With insurance for City Water, Light and Power properties set to expire this weekend, the Springfield City Council approved a new coverage plan at a special meeting Thursday.
The ordinance pays up to $2.1 million to R.W. Troxell and Co. to insure 40 CWLP properties, including Dallman Power Plant Units 31, 32, 33 and Unit 4. With it, the city narrowly avoided a lapse in coverage.
The urgent situation caught city council members off guard, with many saying it was first brought to their attention at Tuesday’s regular city council meeting. The ordinance was ultimately approved with an 8-0 vote on Thursday.
Under the deal negotiated by Troxell, several insurance companies will split coverage, with STARR Companies and AIG covering the majority, 43 percent and 35 percent, respectively. While the city in past years has been 100 percent covered, the ordinance indicates the city is only 95.8 percent covered under the new agreement. Mayor Jim Langfelder said Troxell is continuing negotiations to close that liability gap.
In the past, the city signed multi-year agreements with one insurer, historically AIG, to provide all the coverage. But Troxell officials said changes in the industry have led insurers to diversify their risk portfolios, leading to the patchwork of companies providing coverage this year.
While joining his colleagues in the affirmative, Ward 7 Ald. Joe McMenamin criticized the process that led to Troxell’s selection, arguing a request for proposal should have been issued.
â€œMr. Mayor, I guess what we need here is a competitive process,” McMenamin said, addressing Langfelder. â€œAnd that means a request for proposal. … I think we need to get the best insurance coverage we can get. The last time we talked about how many power plants R.W. Troxell arranges insurance for, it was one. I don’t know if that’s changed or not. That’s a problem I would hope for most of the aldermen around the horseshoe.”
McMenamin read into the record an email council members received on Thursday from Tom Kavanagh, area assistant vice president for Gallagher Insurance. Kavanagh wrote thatÂ his company, which insures more than 100 utilities nationwide, has “in the past requested the opportunity to provide capabilities presentation” to the city, but they were not given the opportunity to bid this time around.
CWLP’s relationship with Troxell dates back at least to former Mayor Karen Hasara’s administration. The company’s long track record of reliability through several incidents, such as the 2006 tornado and 2008 explosion of the Dallman 1 power plant, is a major reason the utility has stuck with them over the years, said CWLP chief utility officer Doug Brown.
â€œYouâ€™re right, thereâ€™s a longstanding history with the utility and Troxell, along with AIG being the main insurer,â€ Brown said. â€œThe outstanding performance that theyâ€™ve had through all the years, through the claims that weâ€™ve made, theyâ€™ve met every need that weâ€™ve ever asked for. They were providing a very responsive service for providing the monies that we needed to make the necessary repairs.â€
Troxell president Mike Aiello acknowledged CWLP was the only utility the company insures but argued that there was not anything that Gallagher could provide that Troxell could not. He also noted Troxell is rooted in the community.
“We have one power plant, youâ€™re right,â€ Aiello said. â€œWe are a proud member of this community. We have over 150 people in our company. Weâ€™ve grown into Chicago, Peoria, Bloomington, we have an agency in Florida now, weâ€™re in St. Louis. And as weâ€™ve grown, weâ€™ve made a dedicated effort to hire underwriting and staffing in the Springfield area.”
“Itâ€™s people that have jobs here, their families are here and weâ€™re proud of that,” Aiello continued. “And weâ€™re going to continue to pass our business on to the next generation. We want this to stay this way. Youâ€™ve seen in our community whatâ€™s happened to grocery stores, gas stations, movie theaters. Theyâ€™re all owned by these big companies. We want to stay local. We want representation local.”
Langfelder said the city typically issues request for proposals about every five years to shop rates. Since the last RFP was issued in 2015, the mayor said he anticipates issuing one next year.
Contact Brenden Moore: 788-1526, email@example.com, twitter.com/brendenmoore13.