The City of Frankfort recently named Lexington-based insurance agency Roeding Insurance as its new broker, ending a 54-year business relationship with Chenault and Hoge Insurance of Frankfort.
Chenault and Hoge Agent and Partner Susan Coblin told The State Journal this week that she questions the intention of the switch in brokers. She also has concerns about a local bidder preference and the city’s new procurement software, DemandStar.
The city’s contract with Chenault and Hoge ended in October, Coblin said, but the city’s policy with the Kentucky League of Cities, which her agency wrote, does not expire until 2021.
“They had to take the policy we wrote with them to Roeding,” Coblin said. According to her, this policy cost the city nearly $600,000 last year.
Coblin said she didn’t understand why a change in brokers happened this year since the policy for the upcoming year was already established.
City Manager Keith Parker says it's true that the city took the same policy with Kentucky League of Cities to Roeding. However, since Roeding became the city’s insurance broker, it has been able to negotiate a few changes with the Kentucky League of Cities that will save the city thousands this year.
Roeding became the city’s insurance broker on Oct. 3. Since then, Roeding has negotiated an increase in the city’s sanitary sewer overflow coverage, Parker said. Now, the city will have $500,000 per event coverage instead of $200,000. Roeding was able to negotiate this increase in coverage without an increase in deductible or renewal premium, Parker said.
Since law enforcement liability claims have been very low the past five years, Roeding was also able to increase the deductible to $5,000 and lower the monthly premiums, giving the city $2,600 in yearly savings, according to Parker.
Roeding was also able to negotiate a reduction in personal injury protection coverage from $40,000 to $20,000 on all city vehicles. According to Parker, $40,000 was higher than needed and not consistent with what other Kentucky cities are paying. This change is saving the city $1,300 this year.
Roeding also convinced the Kentucky League of Cities to reevaluate the city’s risk control scorecard, so now the city will save an additional 3% annually, Parker said.
Roeding is also in the process of reviewing other aspects of the policy to see whether changes should be made or if more cost-saving negotiations can be made.
Overall, the city is expecting to save $15,000 to $25,000 annually, Parker said.
“It’s good practice to have a different set of eyes look at city policy procedure, financial audits, brokerage services to make sure we’re good stewards of the tax money,” Parker said. “In my opinion, I think it’s good business practice to test the waters and compete.”
This change was not decided by commissioners, but instead by staff, Parker said. Commissioners can, however, call a vote to overturn his decision if they wish to do so.
Parker said the switch to Roeding is nothing personal.
“I’m not going to talk about about Chenault and Hoge, you know, they didn’t do anything wrong,” he said.
At the Oct. 14 Frankfort City Commission meeting, Coblin addressed the commission during public comments. She provided the commission with background information regarding Chenault and Hoge’s business relationship with the city and expressed concerns about Roeding not being a local business.
Coblin was under the impression that Chenault and Hoge qualified for the local bidder preference, which it filled out and included in its bid. Parker said that is not the case.
“Local bidder preference is directly related to goods or services we pay for,” Parker said. “We don’t pay a broker.”
Parker likens the process to buying a house. You use a Realtor to help you buy a house and the Realtor makes a commission on the sale, but who you buy that house from pays the Realtor, not you. Therefore, a local bidder preference could not be applied to the broker bidding process.
“They are not somebody we cut a check to for our services,” Parker said.
When Coblin addressed the commission, she expressed concern that since Roeding is located in Lexington, it would be unable to serve Frankfort in the same way Chenault and Hoge does.
“Will Roeding be here to give office space to flood adjusters the next time Paul Sawyier and Hermitage Drives flood?” Coblin asked on Oct. 14. “Will they be here to offer a home base to the firemen while they work all night to save half of St. Clair Street from a fire?”
Parker said that while Roeding is based in Lexington, the company does have Frankfort ties.
“It needs to be known Roeding Insurance has two employees who are working on our account who live in Frankfort,” Parker said. “Sue Porter, who runs Roeding Insurance, has property in Frankfort, so there is a local connection there. It’s not the longstanding relationship we’ve had with other local connections, but it’s still there.”
Coblin also told commissioners that Chenault and Hoge had issues with DemandStar, the software the city now uses to accept bids.
“When the city notified us of this change, we went in, created our account and signed up to be notified when the bidding process opened up for insurance,” Coblin said. “We never received that notification.”
Coblin said when city officials saw that Chenault and Hoge had not submitted its bid by the Sept. 11 due date, the agency was contacted and given an extension to Sept. 16, which company officials were thankful for.
“They did indicate to me they had some issues with it…,” Parker said. “They had plenty of time to respond, and they were the only ones that had trouble with DemandStar. It’s worked well with some of the other procurement.”
After the agency's bid was submitted, Coblin said they participated in an interview and provided the city with a list of six references, three for the agency and three for the agent. After Chenault and Hoge learned it had not been chosen, Coblin said she found out only one of Chenault and Hoge references had been contacted, which disappointed her.
Parker confirmed to The State Journal on Thursday that only one reference for Chenault and Hoge was contacted while three references for Roeding Insurance were contacted, but only two were able to be reached. Finance Director Jennifer Jenkins also confirmed this.
Parker said Roeding was chosen because of its experience insuring municipalities.
“They carry a lot of cities, counties, school boards, stuff like that,” he said.
While Coblin and Chenault and Hoge are disappointed that their business relationship with the city has ended for the time being, she hopes some changes are made to the procurement process and to the wording of the local bidder preference.
She also said the company is not angry with the city but just want the process to be fair.
“I want Frankfort businesses to succeed,” Coblin added. “Our city and our businesses are not going to grow unless we all support each other. And I want to feel like my city government is representing our community, you know, and doing what’s best for our people, our employees, our citizens and not just what’s best inside that building.”