FY2023-44 Insurance Consultant agreeement with MarshMcLennan AgencyMarshMcLennan
Agency
AGREEMENT ("Agreement") effective 3-1-2023, (the
"Effective Date"), between Marsh & McLennan Agency
LLC ("Marsh & McLennan Agency"), and Kodiak Island
Borough ("you").
It is agreed as follows:
1. Services.
Marsh & McLennan Agency will act as your insurance
broker and/or risk management consultant with respect to
the lines of insurance listed in Section 2. Marsh &
McLennan Agency shall provide to you the following
services (the "Services"):
Pre-Marketinsa Services
(a) Conduct an initial strategy discussion in advance of
each placement;
(b) Assist you in assessing your risks and in developing
insurance specifications which Marsh & McLennan
Agency will submit to insurers;
(c) Recommend potential insurers;
Marketinsa and Placement Services
(d) Solicit quotes from insurers that you select;
(e) Negotiate on your behalf with insurers;
(f) Assist you in evaluating the options received from
insurers;
(g) Use best efforts to place insurance for you, but only
after you have authorized Marsh & McLennan Agency
to bind coverage for you;
Services related to Marsh & McLennan Agency
placements
(h) Deliver confirmation of coverage once it is placed;
(i) Follow up with insurance carriers to obtain policies
and/ or endorsements. Marsh & McLennan Agency
may deliver your insurance policies and
endorsements to you electronically;
Q) Review policies and endorsements for conformity with
agreed terms and coverages;
(k) Provide coverage summaries;
(1) At your request, issue certificates or memoranda of
insurance and/or auto identification cards;
(m) Review premium and exposure audits, rating
adjustments, dividend calculations and loss data;
(n) Provide you with invoices, except in the case of direct
billing by insurers. Remit premiums to insurers and,
where applicable, remit taxes and fees to the relevant
authorities, following receipt thereof from you;
(o) Monitor published financial information of your current
insurers and alert you when one of those insurers falls
below Marsh & McLennan Agency's minimum
financial guidelines.
Claims -Related Services
(p) Provide the following claims -related services:
• Evaluate coverage applicability on all Marsh &
McLennan Agency placed business
• Assist you in the development of settlement
strategies
• Assist you with insurer negotiations
• Assist you with litigation management issues that
impact claim settlements
Excluding Workers Compensation, Primary Auto
Liability 1 Physical Damage and non-complex
Primary General Liability claims, prepare loss
notices to insurers and notify insurers of claims;
provided that your Marsh & McLennan Agency
claims advocate is informed in writing by you of the
claim, with details of the claim, and Marsh &
McLennan Agency has placed the applicable
policies or the Marsh & McLennan Agency claims
advocate has been provided written notice by you
of the applicable carrier and policies.
The total number of hours of property and casualty
claims services described in this paragraph provided
by Marsh & McLennan Agency to you in a calendar
year shall not exceed 62.5. In the event such claims
services exceed such hourly allotment, Marsh &
McLennan Agency reserves the right to seek
additional compensation.
Marsh & McLennan Agency may utilize the services of
intermediaries to place your insurance, subject to your
approval.
Marsh & McLennan Agency will not serve as your
insurance broker, but only as your risk consultant, with
respect to placements with ineligible insurers. In those
circumstances, Marsh & McLennan Agency's non -U.S.
affiliates shall provide the brokerage Services.
Marsh & McLennan Agency may retain your information in
paper or imaged format and may destroy paper copies if
Marsh & McLennan Agency retains digital images thereof,
2. Lines of Insurance.
Fee Covera e s — Placements with AMLJIA
Property
General Liability
Public Officials Liability
Auto Liability
Employee Benefit Liability
Volunteer Medical Payments
Workers Compensation
Employers Liability
Crime
C ber Liabili
Commission Coverage Us
Cyber Liability — if outside of AMLJIA
Pollution/Environmental Liability
Aviation/Drone Liability
Marine
Professional Liability
Surety
3. Compensation.
Marsh & McLennan Agency shall be compensated for its
Services as follows:
Fee -Based Compensation
Marsh & McLennan Agency will deliver its Services to you
for the Fee Coverages at 10% of the earned premium.
The annual fee shall be paid by you commencing July 1,
2023.
Marsh & McLennan Agency shall credit against the annual
fee any retail commissions collected by it or its affiliates
that apply to the Fee Coverages. If the retail commissions
for a contract year exceed the annual fee, then Marsh &
McLennan Agency will return any excess retail
commissions to you unless prohibited by anti -rebating
laws. Marsh & McLennan Agency and its affiliates will not
credit any wholesale or contingent commissions against
the annual fee.
Commission -Based Compensation
Marsh & McLennan Agency shall be compensated for its
Services for the Commission Coverages through
commissions from insurers.
Please see Appendix A for our standard compensation
disclosure, which we may update from time to time.
Marsh & McLennan Agency can provide additional
services at an additional cost. The cost and scope of
additional services (see Appendix B) will be agreed in
advance and reflected in an amendment to this Agreement
or a separate agreement.
In the case of local placements made by Marsh &
McLennan Agency's non -U.S. affiliates on behalf of you or
your non -U.S. subsidiaries, Marsh & McLennan Agency's
non -U.S. affiliates shall receive commissions, which shall
be in addition to and not be credited against the annual
fee. If you ask Marsh & McLennan Agency to access non-
U.S, markets not anticipated at the Effective Date, you
agree to negotiate in good faith the additional costs of
Services relating to those placements.
If there is a significant change in your operations or risks
that affects the nature and scope of your insurance
program and/or service needs, both parties agree to
renegotiate Marsh & McLennan Agency's compensation in
good faith.
4. Term and Termination.
The term of this Agreement is one year starting on the
Effective Date and may be extended in writing.
Either party may terminate this Agreement upon 90 days'
prior written notice. If Marsh & McLennan Agency
terminates this Agreement, Marsh & McLennan Agency's
compensation will be adjusted pro -rata to reflect the
duration of the Agreement. If you terminate this
Agreement, Marsh & McLennan Agency's commission
compensation will be deemed fully earned, and Marsh &
McLennan Agency's fee compensation will be deemed
earned as follows: 60% at the commencement of the
current contract year; 75% after four months of the current
contract year; and 100% after seven months of the current
contract year.
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The obligation of Marsh & McLennan Agency and its
affiliates to provide Services to you will cease upon the
effective date of termination, unless otherwise agreed in
writing. Marsh & McLennan Agency will assist you in
arranging a smooth transition process, subject to receipt
by Marsh & McLennan Agency of all amounts due to
Marsh & McLennan Agency from you.
5. Taxes and Fees.
Marsh & McLennan Agency may place insurance for you
that may require the payment of insurance premium taxes
(including U.S. federal excise taxes), sales taxes, use
taxes, surplus or excess lines and similar taxes and/or
fees to federal, state or foreign regulators, boards or
associations. You agree to pay such taxes and fees.
Marsh & McLennan Agency will remit any taxes and fees
that it collects from you to the appropriate authorities.
6. Your Responsibilities.
You shall be solely responsible for the accuracy and
completeness of all information that you furnish to Marsh
& McLennan Agency and/or insurers, and you shall sign
any required application for insurance. Marsh &
McLennan Agency shall not be responsible to verify the
accuracy or completeness of any information that you
provide, and Marsh & McLennan Agency shall be entitled
to rely on that information. Marsh & McLennan Agency
shall have no liability for any errors, deficiencies or
omissions in any Services provided to you, including the
placement of insurance on your behalf, that are based on
inaccurate or incomplete information provided to Marsh &
McLennan Agency. You understand that the failure to
provide all necessary information to an insurer, whether
intentional or by error, could result in the impairment or
voiding of coverage.
You will review all policy documents provided to you by
Marsh & McLennan Agency.
7. Other Revenue.
If Marsh & McLennan Agency assists you with obtaining
premium financing, Marsh & McLennan Agency may
receive compensation from the finance company that
provides the premium financing.
Marsh & McLennan Agency earns and retains interest
income on premium payments held by Marsh & McLennan
Agency on behalf of insurers between the time Marsh &
McLennan Agency receives these payments from you and
the time Marsh & McLennan Agency remits these
payments to the insurers, where permitted by applicable
law.
8. Disclaimers; Limitation of Liability.
Marsh & McLennan Agency does not speak for any
insurer, is not bound to utilize any particular insurer and is
not authorized to make binding commitments on behalf of
any insurer, except under special circumstances which
Marsh & McLennan Agency shall endeavor to make
known to you. Marsh & McLennan Agency shall not be
responsible for the solvency of any insurer or its ability or
willingness to pay claims, return premiums or other
financial obligations. Marsh & McLennan Agency does not
guarantee or make any representation or warranty that
insurance can be placed on terms acceptable to you.
Marsh & McLennan Agency will not take any action to
replace your insurers unless you instruct Marsh &
McLennan Agency to do so. You acknowledge that, in
performing Services, Marsh & McLennan Agency and its
affiliates are not acting as a fiduciary for you, except to the
extent required by applicable law. Any reports or advice
provided by Marsh & McLennan Agency should not be
relied upon as accounting, legal, regulatory or tax advice.
In all instances, Marsh & McLennan Agency recommends
that you seek your own advice on such matters from
professional accounting, legal, regulatory and tax
advisors.
Marsh & McLennan Agency will not be responsible for the
adequacy or effectiveness of any insurance programs or
policies implemented by another broker, or any acts or
omissions occurring prior to Marsh & McLennan Agency's
engagement.
In no event shall either party to this Agreement be liable
for any indirect, special, incidental, consequential or
punitive damages or for any lost profits arising out of or
relating to any services provided by Marsh & McLennan
Agency or its affiliates. The aggregate liability of Marsh &
McLennan Agency, its affiliates and its and their
employees to you or your affiliates arising out of or relating
to the provision of services by Marsh & McLennan Agency
or its affiliates shall not exceed $10,000,000. This
provision applies to the fullest extent permitted by
applicable law and to all causes of action, including,
without limitation, breach of contract, breach of warranty,
negligence, strict liability, misrepresentation and other
torts.
Marsh & McLennan Agency may provide to you
information and services related to insurance regulatory
and insurance tax issues relating to your insurance
program. Any reports or advice provided by Marsh &
McLennan Agency will be based on publicly available
information and Marsh & McLennan Agency's experience
as an insurance broker and risk consultant in dealing with
such matters for other clients and should not be relied
upon as accounting, regulatory or tax advice. In all
instances, Marsh & McLennan Agency recommends that
you seek your own advice on accounting, regulatory and
tax matters from professional legal and tax advisers.
Marsh & McLennan Agency may provide you with
modeling and/or business analytics services, including
hazard loss and catastrophe modeling, loss forecasting
and triangles, adverse event simulation, scenario and
portfolio risk analysis, decision mapping, risk bearing and
risk retention tolerance analysis and insurance program
evaluation analysis ("Modeling and Analytics"). Modeling
and Analytics services will be based upon a number of
assumptions, conditions and factors. If any of them or any
information provided to Marsh & McLennan Agency are
inaccurate or incomplete or should change, the Modeling
and Analytics provided by Marsh & McLennan Agency
could be materially affected. These services are subject to
inherent uncertainty, and actual results may differ
materially from that projected by Marsh & McLennan
Agency. They are provided solely for your benefit, and do
not constitute, and are not intended to be a substitute for,
actuarial, accounting or legal advice. Marsh & McLennan
Agency shall have no liability to any third party in
connection with these services or to you with regard to any
services performed or provided by a third party. Except to
your insurers in connection with the placement of
coverage by Marsh & McLennan Agency, you shall not
share any of Marsh & McLennan Agency's Modeling and
Analytics work product with a third party without Marsh &
McLennan Agency's prior written consent.
9. Miscellaneous.
The laws of the State of Alaska govem this Agreement.
This Agreement may only be amended by mutual written
agreement.
Each party, on behalf of itself and its affiliates, to the
fullest extent permitted by law, knowingly, voluntarily, and
intentionally waives its right to a trial by jury in any action
or other legal proceeding arising out of or relating to this
Agreement or any services provided by Marsh &
McLennan Agency or its affiliates. The waiver applies to
any action or legal proceeding, whether sounding in
contract, tort or otherwise. Each party, on behalf of itself
and its affiliates, also agrees not to include any employee,
officer or director of the other party or its affiliates as a
party in any such action or proceeding.
It is the intent of the parties that the provisions of this
Agreement shall be enforced to the fullest extent permitted
by applicable law. To the extent that the terms set forth in
this Agreement or any word, phrase, clause or sentence is
found to be illegal or unenforceable for any reason, such
word, phrase, clause or sentence shall be modified or
deleted in such manner so as to afford the party for whose
benefit it was intended the fullest benefit commensurate
with making this Agreement, as modified, enforceable, and
the balance of this Agreement shall not be affected
thereby, the balance being construed as severable and
independent.
This Agreement and its written amendments and
appendices constitute the entire understanding between
Marsh & McLennan Agency and you, and supersede all
other agreements or understandings, related to its subject
matter.
Neither party will have any liability for any failure or delay
in performing because of a force majeure event.
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Appendix A
Compensation Disclosure
Marsh & McLennan Agency LLC ("MMA") prides itself on being an industry leader in the area of transparency and
compensation disclosure. We believe you should understand how we are paid for the services we are providing to you. We
are committed to compensation transparency and to disclosing to you information that will assist you in evaluating potential
conflicts of interest.
As a professional insurance producer, MMA and its subsidiaries facilitate the placement of insurance coverage on behalf of
our clients. As an independent insurance agent, MMA may have authority to obligate an insurance company on behalf of our
clients and as a result, we may be required to act within the scope of the authority granted to us under our contract with the
insurer. In accordance with industry custom, we are compensated either through commissions that are calculated as a
percentage of the insurance premiums charged by insurers, or fees agreed to with our clients.
MMA engages with clients on behalf of itself and in some cases as agent on behalf of its non -US affiliates with respect to the
services we may provide. For a list of our non -US affiliates, please visit: https:iimma.marshmma.com/non-us-affiliates . In
those instances, MMA will bill and collect on behalf of the non -US Affiliates amounts payable to them for placements made by
them on your behalf and remit to them any such amounts collected on their behalf,
MMA receives compensation through one or a combination of the following methods:
• Retail Commissions — A retail commission is paid to MMA by the insurer (or wholesale broker) as a percentage of the
premium charged to the insured for the policy. The amount of commission may vary depending on several factors,
including the type of insurance product sold and the insurer selected by the client.
• Client Fees — Some clients may negotiate a fee for MMA's services in lieu of, or in addition to, retail commissions paid
by insurance companies. Fee agreements are in writing, typically pursuant to a Client Service Agreement, which sets
forth the services to be provided by MMA, the compensation to be paid to MMA, and the terms of MMA's engagement.
The fee may be collected in whole, or in part, through the crediting of retail commissions collected by MMA for the client's
placements.
• Contingent Commissions — Many insurers agree to pay contingent commissions to insurance producers who meet set
goals for all or some of the policies the insurance producers place with the insurer during the current year. The set goals
may include volume, profitability, retention and/or growth thresholds. Because the amount of contingent commission
earned may vary depending on factors relating to an entire book of business over the course of a year, the amount of
contingent commission attributable to any given policy typically will not be known at the time of placement.
• Supplemental Commissions — Certain insurers and wholesalers agree to pay supplemental commissions, which are
based on an insurance producer's performance during the prior year. Supplemental commissions are paid as a
percentage of premium that is set at the beginning of the calendar year. This percentage remains fixed for all eligible
policies written by the insurer during the ensuing year. Unlike contingent commissions, the amount of supplemental
commission is known at the time of insurance placement. Like contingent commissions, they may be based on volume,
profitability, retention and/or growth.
• Wholesale Broking Commissions — Sometimes MMA acts as a wholesale insurance broker. In these placements,
MMA is engaged by a retail agent that has the direct relationship with the insured. As the wholesaler, MMA may have
specialized expertise, access to surplus lines markets, or access to specialized insurance facilities that the retail agent
does not have. In these transactions, the insurer typically pays a commission that is divided between the retail and
wholesale broker pursuant to arrangements made between them.
• Medallion Program and Sponsorships — Pursuant to MMA's Medallion Program, participating carriers sponsor
educational programs, MMA events and other initiatives. Depending on their sponsorship levels, participating carriers are
invited to attend meetings and events with MMA executives, have the opportunity to provide education and training to
MMA colleagues and receive data reports from MMA. Insurers may also sponsor other national and regional programs
and events.
• Other Compensation & Sponsorships — From time to time, MMA may be compensated by insurers for
providing administrative services to clients on behalf of those insurers. Such amounts are typically calculated
as a percentage of premium or are based on the number of insureds. Additionally, insurers may sponsor MMA
training programs and events.
We will be pleased to provide you additional information about our compensation and information about alternative quotes
upon your request. For more detailed information about the forms of compensation we receive please refer to our Marsh &
McLennan Agency Compensation Guide at https:/1www.marshmma.com/usicompensation-guide.htmi
MMA's aggregate liability arising out of or relating to any services on your account shall not exceed ten million dollars
($90,000,000), and in no event shall we be liable for any indirect, special, incidental, consequential or punitive damages or for
any lost profits or other economic loss arising out of or relating to such services. In addition, you agree to waive your right to a
jury trial in any action or legal proceeding arising out of or relating to such services. The foregoing limitation of liability and jury
waiver shall apply to the fullest extent permitted by law.
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Appendix B
Additional Services
Additional Services are available for separate compensation and shall be agreed upon in advance and addressed by
amendment to this agreement or by separate agreement {in certain cases with affiliates of Marsh & McLennan Agency}, Such
additional services include, but are not limited to:
• Actuarial analysis of Workers' Compensation, General Liability, and Automobile Liability claims, or other lines of
insurance;
• Consulting relating to workers' compensation cost containment, including behavioral risk management, absence
management, cumulative injury management, lean ergonomics, financial diagnostics, claims inventory workout,
vendor selection, return -to -work, PastPerformer diagnostics, managed care, claim audits and custom cost
containment solutions;
• Business interruption and other claim valuation services offered by Marsh & McLennan Agency's Forensic
Accounting practice;
• Environmental risk consulting services;
• Specialty consulting, including business continuity management, supply chain risk management, strategic risk
assessments, and other MRC specialty practices;
• Specialized/customized property risk consulting solutions, including business interruption and natural hazards
model inglconsulting, boiler and machinery specialized consulting, loss estimate studies, emergency response
management solutions, Fre protection engineering services, and property risk site evaluation and assessment
services;
• Claims services other than those specified under Section 1, if any, including claims management services, claims
reporting as to lines of coverage or claims not included under Section 1, and property and casualty catastrophic claim
response;
• Mass tort claims consulting and insurance archaeology research;
• Services in connection with loss portfolio transfers and alternative risk financing, including placements made in
connection with such services;
• Captive insurance company feasibility studies;
• Establishment and administration of captive insurers;
• Placement of non-recurring insurance, including, but not limited to:
• "one-time" placements for construction projects,
• "one-time" placements for marine/cargo risks,
• "one-time" placements for surety,
• Placements for specific financial risks, such as trade credit,
• Placements involving significant quantitative or actuarial analysis or modeling,
• Placement of risks with financial institutions other than insurance carriers, and
• Placements of risks not customarily accepted by insurers;
• Employee benefits services;
• Pension plan consulting;
• Compensation consulting;
• Executive deferred compensation services;
• Risk management claims information systems, including STARS and TrendTracker software programs, and related
services;
• Enterprise Risk Management consulting;
• Strategic Risk Assessment;
• Provision of Marsh & McLennan Agency personnel on an out -sourced basis;
• Intellectual Property Consulting;
• Security Consulting;
• Insurance -related mergers and acquisition due diligence services and transactional solutions;
• Placement and servicing of owner controlled insurance programs; and
• Interactive on-line client services.
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