Records of Meeting - 1 - August 20, 1998
Taxi/Limousine RFP Selection Committee
RECORDS OF MEETING
TAXI/LIMOUSINE RFP SELECTION COMMITTEE
A meeting of the Taxi/Limousine RFP Selection Committee of the Commonwealth Automobile Reinsurers was held at the offices of CAR, 100 Summer Street, Boston, on –
THURSDAY, AUGUST 20, 1998 AT 10:00 A.M.
The following members were present -
Mr. Charles I. Boynton, III – Chairman
Boynton Insurance Agency, Inc.
Mr. Charles A. BranstromCGU Insurance Companies
Mr. David BrussardSafety Insurance Company
Mr. Michael DeContiTravelers/Aetna Property Casualty Corp.
Ms. Kathleen DevericksPremier Insurance Company
Also present were –
Commonwealth Automobile Reinsurers
Mr. Ralph A. IannacoPresident
Mr. Jason BurnsActuarial Analyst
Mr. Paul CorsettiDirector of Communications Ms. Cynthia Duffy Statistical Analyst
Mr. Timothy GalliganSenior Actuarial Analyst
Ms. Valerie GedziunVice President – Claims
Mr. Joseph MaherVice President and General Counsel
Ms. Sharon SchorgeManager of Actuarial & Statistical Services
Mr. Douglas ShetterlyActuarial Analyst
Ms. Cheryl StandrowiczUnderwriting Technical Assistant
Mr. Michael TrovatoExecutive Vice President and Treasurer
Ms. Jennifer VieiraStatistical Analyst
Ms. Pamela WallaceUnderwriting Manager
Records of Meeting - 1 - August 20, 1998
Taxi/Limousine RFP Selection Committee
Also present were -
Mr. William HuntClark, Hunt & Embry
Ms. Diane SwierczynskiClark, Hunt & Embry
Mr. Richard HarrisEmpire Insurance Company
Mr. Francis PascalEmpire Insurance Company
Ms. Kathy KarpeISI Systems
Mr. David RichardsLiberty Mutual Insurance Company
Mr. John DelanoPilgrim Insurance Company
Mr. Leonard RollinsPilgrim Insurance Company
Mr. Barry TagenPilgrim Insurance Company
Mr. Ed WallestonPilgrim Insurance Company
Mr. Steve PacePolicy Management Systems Corporation
TLSC
98.1RECORDS OF MEETING
On a motion made by Mr. DeConti and seconded by Ms. Devericks, the Records of the Taxi/Limousine RFP Selection Committee meeting held on May 26, 1998 which continued on May 28, 1998 and June 2, 1998 were unanimously approved as written.
TLSC
98.2TAXI/LIMOUSINE SERVICING CARRIER SELECTION
Mr. Maher summarized the proceedings regarding the taxi/limousine servicing carrier selection at the last Governing Committee meeting. The Taxi/Limousine RFP Selection Committee had made a recommendation for Governing Committee consideration that Empire Insurance Company and Pilgrim Insurance Company be considered as the servicing carriers for business written in conjunction with the Taxi/Limousine Program effective January 1, 1999. The Committee had further recommended $1,118 as the expense allowance for taxis and $616 as the expense allowance for limousines/car service, for a combined expense allowance of $911 per exposure for policy year 1999. These numbers were determined using Pilgrim’s bid, the lowest of all the bids received.
Before any action was taken by the Governing Committee on the recommendations, Mr. Harris of Empire noted objections to the manner in which the expense fees were determined and indicated that Empire might be unable to provide service as set forth in their bid at the expense allowance recommended by the RFP Selection Committee. As a consequence of that discussion, the Governing Committee did not accept the recommendation on the selection of Empire Insurance Company and Pilgrim Insurance Company Insurance Company to service business written through the Taxi/Limousine Program, and referred the matter back to the RFP Selection Committee for further consideration with a final recommendation to be presented to the Governing Committee at a later meeting.
Mr. Maher informed the Governing Committee that the RFP itself indicated that the expense reimbursement would be determined by the Governing Committee and that if either of the companies selected were unwilling to assume the assignment on the basis of the recommended reimbursement then the Governing Committee could choose to offer the appointment to one of the other applicants or to determine that one carrier may be appropriate for handling the entire Taxi/Limousine Program. Mr. Richards of Liberty Mutual then informed the Governing Committee that Liberty Mutual would be willing to accept an appointment premised on the bid recommended by the RFP Selection Committee.
The Governing Committee voted to refer the matter back to the Taxi/Limousine RFP Selection Committee for further review. Mr. Maher noted that there was no Governing Committee action taken neither upon the expense allowance, the recommendation of Pilgrim or Empire, nor on the issue of whether there should be one or two carriers.
Mr. Harris of Empire addressed the Committee noting two key items that have transpired since the Governing Committee meeting. Empire has employed a new chief executive officer effective at the end of August who has a different vision for the company. Furthermore, after long consultations with their attorneys, Empire management has rethought the entire process and feels the Program will be best served by their reconsideration and not going forward with their objection to the expense allowance as established by the Committee. Empire therefore withdrew their objections to the expense allowance and stated to the Committee that they unequivocally were willing to accept the appointment at the expense allowance recommended by the Committee. Mr. Harris noted that Empire has an established facility that is dedicated 100% to the Program and that Empire will continue to provide the exact same level of service as described in the proposal for the recommended expense allowance.
Mr. DeConti questioned how Empire plans to reconcile the service level in relation to the difference in expense allowance from bid to acceptance level. Mr. Harris stated that Empire’s new leader has a different approach to allocating resources and expense dollars. Empire plans to allocate more resources and dollars to MA and are looking to model other offices around this operation. Mr. Harris reassured the Committee that the fine work from the past would continue with the improvements included in the proposal for the Committee’s recommended expense allowance.
On a motion made by Mr. Brussard and seconded by Mr. DeConti, the Committee unanimously recommended that Empire Insurance Company and Pilgrim Insurance Company be considered as the servicing carriers for business written in conjunction with the Taxi/Limousine Program effective January 1, 1999. The Committee further recommended $1,118 as the expense allowance for taxis and $616 as the expense allowance for limousines/car service, for a combined expense allowance of $911 per exposure for policy year 1999. These numbers were determined using Pilgrim’s bid, the lowest of all the bids received. This was the same motion as previously recommended to the Governing Committee.
Mr. Richards questioned whether these expense allowances would be set for the full term of the contract. CAR Staff explained to the Committee that Pilgrim’s bid included a 1.5% inflationary adjustment for policy year 2000 and 2001 and the intent of the process was that whatever was included in the bid would be set for the three-year term. Therefore, the expense allowances would be: taxis $1,118 and limousines/car service $616 for policy year 1999; taxis $1,135 and limousines/car service $625 for policy year 2000; and taxis $1,152 and limousines/car service $634 for policy year 2001. Mr. Brussard confirmed that the expense allowances are set whether the market populates or depopulates.
Mr. Richards then questioned whether the Committee was going to do any type of verification of Empire resources as allocated in their bid since they are willing to accept the lower bid. He expressed concern whether Empire would truly commit the resources contained in their proposal resources since Liberty Mutual picks up a fair share of the pool results. Mr. Trovato noted that it is CAR’s role to work with both of the taxi/limousine servicing carriers to assure that CAR is receiving the service required. CAR Staff has worked closely with both in the past and does not anticipate any problems.
OTHER BUSINESS
There being no further business to discuss, the meeting was adjourned.
CHERYL STANDROWICZ
Underwriting Technical Assistant
Attachments
Boston, MA
September 8, 1998
Note: These Records have not been approved. They will be considered for approval at the next meeting of the Taxi/Limousine RFP Selection Committee.