. They are requesting to increase their annual fee from
$21,000 per year to $23,100 per year, which is a 10% increase. This fee would be guaranteed
for two years until June 30, 2007. I budgeted $22,260 for consulting services and $1,000 for
travel expenses in Fiscal Year 2006. Bill Robinson of Gallagher Benefit Services states in his
letter 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 $2,000.
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 is
an estimated annual savings of $1 ,500. 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 $23,100 per year with a guarantee that this fee
will remain in effect until June 30, 2007.
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 $23,100 effective July 1, 2005 through June 30, 2007 and
authorize the City Manager to sign the Amendment.
RP:bf
Gallagher Benefit Services, Inc.
A Subsidiary of Arthur]. Gallagher & Co.
April 14, 2005
Mr. Randy Peck
Personnel Manager
City of Dubuque
50 West 13th Street
Dubuque, IA 52001-4864
Re: Consulting and Actuarial Services Agreement
Dear Randy:
Our current Consulting and Actuarial Services Agreement with the City expires June
30, 2005. 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 October 1, 2002. It calls for an
annual fee of $21,000. Due to increases in our costs of doing business and
additional compliance service requirements, we are requesting a 10% fee increase
effective July 1, 2005. The increase would make our annual fee $23,100. We will
guarantee this fee for two years until June 30, 2007.
It may be possible to offset all or part of our requested fee increase through fully
disc\o,sed commissions from one or more of 'Jour current insured coverages. We are
fully licensed to accept commissions in Iowa and would be amenable to exploring this
option. If this is of interest to the City, please let me know and we can explore this
option.
Gallagher Benefit Services and I, personally, appreciate our relationship with you and
the City. We look forward to continuing this relationship into the future.
Sincerely,
~~;J1wa-
Wilham F. Robinson, Jr.
Area Vice President
6399 South Fiddler's Green Circle. Suite 200
Greenwood Village, CO 80111-4949
Main 303.220.7575
Fax 303.220,7010
K:\#Cus-a-I\Dubuque - City of\Contractual Documents\Fee Increase Ltr 41405,doc
GALLAGHER BENEFIT SERVICES, I NC.s:::lll:l Me m 0
To:
Randy Peck, City of Dubuque
From:
Bill Robinson, Denver Office
Date:
June 23, 2005
Re:
Consulting Services Agreement
Randy,
Our consulting services agreement with the City has been in effect since October 1,
2002. We have requested a 10% ($2100.year) increase effective July 1, 2005. Our
new annual fee of $23,100 will be guaranteed for two years through June 30, 2007.
To assist the City with our fee increase, we have negotiated a 2% reduction in life
insurance premiums with its carrier, Standard Insurance Company. This premium
reduction will save the City approximately $1531 per year. If applied to our requested
fee increase, the net annual increase in cost for the City will be $569.
Gallagher Benefit Services and I personally have appreciated our business relationship
with the City. We look forward to working with you, the City and its employees into the
future.
If our fee increase is acceptable, please indicate below and return this memo to my
attention.
Regards
Accepted on Behalf of the City of Dubuque:
Name
City ManaQer
Title
Date