DATE: April 11, 2023
SUBJECT:
Title
RESOLUTION SELECTING AND AUTHORIZING A FIVE-YEAR AGREEMENT WITH HUB INTERNATIONAL INSURANCE SERVICES TO PROVIDE HEALTH BENEFIT BROKER AND CONSULTING SERVICES FOR AN AMOUNT NOT TO EXCEED $161,000 PER YEAR AND A TOTAL OF $805,000 FOR THE PERIOD OF MAY 1, 2023, THROUGH APRIL 30, 2028.
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EXECUTIVE SUMMARY:
A health benefits broker/consultant is required to assist the San Diego Unified Port District (District) with its health benefits program. The consultant serves as a broker negotiating health benefits and insurance plan premiums with insurance carriers on behalf of the District and assists the District with strategic planning, financial analysis, actuarial services, annual renewals, compliance, and other assistance as appropriate. The consultant will help the District achieve its goal of having a quality benefits program that is sustainable for the long term and will work to minimize healthcare and insurance costs for the District, employees, and retirees.
Staff issued a request for proposals (RFP) on December 7, 2022. Proposals were due on January 18, 2023, and five responsive proposals were received. A panel comprised of District staff, including bargaining unit representatives, reviewed the proposals and conducted finalist interviews with three companies on February 22, 2023:
Burnham Benefits Insurance Services, HUB International Insurance Services, and Keenan & Associates.
After a comprehensive review of all proposals, staff recommends that the Board select and authorize an agreement with HUB International Insurance Services as the District health benefits broker/consultant.
RECOMMENDATION:
Recommendation
Adopt a resolution selecting and authorizing a five-year agreement with HUB International Insurance Services to provide health benefits broker and consulting services for an amount not to exceed $161,000 per year and a total of $805,000 for the period from May 1, 2023, through April 30, 2028.
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FISCAL IMPACT:
The consultant's maximum annual compensation of $161,000 per year for services rendered is paid as commissions directly to the consultant by the health and insurance plan carriers. Commissions are based on premiums paid by the District to the carriers, and the cost is shared by the District, employees, and retirees. At no time will the consultant's compensation exceed $161,000 for any agreement year. Should commissions received by the consultant exceed the annual maximum compensation, the difference will be returned to the District by the consultant. Should commissions received by the consultant be less than $161,000 for any agreement year, the District shall remit the difference directly to the consultant. This compensation structure provides fair compensation to the consultant, ensures that the consultant's commission is not linked to the dollar value of premiums paid to the healthcare providers, and allows the consultant to negotiate for lower premiums without any complicating incentives. Funds for FY 2023 are budgeted in the District's personnel budget. Funds required for future fiscal years will be budgeted in the appropriate year subject to Board approval upon adopting each fiscal year's budget.
Compass Strategic Goals:
This agenda item supports the following Strategic Goal(s).
• A Port with an innovative and motivated workforce.
• A financially sustainable Port that drives job creation and regional economic vitality.
DISCUSSION:
Role of the benefits broker/consultant:
Benefits brokers/consultants play a key role in helping employers find affordable healthcare coverage for their employees, retirees, and dependents. They act as a partner in finding and negotiating affordable coverage, minimizing premium costs, and helping the employer achieve benefit program goals. Due to employers' complex benefits issues, a consultant should have significant expertise in healthcare cost management, negotiations with vendors, strategic planning, navigating legislative and regulatory issues, underwriting, and wellness programs. They should also have resources available to access and perform services in these areas. Between active employee and retiree benefits, the District provides nine medical plans and fourteen other types of health and insurance coverage options. Due to the unique nature of the District and the range of coverages provided, it is critical that our consultant be well-versed in public entities and retiree plans and have a thorough understanding of both the
San Diego marketplace as well as the national health care landscape.
Additionally, consultants provide valuable services such as:
• Evaluate and compare proposed rates and benefits packages;
• Negotiate discounts or premium reductions;
• Problem-solving and advocacy for employers;
• Educating employers about legislative and regulatory changes, as well as monitoring and preparing for potential changes;
• Educate employers about trends and developments in the healthcare and wellness marketplace;
• Resolving high-level claims issues with carriers;
• Assisting with compliance through plan document review and annual employee disclosures;
• Participate on the District's Health Benefits Committee, and recommend wellness and health productivity initiatives; and
• Benchmark for best practices locally, regionally, and nationally.
The RFP Process
An RFP was issued on December 7, 2022. Three hundred forty-two prospective vendors were notified, and 23 downloaded solicitation documents. The anticipated agreement is proposed for five years. There are inherent advantages to a long-term relationship with a benefits broker, including better communication and trust between the parties and a working relationship where eventually, the consultant can anticipate, from previous experience, the needs of the District.
An Information Exchange Meeting was held on December 15, 2022, which seven (7) companies attended:
• Bolton & Company / IMA
• Burnham Benefits Insurance Services
• EPIC
• Gallagher Benefit Services, Inc.
• HUB International Insurance Services
• Keenan & Associates
• Valuepro Insurance Solutions Inc
Proposals were due on January 18, 2023, and five responsive proposals were received:
• Burnham Benefits Insurance Services
• Gallagher Benefit Services, Inc.
• HUB International Insurance Services
• Keenan & Associates
• McGriff Insurance Services, Inc
A panel was gathered to select finalists and conduct finalist interviews. The panel included human resources staff and representatives from the District's labor groups, the Harbor Police Officers Association and California Teamsters, Professional & Medical Employees Union, Local 911.
The panel reviewed the proposals and conducted finalist interviews with three companies:
• Burnham Benefits Insurance Services
• HUB International Insurance Services
• Keenan & Associates
In-person interviews were conducted on February 22, 2023. The panel ranked the firms based on criteria established in the RFP.
The panel ranked HUB International Insurance Services (HUB International) as the top firm. HUB International provided a well-prepared presentation showing an organized, thorough, and precise proposal outlining programs that would benefit the District and employees. In addition, HUB International was the only finalist in San Diego County and showed the best understanding of the plans and medical groups in the San Diego region.
HUB International's proposed key staff had more experience and a broader array of skills available on the primary service team (such as actuarial and underwriting knowledge). They provided a thorough and detailed customer service approach, with an internal model for managing and tracking work, specific timelines of 2 hours for responding to calls and emails, and work schedule arrangements that provide 12 hours per day of availability of the direct service team. They responded directly and specifically to District needs noted in the RFP. HUB International has significant public sector experience, especially on the proposed service team. HUB International also provides extensive national resources, such as their National Legal Resource Group, to address legal and regulatory issues and trends, and subject matter experts available in other human resources and personnel topics for no additional cost. HUB International Insurance Services is the District's incumbent broker.
Keenan and Associates presented a thorough, precise, and well-organized proposal for a similar range of services and had interesting ideas regarding retiree benefits. While they have a deep understanding of public sector agencies as they specialize in consulting with California agencies, the proposed primary staff had less experience than that of HUB International.
Burnham did not as thoroughly describe their approach to the proposal, nor was the presentation as well organized. Basics were covered, but other components were not expressed in detail to the extent of the other presentations.
After a comprehensive review of all proposals, staff recommends that the Board select and authorize an agreement with HUB International Insurance Services as the District's health benefits broker. Overall, HUB International Insurance Services provides a thorough approach to the services, a highly experienced service team, excellent responsiveness, and extensive resources to carry out their broker and consulting services to support the District, its employees, and its retirees.
General Counsel's Comments:
The Office of the General Counsel has reviewed this agenda as presented to it and approves the same as to form and legality.
Environmental Review:
The proposed Board action, including, without limitation, selecting and authorizing a five-year agreement with HUB International Insurance Services to provide health benefits broker and consulting services for an amount not to exceed $161,000 per year and a total of $805,000 for the period of May 1, 2023, through April 30, 2028, does not constitute a project under the definition set forth in California Environmental Quality Act (CEQA) Guidelines Section 15378 because there is not a potential to result in a direct or indirect physical change in the environment. Therefore, the proposed Board action is not subject to CEQA, and no further action under CEQA is required.
The proposed Board action complies with Sections 21 and 35 of the Port Act, which allow the Board to pass resolutions; and to do all acts necessary and convenient for the exercise of its powers. The Port Act was enacted by the California Legislature and is consistent with the Public Trust Doctrine. Consequently, the proposed Board action is consistent with the Public Trust Doctrine.
The proposed Board action does not allow for development, as defined in Section 30106 of the California Coastal Act, or new development, pursuant to Section 1.a. of the District's Coastal Development Permit Regulations. Therefore, issuance of a Coastal Development Permit or an exclusion finding is not required.
Diversity, Equity, and Inclusion Program:
Due to limited known sub-contracting opportunities, no Small Business Enterprise goal was established for this agreement.
PREPARED BY:
Rita Reddy
Senior Human Resources Analyst
Attachment(s):
Attachment A: Agreement between San Diego Unified Port District and Hub Internantional Insurance Services, Inc. for Health Benefits Broker Services