Council OKs employee insurance brokerage contract in last minute agenda item

Sidney’s City Council unanimously voted to accept a contract with Holmes Murphy of Omaha for employee insurance brokerage during Tuesday’s regular meeting as administration seeks to improve benefits for its staff going into the next fiscal year.

“These are the people who will bring us proposals from various insurance companies,” City Manager Ed Sadler said. “The whole point is for them to bring us something better, we hope, than what we currently have.”

The City of Sidney’s employee insurance is currently partially self-insured, and large claims in years past have led to high deductibles that Sadler said has encouraged many employees to move to their spouse’s insurance program or avoid using the services all together.

“You’ve got some people not going to the doctor and not taking their meds,” he said. “They’re ignoring a lot of things that are going to catch up with you in three to four years and really, really cost.”

The agenda item was a late addition to the meeting as the contract was received just days prior. Sadler said he had originally planned on asking the council to schedule a special meeting to accept the contract.

“But we’re running out of time,” he said. “The insurance for employees here expires September 1, which means somebody’s going to have between now and early August to bring us something.”

Sadler said he had heard about the city’s “pretty bad claims history” that led to some “fairly serious revisions” to the insurance offered to its employees. He formed an employee insurance committee comprised of himself and ten non-department-head city staff to research their options.

“They’ve done homework for us, checked around, called other cities, the state insurance commissioner,” Sadler said. “All sorts of people to try to get a better handle on the options we have.”

Sadler said the committee decided to issue a request for proposals (RFP) for insurance brokerage services.

“To see if we could get a better service, if you will, and bring us better options,” he said.

Seven proposals were received, Sadler said, which the committee evaluated and then sent invitations to the top four submissions to make presentations to them.

“Of those four, one did back out due to a conflict,” he said. “But we did interview three companies last week.”

Sadler said the committee spent up to two hours which each company and then evaluated them one more time. He said they “uniformally agreed” that two of the companies be given “serious consideration,” with the majority of the votes going to Holmes Murphy of Omaha.

“They have plenty of experience,” Sadler said. “Both the firms we narrowed it down to had experience with municipalities and experience in Nebraska, which we found appealing to understand us and understand what we’re looking for.”

Sadler said he was aware that asking the council to make a decision so quickly probably makes them feel rushed, but because of the Sept. 1 expiration for employee insurance they do not have a lot of time.

“We’re feeling the sense of urgency to try to give this new insurance brokerage company adequate time to give us options,” he said.

Sadler said the contract was a “fairly standard service agreement” that City Attorney J. Leef had already evaluated. The direct cost of the the contract, which includes work on numerous employee benefit issues, is $30,000 per year for a three-year term.

He also pointed out that the firm does not get a percentage of any insurance contract they bring to the city.

“The only money they get is what we pay them,” Sadler said. “They represent us. There is no money involved in who they get us signed up with and what proposals they bring to us.”

Councilor Joe Arterburn asked Sadler if the fees shown in the contract reflect a savings from what the city currently pays. Sadler said he did not know.

“We know what we pay, but I couldn’t tell you if this is the only thing (our current broker) gets paid or not,” he said. “I don’t know. Right now, you’re paying a little over $12,000 a year directly.”

“But you don’t know what commissions they’re getting from carriers?” Councilor William Gay asked.

“It may be nothing,” Sadler replied. “I do not know.”

Gay then asked if Sadler was comfortable that, with the flat fee presented in the contract, if there are commissions paid, they will be transparent and the difference would be returned to the city.

“Exactly,” Sadler said.

Sadler said the contract also included a 60-day out for both parties for any reason.

“So if they are all smoke and mirrors, we can get out of it,” he said. “I don’t think they are. This is a company that I’ve dealt with for eight years.”

Arterburn asked if Sadler was confident the city would get $30,000 worth of service from the firm.

“If we don’t, it will be a very short contract,” Sadler said.