Title
Settlement of Interest and Additional Principal Payments with Arthur J. Gallagher & Company (B)
This item involves the final settlement related to the over-retention of commissions by the City's former insurance broker Arthur J. Gallagher & Company.
Explanation
In June 2005, the City's insurance broker, Arthur J. Gallagher & Company, presented the City with a check of approximately $1.3 million. This amount was deposited in a City account under agreement with Arthur J. Gallager and Company. The check represented excess commissions improperly retained by Arthur J. Gallagher & Co. for insurance policies placed for the City between 1991 and 2005 under agreements with the City. At the time the check was delivered to the City, Arthur J. Gallagher & Co. agreed to allow for a review of their files and to pay interest to the City related to the excess commissions.
Based on the results of a review by the City Auditor's Office, adjustments to the original payment amount and interest due the City were identified. Ensuing negotiations with Arthur J. Gallagher & Co., as discussed in a December 8, 2005 communication from the City Auditor to the City Commission, have resulted in a proposed additional settlement amount of $514,272 due the City. (See Attachment). Arthur J. Gallagher & Co. has agreed to this proposed settlement amount and the City Manager, City Auditor and City Attorney support the City Commission's acceptance of the final settlement amount.
Fiscal Impact
The funds received through this settlement will be placed in the General Insurance Fund, pending a final decision by the City Commission regarding the allocation of the funds.
Recommendation
The City Commission: 1) accept the settlement for principal and interest of $514,272 from Arthur J. Gallagher & Company, and 2) authorize the City Manager or his designee to negotiate and execute the necessary documents required to complete the settlement, subject to approval from the Cit...
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