The board of directors for Alabama’s largest water utility made a last-minute decision Tuesday to change its insurance broker – without considering more than one firm.
During a special-called Central Alabama Water board meeting, board Vice Chairman Phillip Wiedmeyer asked how many proposals the utility received from insurance brokers besides the one by Marsh USA.
“It's just a good business practice, when you are thinking about making a change, that you get several proposals to evaluate,” Wiedmeyer said. “And I was curious as to whether that had been done in this case or not.”
CAW senior managers did not do that, said Jeffrey Thompson, who is chief executive of CAW and recommended Marsh USA to the board. The utility’s contract with Valent Group, its insurance broker for 24 years, expires Aug. 1. An insurance broker shops for and compares policies across multiple companies.
“We elected not to go for a full solicitation,” Thompson said. “That would have taken many months to have completed. We just didn't have the time to do that.”
Thompson said CAW senior managers were under the impression the broker agreement would end when the utility’s current insurance policies expire on Oct. 31.
Thompson could not answer Wiedmeyer’s question about how long the proposed agreement with Marsh USA would last.
Shan Paden, an outside attorney for CAW, explained the board would be approving a short-term measure and he would draft a longer-term agreement for the board to approve before CAW’s insurance policies expire.
Thompson said Marsh USA is the premier provider for CAW’s brokerage needs, and the company provided a great proposal and stellar presentation. David Walker, chief administrative officer for CAW, said the company insures many water utilities.
“We're looking for the best for our ratepayers, and Marsh will help us drive down our risk footprint, and in turn, that will make us more appealing in the insurance market to help save ratepayers' money in the future,” he said.
Wiedmeyer said he has no problem with Marsh, but he suggested managers request proposals from multiple companies before asking the board to approve a long-term agreement.
Thompson said that’s possible.
“We can certainly do that when we come back to the board with the actual agreement,” he said.
After the meeting, Wiedmeyer says he’ll wait and see if that happens before Oct. 31. He said it’s also possible management will bring back only a contract with Marsh USA.
A written statement CAW public relations manager John Matson provided said CAW appreciates Valent Group’s long service.
“As a healthy business practice, CAW occasionally engages new professional service firms to provide fresh perspectives on various facets of our operation,” the statement reads.
