July 18 2018 Proposal.pdf

July 18, 2018

Ms. Amanda Carone

Agency Procurement Officer – Legal Department

Illinois Housing Development Authority

111 E. Wacker Drive, Suite 1000

Chicago, IL 60601

Re: Proposal for Insurance Consulting/Risk Management Services

Dear Ms. Carone:

We are pleased to present our proposal to serve as the independent insurance and risk management consultant to the Illinois Housing Development Authority

(IHDA).

Our services will match precisely those outlined in your Request For Quotes, which we received by email on November 13, 2017.

Insurance Audit and Inspection Company (Insurance Audit) is one of the oldest independent insurance and risk management consulting firms in the country, as well as one of the most highly regarded and well‐recognized. We were founded prior to the turn of the last century and incorporated in 1901. Currently in our

116th year of continuous consulting, we are a family company in its fifth generation.

We do not sell insurance and have no financial interest in any insurance company, agency, brokerage, reinsurer, or other insurance intermediary. Our only source of revenue is fee‐based consulting for insurance policyholders. We do not provide brokerage services. As a result, our advice comes to you completely objectively and is free of any built‐in bias. We do not have the conflict of interest that exists any time the advice you receive about the types and amounts of insurance you need comes from a source that is paid commissions by insurance companies to sell specific products.

Insurance Audit operates nationwide from its headquarters in Indianapolis, Indiana. We also have consultants located in the states of Michigan and Ohio.

Our clientele includes nearly all types of business and industry, including non‐ profits and public entities. This unique combination of independence and broad perspective is one of our core strengths.

DELIVERABLES

1. During the contract period and at the time of our audit, we will seek to identify exposures to loss or liability, examine the various methods for handing these risks, assist you in selection of the best risk management method, implement the chosen method, and monitor it to make certain that it remains optimal in light of changes, both internally and externally.

Because of IHDA’s size and structure, the use of commercial insurance products to transfer risk will be the method of choice. Our effort will be to assist IHDA to strike the best balance between risk retention (deductibles and self‐insured retentions (SIR’s)) and risk transfer by commercial insurance. We are aware of all of the types of commercial insurance carried by IHDA. We are thoroughly familiar with the offerings of the various insurance companies that provide the coverages required by

IHDA. We will render our opinion as to the reasonableness of the cost of all insurance products in IHDA’s property and casualty insurance portfolio.

All of our consultants are considered experts in our profession, with years of experience as risk officers at other organizations before coming to

Insurance Audit. Our work for IHDA will be performed by a person at or above the level of vice president.

2. We will conduct a comprehensive audit of all insurance policies presented to us and collect and compile all available documents and other data necessary to determine the thoroughness of coverage and competitiveness of cost of IHDA’s insurance program. This includes, but is not limited to, insurance policies, statements of value, business income and extra expense worksheets, statements of financial condition, organizational charts, vehicle fleet schedules, management liability applications, claims data and loss runs, and similar documents.

We will prepare and submit a comprehensive written report on our findings, including comments and recommendations for improvement of coverage or reduction in cost. We will also address new exposures, and identify new insurance products and make specific recommendations as to whether these items are appropriate for consideration by IHDA. Our report will be presented in a format which is easy to understand and avoids insurance jargon which can be confusing and counterproductive.

3. As mentioned under item 2 above, we will prepare and submit a comprehensive written report of our findings within 45 days of the date of our onsite visit.

a) We will prepare executive summaries of each insurance policy in

IHDA’s portfolio. These executive summaries include coverage amounts or limits, deductibles, and premiums paid. They also include a complete list of all forms and endorsements. We compare the forms and endorsements found in the policy with those listed on the schedule of endorsements attached to each policy and note any missing documents, so that these can be obtained from your broker. The executive summaries are useful for archiving, since policies issued today may have to respond to claims presented in the future. Our executive summaries serve as a useful reference tool that can be kept at your fingertips and can be distributed to others within your organization that may have a need to know what coverage is in force.

b) As noted under item 2 above, our written report includes comments and recommendations, wherein we will advise you of errors or omissions in your insurance documents. We will provide specific direction on how to correct them.

c) We check the financial strength and claims paying ability of each of the insurance companies writing a policy included in your portfolio against the most recent ratings issued by the AM Best Company, which we believe is the strongest of the insurance company rating facilities. We recommend only those companies carrying one of the

Best’s “A” ratings. If, during the course of our work, one of your insurance companies receives a downgrade in its letter rating by

AM Best, we use our best efforts to notify you as soon as practicable, so that you can assess your options and take appropriate action.

d) Our report includes comments and recommendations for improvement in coverage or reduction in cost, for each line of insurance in your portfolio. Since we are thoroughly familiar with the products offered by the various insurers that underwrite insurance for organizations like IHDA, we are able to make comparisons of your current coverage with those products available from other insurers.

4. The primary account representative will be our President and General

Counsel, Daniel C. Free, CPCU, ARM. Mr. Free is quite familiar with governmental entities, including finance authorities similar to IHDA, as well as the types of operations, management personnel who are stakeholders in the risk management process, and the overall structure and balance of an insurance and risk financing program. It should be noted that we use a team approach to consulting, so that you get the benefit of the experience and perspective of at least two principal consultants on each phase of our work. All of our work is original – we do not use boilerplate or “canned” materials.

5. We are frequently called upon to examine new coverages, respond to questions or concerns, undertake research, and provide guidance on an

“as needed” basis. This will be included as part of our work.

Cost

Our fee for services includes all of our expenses, including travel, postage, overnight mail, and the like. For the forthcoming year, our proposed charge will be $10,000. It is worthy of mention that we do not bill for time we do not incur.

As set forth in your Request for Quotes, this is a “not to exceed” figure.

As with anything these days, there are some practical limitations. Since our proposed fee includes all of our expenses, such as travel, postage, document retention and the like, we anticipate one visit to your offices, at the time of our on‐site audit.

We encourage you to reach out to us if you have any questions. We look forward to the opportunity to be of service to IHDA.

Respectfully Submitted, Daniel C. Free, CPCU, ARM

President and General Counsel

DCF/mnf