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1990-04 Risk Management Programcoo.-ooy RISK MANAGEMENT SPECIALISTS January 3, 1990 Kodiak Island Borough c/o Bryce S. Weeks Finance Director 710 Mill Bay Road Kodiak, Alaska 95615-6340 Dear Bryce: As per our discussion, RISC is prepared to assist Kodiak Island with a: analysis of their risk/insurance administrative process; audit of the property and casualty insurance programs; quantitative review of the liability program. The above three segments should be broken down into three phases which will accomplish the following: 1) Develop administrative guidelines for a functional risk management program. 2) Determine if the present insurance program adequately provides coverage to existing exposures to loss. 3) Determine the present frequency and severity of liability losses and the cost to fund these losses if self insurance was a consideration. SCOPE OF SERVICES Phase I: 1) Examine indemnity provisions in a representative sampling of major contracts and lease agreements to determine if risk is being transferred appropriately. 2) Review any chargeback systems in use to determine if cost allocations are properly made to participating departments/ agencies. If none exists, one will be developed. RISC, Ma 150 WILLIAM STREET NEW YORK, N. Y. 70038 ~212~ 553-3180 FAX (212) 553-3244 3) Review written policies and procedures currently in effect for the safety and insurance/risk management functions to determine if modifications should be made. If none exist, policy and procedures will be recommended. Phase II Conduct a detailed review of the property and casualty insurance coverage to determine: 1) adequacy of coverage, conditions and limits to meet the existing exposures to loss. 2) relationship of premium cost to values received. 3) duplication of coverage or coverage omissions, and methods of reducing any overlaps or eliminating any gaps. 4) appropriate deductible levels. Phase III Conduct a quantitative analysis of the Borough's liability losses to determine appropriate funding levels. This will entail: 1) evaluation of historical losses to identify the areas of high frequency and severity. 2) projection of ultimate loss funding levels for the upcoming years, using standard risk management statistical techniques; and 3) formulation of a report detailing the alternative funding levels for liability exposures. PROJECT TEAM The entire staff of RISC will be available to work on this project as needed. However, a special team has been chosen to perform the work required. A brief statement outlining the experience of each member is provided below. ROBERT M. BIEBER ARM has over 23 years in risk management, of which 17 years has been working with municipalities. He holds a Masters degree in Occupational Safety and Health from New York University and a Bachelors degree from the College of Insurance in insurance. KAREN W. Nussman, ARM, CPCU has over 11 years of risk management and insurance experience which consist of, pricing property and liability coverages, setting up alternative funding programs and policy coverage reviews. She has a Masters degree in business from the University of North Carolina and a Bachelors degree from Virginia Polytechnic Institute and University. -3- j '~ COMPENSATION Professional fees for this study will be as follows: Phase I Risk/Insurance Administrative Review $4,500 Phase II Policy Review $5,000 Phase III Liability Quantitative Analysis $4,500 The foregoing fees do not include out-of-pocket expense which will include travel and living expenses, telephone toll charge and report reproduction costs. These costs will be in addition to professional f s. (Travel from NY to Kodiak, AK only if mutually agreed to by both parties). Billing for se ces and expenses will be on a monthly basis as the work progresses. If additional/continuing services are requested, they will be charged at a rate of $125 per hour. RISC agrees to maintain strict confidentiality of any records, work papers or reports, or other proprietary material contained as part of this consulting assignment. If the terms of this agreement meet with your approval, please sign the attached copy and return it to us. We appreciate the opportunity to present this proposal. We will he happy to answer any questions. Sincerely Robert M. Bieber Vice President RMB/bl ACCEPTED for KODIAK ISLAND BOROUGH By Jerome Selby ~ _ Title mayor Date 317T1~ 3176d/86-8