Glendora, Facing Probe, Orders Bids for Its Insurance

City officials, whose insurance practices are being examined by the Los Angeles County district attorney’s office, must begin seeking competitive bids from insurance brokers, the City Council decided in a budget study session Wednesday.

The change reverses the city’s longstanding practice of selecting brokers without soliciting bids.

Mayor Bob Kuhn, who co-owns Alandale Insurance Agency, a brokerage firm for the city since the 1960s, abstained from the 4-0 vote to avoid any possible conflict of interest.

The Times reported May 17 that Kuhn’s firm has brokered $126,528 in premiums for the city since he joined the council in April, 1986.

The district attorney’s office is examining the city’s insurance practices and Kuhn’s role, if any, in its insurance decisions. The state Fair Political Practices Commission has also undertaken a review. The mayor, who said he has not profited from the city business, has denied any impropriety.

Seeking bids “will allow us to find if there is a competitive situation out there,” Mayor Pro Tem Larry Glenn said. Glenn, who said his vote was not influenced by news of the reviews, said he does not believe that city officials have acted improperly. “Staff has handled our insurance matters in a very professional manner,” he said.

Since 1986, the bulk of the city’s insurance has been acquired through the Independent Cities Risk Management Authority, a 26-city insurance pool.

One Parks and Recreation Department policy covering the city’s summer youth sports program is brokered by Alandale, but the rest of the city’s insurance is obtained through Glendale Insurance Agency Inc. Glendale is co-owned by Cleve Traughber, a Kuhn business partner who also owns a share of Alandale. Traughber said he has handled the city accounts since 1972.

Councilman David Bodley, who made the proposal to seek bids from other brokers, said the change was necessary to avoid any appearance of conflict of interest. “We have to present ourselves to the citizens in a certain way at this time,” he said, alluding to the ongoing investigations.

Before the vote, City Manager Art Cook and Finance Director Larry Schroeder maintained that obtaining insurance is not the same as contracting for other city services.

“Placement of insurance for any city doesn’t lend itself well to the bidding process,” Schroeder said. He said all brokers must seek quotes from the same handful of insurance companies willing to cover cities. Since the companies will tend to quote the same rates to brokers, there is little advantage for the city in seeking competitive bids from different brokerage firms, he said.

Schroeder also said the broker selected must be familiar with the city. “You want somebody that’s going to know your needs and the changing market,” he said.