A Citizen Researches Insurance Issues

Town Council, please take notice and advise on what will be next. The 2009/2010 budget review is right around the corner. We cannot afford more of the same. It IS time for a CHANGE!

Topic- Acct 101-03, Department-Insurance 2008-09 Budget

a) at the 5/10/08 Town Council/Town meeting, Request for Proposal (RFP) process was raised by a few citizens. At this meeting, it was stated by Mr. Eldridge that it was too late for an RFP to be sent out for bid for the Municipal Policy because of the 7/1/08 Effective Date of Coverage (EDOC). Councilor Bowie stated that the process for the medical and workman's compensation insurance could be reviewed since the EDOC for that policy was later, 1/1/09;

b) at the 6/17/08 Town Council meeting, Mr. Eldridge stated the RFP's were close to completion and he expects them to be sent out within a few weeks;

c) at the 8/19/08 Town Council meeting, 2 months after they were reported to be near completion, Mr. Eldridge reports the RFP's to have been worked on diligently by his staff and will go out in the mail 9/1/08 (technically 9/2/08 due to the Labor Day holiday)

Issue #1- Municipal Insurance:

The RFP that went out in September 2008 with a proposal deadline of 10/31/08 at 4pm with updated proposals due no later than 1/31/09 by 4pm was for the municipal Risk Management policy (Property & Casualty) which is not up for renewal until 7/1/09. The 2009 ratings for 7/1/09 plans were not available or even rated yet by providers at that time yet we sent out an RFP as such. By sending out an RFP for such a future EDOC, you are hindering our ability to receive viable proposals. This was discussed with our current insurer, Maine Municipal Association (MMA). They concurred that it would be difficult to receive bids with 2009 rate quotes since companies were not yet quoting for that period. This should have been completed in May 2008 as previously requested for 7/1/08. Although it was stated that there was not enough time, information obtained differed.

In a discussion with MMA, they note our policy to have a 60 day preferred bid notice but only requires 30 days notice. Of note, MMA confirmed there would have been no penalty incurred for a notice not received within the 30 day notice period. (Source: MMA - Marcus Ballou, Marketing Consultant via telephone on 10/1/08)

This information could have been put out to bid and possible decreased premiums received if the RFP had been submitted in May 08 as requested by citizens of this town.

Issue #2- Medical Insurance:

Since our budget does not differentiate what insurance policies specifically are increasing, and based on the economy, it would seem prudent for the Town of Lisbon to look at all policies and insurers for better rates.

If our medical coverage was to go out to bid as well as our Workman's Compensation (WC) plan which are up for renewal effective 1/1/09, why as of October 2008 did we not put RFP's together to put these policies out to bid?

Emails from your office in September and October 2008 stated that the WC was not going to be put out to bid. Two brokers however had asked to submit quotes and per your office, the proper notice was going to be provided to MMA authorizing the quotes to be submitted. Why was the same not done with regards to the medical coverage?

Mr. Eldridge, at the October 7, 2008 town council meeting and again at the November 6, 2008 town council meetings you stated that you were in discussion with other insurance carriers about other plans and coverage. How may I ask are you able to obtain an appropriate rate and quote when an RFP was not sent out for this coverage? Another carrier cannot appropriately provide a quote for coverage without receiving all of the information needed to rate the coverage appropriately. Another carrier needs very specific details pertaining to types of coverage, number of lives, bundling of coverage when applicable, union(s), etc.

An example would be if I was to call a car insurance company and only give them the make and model of my car and ask them for an insurance quote when they do not have my driving record or the year of the car to provide accurate rate information.

This was one of the top 8 budget line item increases with a 8.9% increase noted. $704,552.00 increased to $767,151.00 per anum. The Town of Lisbons increased cost for this is $62,599.00.

WHY Mr. Eldrige are you now stating that the Town Council had given you the directive to seek rates for the P&C policy only? You are the town manager and as such you should know the difference in the policies and where the most impact can be made. We have MMA for advisement and even though they would be a competitor for this business, they will still advise you as to what area of insurance the most impact can be made. Why did we not consult them? At what meeting did the Town Council advise that the P&C policy should go out to bid? I do not recall that going out to vote let alone discussed?

Who voted on this decision and what meeting date was this discussed with the Town Council to see when the directive was given?

Without significant changes in the updating of our P&C policy, there will be no major change in our rates. This should have been looked out with more scrutiny and with the best financial interest in mind for our town.

What does this all mean in summary? Because the Municipal policy was submitted too early, the process for receiving bids has been hampered as companies can not provide rates to assist us in "shopping around" because the RFP was sent out before the 2009 rates were available.

Additionally, because we did not send out RFP's for medical and workman's compensation insurance, we did not "shop around" and therefore it is impossible to lower our cost for this coverage. Result? More of the same. Increases as outlined in the 2008-09 budget with NO CHANGES! This is what our tax dollars are paying for. MMA policy will stand as is because the process for change was not managed and or explored appropriately.

(This information was presented at the Dec. 2, 2008 Town Council Meeting)