REPORT IN BRIEF

This report recommends the renewal of the existing contract between the City of Sunnyvale and AIG Life Insurance Company (AIG) for life and accidental death and dismemberment (AD&D) insurance to be effective July 1, 2002 with no rate increase for two years.

BACKGROUND

As part of its employee benefit package, the City of Sunnyvale provides full-time and employees in the Reduced Time Job Status Program with a comprehensive Life/AD&D insurance benefit. The existing contract for this insurance has been provided by AIG since April 1, 1997, and expires on June 30, 2002.

DISCUSSION

Marsh Risk and Insurance Services (Marsh) is the City's benefits insurance broker and is charged with negotiating benefit contract rates, including the one for Life/AD&D insurance, on behalf of the City Of Sunnyvale.

Marsh reviewed the current /proposed premium rates and found them to be competitive. These competitive rates and the City's satisfaction with service, make AIG a very viable plan. Marsh recommended renewing with AIG the contract for Life/AD&D insurance.

FISCAL IMPACT

Funding for this expenditure is provided in the Benefits Fund and the cost of the contract renewal has been provided for in the Fiscal Year 2002-03 Base Budget.

*uses current number of employees plus an estimated salary increase. Actual premiums will be affected by new hires, turnover and salary increases. In addition, approximately 50% of the premium is paid by employee.

PUBLIC CONTACT

Public Contact was made through posting of the Council agenda on the City's official notice bulletin board, posting of the agenda and report on the City's web page, and the availability of the report in the Library and the City Clerk's Office.

ALTERNATIVES

1. Renew the Life/AD and D insurance contract with AIG Life Insurance Company for two years with no rate increase.
2. Do not renew the contract and seek other alternatives.

RECOMMENDATION

Alternative #1; renew the Life/AD&D insurance contract with AIG Life Insurance Company.

Prepared by:

Myriam Castaneda
Human Resources Supervisor

Reviewed by:

Mark Gregersen
Director, Human Resources

Approved by:

Robert S. LaSala
City Manager

Attachments

1. Motion