3.2. SR 09-17-2001TO:
FROM:
DATE:
SUBJECT:
MEMORANDUM
Mayor & City Council
Lori Ziemer, Asst. Finance Director
September 17, 2001
Workers' Compensation Insurance Renewal
Iteml 3.2.
The city's workers' compensation insurance contract with the League of Minnesota Cities
Insurance Trust (LMCIT) renews on October 1, 2001. Attached is a copy of the quote
received by the LMCIT that is based on our estimated payroll for the contract period.
The quote includes a five percent premium credit of $5,744 for the city's participation in a
managed care program with Corvel, but does not yet reflect the deductible credit.
Each year the city can choose a deductible option in return for a premium credit. For the
past several years, the city has carried a $5,000 per occurrence deductible for medical
expenses. For the new contract period a $5,000 deductible results in a premium credit of
$15,508. Increasing the deductible to $10,000 would result in a premium credit of $20,677,
or an additional savings of $5,169.
Also attached for your review is a deductible comparison worksheet based on historical
claim information from the last three contract years. Based on this information, it appears as
though the city would have incurred additional deductible costs in only one of the last three
years and realized greater savings by increasing the deductible from $5,000 to $10,000.
Action Requested
The City Council is asked to approve the workers' compensation insurance renewal with the
LMCIT for the contract period of October 1, 2001 to October 1, 2002. As in past years, this
contract would include a $5,000 per occurrence deductible. If the council wishes to change
the deductible, this item may be removed from the consent agenda for council discussion.
League of Minnesota Cities Insurance Trust
Group Self-Insured Workers' Compensation Plan
145 University Avenue West St. Paul, MN 55103-2044 Phone (651) 215-4173
Self-Insured Workers' Compensation Quotation
ELK
,:RENEWAL of Agreement No. 0E-000513-1~)
RIVER~, ELI--':: RIVER UTILITIES,
10101 iF]00 i ! 0101
F'oTIMATED DEPOSIT
CODE RATE PAYROLL F'R E?'I I UM
SEE ATTACHED SCHEDULE FOR DETAILS
Manual Premium 141816.
Experience Modification 0.8!
Standard Premium
Managed Care Cred~.t 5.00'~I 5744.
Deductible Credit 0t4 0.
Premium Discount t0795.
Discounted Standard F'remium
Uric Insuranc~ Trust Discount Og 0.
N~t Deposit Premium 9833~
The foregoing quotation is for a deposit premium based on your estimate of payroll. Your final actual
premium will be computed after an audit of payroll subsequent to the close of your agreement year and will
be subject to revisions in rates, payrolls and experience modification. While you are a member of the
LMCIT Workers' Compensation Plan, you will be eligible to participate in distributions from the Trust
based upon claims experience and earnings of the Trust.
If you desire the coverage offered above, please complete the enclosed "Notice of Premium Options" and
return it and your check for the deposit premium (made payable to the LMCIT) to:
Berkley Risk Administrators Company, LLC
PO Box 581517
Minneapolis, MN 55458-1517
LM 4410 (8/99)
League of Minnesota Cities Insurance Trust
Group Self-Insured Workers' Compensation Plan
145 University Avenue West
St. Paul, MN 55103-2044
(65t) 215-4173
The "City"
EL}( RIVE;R,
HRA & EDA
PO BOX 490,
ELK RIVER
l:_:L.t::i RIVER UTILITIES,
13065 ORONO PARKWAY
1'11'4 55330-0490
Agreement No.
08 - 0005 .[ 3 - ! 6
AGREEt'IEI'4T F'ERtOD FROF!: 10/0t/8001
'FF_)~ 10/0I/8008
REMUNERATION RATE
404560~ 4.11
104870, 8,85
970000~ 3,09
169440~ 8,86
118860, 3,?4
POP 19068, 36,65
1568745, 8,81
863800, 1,39
113315, 3,06
139096()~ 0.40
60780, 3,44
336675, 8.44
658870~ 1,00
30300, 0,37
I68140~ 1,8!
CONT!I'4UATION SCHEDULE FOR QUOTATION PAGE
CODE
5506
7580
7539
7580
7706
7708
8017
8887
8810
9015
9108
9410
94!t
9016
DESCRIPTION
STREET CONSTRUCTION & MAINTENANCE
WATERWORKS
ELECTRIC & STEAM PLANT
SEWAGE DISPOSAL PLANT
FiREFIGHTERS (NOT VOLUNTEER)
FtREFIGHTERS (VOLUNTEER)
POLICE
OFF SALE LIQUOR STORE
CITY SHOP & YARD
CLERICAL
BUiLDtI~G MAINTENANCE & REPAIR
PARKS
t~UNtCIPAL EHPLO\'EES
ELECTED OR APPOINTED OFFICIALS
SKATING RIlqK OPERATION
Manual
EST ..
PREM.
t 6687,
8360.,
~°9973.
4846~
4483.
6986,
43913,
3667~
3467~
5564.
8091,
88 ~
11~
3043,
.[4i8i6~
F--41608!'790
FIRST NATIONAL INS
716 MAIN STREET
ELK RtVER.~ MN
09 iC 418001 LM 4680 (8~99)
Notice
League of Minnesota Cities Insurance Trust
Group Self-Insured Workers' Compensation Plan
145 University Avenue West St. Paul, MN 55103-2044 Phone (651) 215-4173
of Premium Options for Standard Premiums of $100,000 -
$150,000
SEP 2 ZOOt
The "City" Agreement No.: 0[~--00051 [~"- _! 6
ELK RIVER: ELK RIVER UTILITIES, Agreement Period:
HRA &. EDA From: !0/0!/800t
PO BOX 490. 13065 ORONO PARKWAY To: 10/01/800~2
ELI.':.' RIVER MN 55330-0490
Enclosed is a quotation for workers' compensation deposit premium. Deductible options are now available in return
for a premium credit applied to your estimated standard premium of $ ! ! 4871, The deductible will apply
per occurrence to paid medical costs only. There is no aggregate limit.
As an alternative, cities with a standard premium in excess of $25,000 may select from several retro-rated premium
options. The fmal net cost under the retro-rated option equals the audited standard premium times the minimum
factor plus losses and all loss-related costs, not to exceed the audited standard premium times the maximum factor.
The net cost for each retro option based on your estimated payroll, would be between the minimum and maximum
amounts shown below, depending upon your losses. Adjustments will be made approximately six months after the
close of your agreement year and annually thereafter until all claims are closed. These adjustments will be based
on audited payroll amounts and reserved as well as paid losses.
Please indicate below the premium option you wish to select. You may choose only one and you cannot change
options during the agreement period.
OPTIONS
1 [] Regular Premium Option
Deductible Options:
Deductible Premium Credit
per Occurrence Credit Amount
2 [] $250 3%
3 [] 500 4.5%
4 [] 1,000 6%
5 [] 2,500 10%
6 [] 5,000 13.5% 1550~,,
7 [] 10,000 18% a0677.
Retrospectively Rated Premium Options:
Retro-Rated Est. Minimum Maximum
Minimum Factor Premium Factor
8 [] 57.9% 63185. 130%
9 [] 47.4% 517-2.5. 150%
10 [] 33.5% 3655~;'., 200%
NET DEPOSIT PRE1VIIUM
73163.
91440.
_R6845.
Est. Maximum (See#1 above
Premium for net deposit
14 !. ~6S~ premium)
1636:7'1.
This should be signed by an authorized representative of the city requesting coverage. One of the above options must
be selected. Please return a signed copy of this notice to us with payment and make checks payable to the LMCIT.
b]gnature Title Date
For more information on the premium options that apply to your city, refer to the enclosed brochures.
LM4507 (8/99)
WC DEDUCTIBLE COMPARISON
Claim Year 1011197.10/1/98
Deductible premium credit
Paid medical based on deductible
Net savings
Deductible
per Occurrence
$10,000
$15,679
8,184
7,495
$5,000
$11,759
7,513
4,246
Claim Year 10/1/98-10/1/99
Deductible premium credit
Paid medical based on deductible
Net savings
13,907
7,615
6,292
10,430
7,615
2,815
Claim Year I0/I/99-10/1/00
Deductible premium credit
Paid medical based on deductible
Net savings
13,426
6,196
7,230
10,070
6,196
3,874