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<br />and paid variously through Board accounts and taxing districts. On December 21, 1993, based upon
<br />information provided by staff, the Board approved funding for the Tax Collector's four-year bond,
<br />directed staff to a bid process for bonds, and directed staff to notify the Mosquito Control District
<br />Board that they will be required to pay for their own bonds in the future.
<br />Following this Board action, I explored options for obtaining public officials' surety bonds. The Board
<br />action was for staff to proceed with the bid process. While such a process is most often the method
<br />by which to obtain competitive insurance coverages, the issue of public officials' surety bonds is
<br />somewhat unique. Suchbondsare purchased at a specific point in time (following an election) and
<br />are based upon an application completed by the newly elected official. While other public entities
<br />may be able to bid their bonds because they are required by the State or their own internal
<br />regulations to maintain position schedule bonds, the County must purchase public officials bonds.
<br />For clarification, position bonds can be purchased at any time, and cover the position regardless of
<br />who fills it. They are often the tool used by towns and villages. Public official bonds are based upon
<br />an individual application and cover only the named elected official; they will not cover any
<br />successors, etc. At the present time, the surety market is stable. In the recent past, however, the
<br />market has undergone an internal collapse with a number of smaller sureties going out of business
<br />and there is a limited market for such specialized bonds. To competitively bid such bonds would
<br />require a lead time which would be unmanageable given the election date, individual application, and
<br />deadline for completion to the Secretary of State.
<br />For those reasons, I approached the Florida League of Cities, the Countys excess insurer since
<br />1990. As a municipal pool, the League deals exclusively with governmental entwes and logically
<br />would have access to the required market. The League has maintained a stable market with
<br />AetnalTravelers for several years. Based upon the volume of over 400 such bonds placed through
<br />the League on an annual basis, the surety has passed on no price Increases since July, 1993,
<br />making the League's offerings financially attractive.
<br />On September 17, 1996, 1 sent a facsimile to Byrn Beard, League underwriter, requesting an
<br />updated price quotation to purchase the required bonds. His underwriting assistant, Valerie
<br />Morrison, responded to me on the following day, and we began the process to prepare to purchase
<br />the bonds which would be needed following the election.
<br />Bond applications were completed by the elected officials, and sent to the League for handling.
<br />What we did not know was that the State of Florida, Secretary of State, had changed the bond
<br />process to require completion by the surety of the State's form. In the past, original bonds were
<br />attached to the State's form and were accepted. This year, the Secretary returned the submittal of
<br />Commissioners Ginn and Adams, and the Tax Collector because the State form was not completed
<br />and signed by the licensed resident agent The League is not a resident agent; instead they use an
<br />insurance broker in Orlando who submits the applications to AetrWrravelers' regional office in
<br />Tampa All paperwork flaws through the League to the broker to Aetna/Travelers, back through the
<br />broker to the League. Aet;*Travelers, because of their broker agreement, would not deal dimly
<br />with the League until the past several days, when we demanded that the forms be handled now.
<br />The broker granted formal permission for direct communication with the League, and through
<br />overnight mail, the bonds have been delivered.
<br />The Clerk completed a bond application for the League program. With the delay in receipt of the
<br />executed forms, however, he purchased his bond from the local insurance agent from whom he had
<br />previously purchased such coverage. Commissioner Adams also purchased her bond without our
<br />involvement Commissioner Tippins has a four-year bond for which he made arrangements upon
<br />his election, but payments are made annually, I will follow up on why these are annual payments
<br />instead of one for the term of coverage.
<br />With clear hindsight, we can reconstruct the difficulties encountered with the bond purchase this
<br />Yaw. We submitted completed bond application forms to the League, which were sent as outlined
<br />above to the surety. Unfortunately, we did not have the Secretary of State's form to accompany
<br />these applications. I had no knowledge that the State requirements had changed. No one in the
<br />underwriting process recognized the State's requirements for execution of their own form had been
<br />changed despite the fad that the League handles a large volume of these documents. They
<br />accepted our application submittal and transmitted it on to the broker, then to the surety, apparently
<br />without checking the complete sufficiency of the request. In their defense, they provided the
<br />requested bond; they simply did not have, nor did they initially complete, the State's form. In the
<br />past, executed bonds were attached to the State's form and were acceptable; this year they were
<br />not.
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<br />January 21, 1997 BOOKu"PAGE .3
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