Calendar:
Monday, December 6
12:00 pm - Community Safety Committee Meeting, Room 267. AGENDA: Dangerous Dogs; Prostitution Free Zone
5:00 pm - Council Policy Retreat and Consideration of 2005 North Carolina Legislative Agenda, Room 267
Wednesday, December 8
8:00 am - Economic Development and Planning Committee Meeting, Rooms 270-271 AGENDA: Albemarle/I-485 Area Plan Amendment; Backlog of Rezoning Cases
12:00 pm - Housing and Neighborhood Development Committee Meeting, Room CH-14 AGENDA: Gentrification - Resolution Statement; Code Enforcement Overview; No Parking on the Front Lawn Ordinance - Six Month Review
Thursday, December 9
9:00 am - Council Retreat, Police/Fire Academy, 2nd Floor, Room 2105
5:00 pm - There will be a lunch break between 12:00 and 2:00 pm to accommodate Council members who have a luncheon engagement. Lunch will be provided for those not leaving the academy.
The agenda notebook is in your packet today.
Agenda Notes:
Revised December 6 Workshop Presentation -- State Transportation Funding Strategy
Staff Resource: Jim Humphrey, 704-336-3383
Attached is a revised copy of the State Transportation Funding Strategic presentation that went into the December 6 Policy Retreat notebooks. The copy that you previously received included several incomplete slides.
Information Items:
Insurance Brokerage Issues:
Staff Resources: Greg Gaskins, 704-336-5885 and Scott Denham, 704-336-4142
On Thursday, October 14, 2004, the New York State Attorney General filed a civil complaint with the New York Supreme Court against Marsh & McLennan and Companies, Inc. and Marsh Inc., alleging six causes of action. This civil complaint was described as "Leading Brokerage Firm Sued for Fraud and Antitrust Violations". Reference is made in the allegations to the "Global Broking Office" of Marsh and concerns about professional conduct in that section of the New York office. This is a centralized unit that handles insurance placements for businesses.
Regional, national, international, and business news bureaus have been reporting on this suit. Marsh is the primary brokerage firm used by the City (on behalf of the joint program of the City, County and Charlotte-Mecklenburg Schools), and staff has taken this matter very seriously. Staff has had numerous discussions with Marsh management in the Charlotte office. We have yet to identify a direct correlation of the services provided by the Charlotte Office, Marsh USA, Charlotte, with the allegations in the complaint.
The complaint included an allegation of improper broker service provided by an employee from the New York Global Broking office of Marsh to the Greenville, SC schools. Given the proximity of Charlotte and Greenville, The Charlotte Observer inquired if the New York Attorney General's office had contacted the City, which has not happened. We have no knowledge of any activity or inquiry by the New York Attorney General's office in this area.
Marsh has taken dramatic steps to deal with this matter. Their chief executive officer was released, as were several members of their board, and they have eliminated the process that is at the heart of the allegations. This process is referred to as "contingent commissions". Business Insurance Magazine published a list of the top 100 brokers who use this methodology. Local firms on the list include Marsh, AON, Willis, Gallagher, Wachovia, BBT, Palmer & Cay among others.
Upon consideration of the information available at the time, staff instructed the local office of Marsh to exclude all Global Broking involvement on any coverage we have or are considering. Marsh implemented that instruction that day.
A reporter has interviewed Risk Management staff concerning the relationship with Marsh and apparently intends to write a story based on the length of time Marsh, as well as Johnson and Higgins (J&H) have provided services to the City, County and School Board.
As you know, the Risk Management Program is designed to use insurance only when it is the best, risk-financing tool for a specific exposure. We predominantly use insurance only at the upper end, or "excess layer", and not for first-dollar coverage. This method precludes much of what is being discussed in the media. We measure our effectiveness by tracking the Total Cost of Risk as a percentage of the operating budget. The current number is 1.3%, which is favorable in comparison to similar entities.
A key premise in the design of this program originally (the middle to late 1980's) was that we required direct contact with the underwriting community (the insurance carriers). Many brokers declined to support this approach at the time, but it is not unusual today. J&H, a leading national firm, liked the idea and supported it strongly. The partnership developed with J&H enabled the solid, stable basis of our program. Marsh and J&H merged in 1997. We have continued the working relationship with the same team, based on the effectiveness in getting desired coverage, listening to our needs, and the level and quality of service.
During the last two years several other brokers have called upon this office. We continue to offer any broker an opportunity to offer us alternative approaches that might be better for the City. The Risk Management Division continues to review all of its policies and programs to achieve even more effective approaches to reduce the Total Cost of Risk. The Risk Management Advisory Board will be reviewing a RFP for brokerage services in the near future.
Police Internal Affairs Annual Report for 2003
Staff Resource: John O'Hare, 704-353-1059
Mayor and Council will receive a copy of the Police Internal Affairs Annual Report for 2003 in their packets today. The report is the first annual summary prepared by the Internal Affairs Section. It will be available to the public on the Police Department's website under Internal Affairs.
