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Committee backs five-year insurance-brokerage contract with AJ Gallagher; staff cites $480,000 savings
Summary
The committee voted to send a resolution to the full Court of Common Council recommending a five-year contract with AJ Gallagher for insurance brokerage services; city staff said the contract would save roughly $480,000 over five years and reduces brokerage commission from a typical 15% to 7.5% on existing business.
Councilman Amir Carr Hernandez led discussion of item 2.3, a resolution from Mayor Alan Poland authorizing the city to contract insurance brokerage services with AJ Gallagher of Boston, Massachusetts. City CFO Leanne Rolls told the committee the five-year contract would save approximately $480,000 over five years.
Sarah Lowenthal, director of safety and risk in the Finance Department, and Ronnie Rush of AJ Gallagher answered committee questions about the contract structure and savings. Lowenthal clarified that “one clarification, hundred and 80,000 is per year, not for the 5 years. So it'll be 2,500,000 over 5 years.” Lowenthal and Rolls said savings come from a lower annual fee and a reduced commission rate compared with the prior broker.
Ronnie Rush of AJ Gallagher said the team assigned to the city are long-term Gallagher employees and that the company agreed to a commission rate of 7.5% on existing business, significantly below the typical 15% industry commission. The committee discussed the risk of a long-term contract if performance declined and staff noted the contract can be terminated for cause and that the city performs annual vendor reviews.
A committee member asked whether newly added policies would receive the same discounted commission; Sarah Lowenthal said incidental new policies (small premium) would be at full commission (about 15%), while most material existing policies remain at the discounted 7.5% rate. Lowenthal said a recently added ‘‘scribe protect’’ policy had a premium around $80,000.
The committee voted to send the resolution to the full Court of Common Council with a favorable recommendation.
