3.3. SR 09-15-2003TO:
FROM:
DATE:
SUBJECT:
MEMORANDUM
Mayor and City Council
Lori Johnson, Finance Director
September 15, 2003
Consider Worker's Compensation Insurance Renewal
Item ~ 3.3.
The city's worker's compensation insurance policy with the League of Minnesota Cities Insurance
Trust (LMCIT) expires on September 30, 2003. Attached is a renewal quote for the policy period
from October 1, 2003 through September 30, 2004. The annual premium before credits for
managed care and a deductible is $127,853. This includes the premium for the water and electric
departments which are also covered under this policy.
The renewal quote is based on an experience modification factor of .78. The experience
modification last year was .79 and the year prior .81. This is a very good experience modification
factor. Obviously the efforts of the Safety Committee and employees in promoting and practicing
employee safety are paying off.
Staff recommends that the city continue to elect the managed care option which will result in a
premium savings of $4,256. The managed care credit has decreased over time as the LMCIT has
evaluated the effectiveness of and cost savings associated with this program. However, as long as a
discount is offered, the city will participate in this program as it other benefits including referral
assistance and guidance to injured workers so they get proper care and are able to return to work as
soon as possible. Additionally, in 2001, the deductible on this policy was increased from $5,000 to
$10,000. The renewal premium savings for a $10,000 deductible is $26,244. This deductible apphes
to medical expenses only. Mary Eberley, First National Insurance, and I have reviewed claims
history for the last several years to determine if the deductible should be changed. It appears that
the claims pattern has not changed; most of the claims are small, less than $1,000, with only one
claim at most per year exceeding $5,000. The premium savings in the last several years have far
exceeded the deductibles incurred. If the Council chooses to adjust the deductible, this item may be
taken off the consent agenda to allow further discussion.
Action Requested
The City Council is asked to approve the worker's compensation insurance renewal quote with the
LMCIT effective October 1, 2003 through September 30, 2004 with managed care and a $10,000
deductible resulting in a premium of $97,353.
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
Notice of Premium Options for Standard Premiums of $100,000-$150,000
ELK RIVER, ELK RIVER UTILITIES ,HRA EDA Agreement No.: 0200051318
13065 ORONO PARKWAY Agreement Period: From: 10/01/2003
ELK RIVER MN 55330 To: 10/01/2004
Enclosed is a quotation for workers~ compensation deposit premium.
Eq TIK~' ^ TED
PAYROLL DESCRIPTION CODE RATE PAYROLL
SEE ATTACHED SCHEDULE FOR DETAILS
DEPOSIT
PREMIUM
Manual Premium
Experience Modification .78
Standard Premium
Deductible Credit 0%
Premium Discount
Net Deposit Premium
181870.
141859.
14006.
127853.
MANAGED CARE CREDIT
Cities that enroll with a state-certified managed care organization(MOO) receive a 3 % premium credit on
their work comp coverage.
Standard Managed Care Net Deposit
Premium Credit Premium
141859. 3% 123597.
OPTIONS
Please indicate below the premium option you wish to select. You may choose only one option and
cannot change options during the agreement period.
NET DEPOSIT PREMIUM
127853.
1.
Regular
Premium
Option
~_ or, with 3% Managed Care Credit:
123597.
mmm
LM 4514(3/02)
Deductible Premium Option
Deductible options are available in return for a premium credit applied to your estimated standard
premium of $ 141859. The deductible will apply per occurrence to paid medical costs only.
There is no aggregate limit.
Deductible Premium Credit NET DEPOSIT PREMIUM
per Occurrence Credit Amount wi~MCO Cre~t wi~out
$250 2.50% 3546. 120051. 124307
$500 4.00% 5674. 117923. 122179
$1,000 6.00% 8512. 115085. 119341
$2,500 9.50% 13477. 110120. 114376
$5,000 13.50% 19151. 104446. 108702
$10,000 18.50% 26244. 97353. 101609
Retrospective Rates Premium Option
Re~o-Ra~d Est. Minimum Re~o-Rated Est. Maximum
Mi~mumFac~r P~mium Maximum Factor Premium
.595% 81874. 1.300% 178884.
.482% 66325. 1.500% 206405.
.338% 46510. 2.000% 275206.
This quotation is for a deposit premium based on your estimate of payroll and selected options. 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 divident distributions from
the Trust based upon claims experience and earnings of the Trust.
If you desire the coverage offered above, please return this signed document and your check for the net
deposit premium option you have selected (made payable to the LMCIT) to:
League of Minnesota Cities Insurance Trust
Workers' Compensation Department
P.O. Box 581517
Minneapolis, MN 55458-1517
this quotation should be signed by an authorized representative of the city requesting coverage.
Signature Title
Date
LM 4513(3/02)