3.4. SR 09-20-1999
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MEMORANDUM
**ITEM 3.4.**
TO:
Mayor & City Council
~
Lori Johnson, Finance Director ~r:pJJJ
FROM:
DATE:
September 20, 1999
SUBJECT: Workers' Compensation Insurance
Renewal
The city's workers' compensation insurance with the League of Minnesota Cities
Insurance Trust (LMCIT) renews on October 1, 1999. Attached is a copy of the
renewal quotation based on our estimated payroll for the contract period. The
quotation does not include credits for managed care or a per occurrence deductible
both of which the city received previously.
.
In the past, the city had a contract with Medica Work Choice to provide managed
care services. Medica Work Choice discontinued offering managed care services in
April 1999. After evaluating other managed care providers, it is recommended that
the city enter into a contract with Corvel Corporation for such services. Corvel
works with numerous other cities and the LMCIT. As in the past, employees will be
allowed to utilize any of the Elk River clinics for work related injuries. The
purpose of the program is to return injured employees to work sooner and to direct
the care given to injured employees thereby reducing insurance costs and lost
productivity. The insurance company pays all costs associated with this program,
and the city receives a $3,520 credit for having a managed care program.
Each year the city has the option of applying a deductible to this policy. For the
past several years, the city has elected a $5,000 per occurrence deductible. After
reviewing the possibility of increasing to a $10,000 deductible for the October 1998,
renewal, the Council chose to keep the deductible at $5,000. A credit of $9,505 is
received if the city selects a $5,000 deductible. The annual savings to increase to a
$10,000 deductible is $3,168.
Finally, the 1999 experience modification factor of .65 is based on claims for the
three years before the last insured year. In other words, last year's claims will not
factor into the experience modification factor until next year at which time it is
anticipated that the experience modification factor will increase based on claims.
This will cause an increase in the premium.
.
13065 Orono Parkway · P.O. Box 490 · Elk River, MN 55330. TDD & Phone: (612) 441-7420 . Fax: (612) 441-7425
. Action Reauested
This item is on the consent agenda. If the council has any concerns or questions
regarding the renewal, please contact me. Additionally, if the Council wants to
change the deductible or does not want to contract managed care services with
Corvel Corporation, this item may be pulled from the consent agenda.
Approval of this the consent agenda item includes three issues:
. Approval of a contract with Corvel Corporation for managed care
servIces.
· Approval of a $5,000 per occurrence deductible for the contract period
10/1/99 to 10/1/00. (The deductible applies to medical costs only.)
· Renewal with the LMCIT for worker's compensation insurance.
.
.
League of Minnesota Cities Insurance Trust
Group Self-Insured Workers' Compensation Plan
Administrator
Berkley Administrators
145 University Avenue West 81. Paul, MN 55103-2044 Phone (651) 215-4169
.
~~~
~~
..
Notice of Premium Options for Standard Premiums of $50,000 - $100,000
The .City"
ELK RIVER~ ELK RIVER UTILITIES~ HRA & EDA
Agreement No.:
Agreement Period:
From:
To:
02-000513-14
10/01/1999
10/01/2000
PO BOX 490~ 13065 ORONO PARKWAY
ELK RIVER MN 55330-0490
Enclosed is a quotation for workers' compensation deposit premium. Deductible options are now available in return
for a premium credit applied to your estimated standard premium of$ 70407.. . 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 final 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 0 Regular Premium Option
Deductible Options:
Deductible
per Occurrence
$250
500
1,000
2,500
5,000
10,000
Premium
Credit
3%
4.5%
6%
10%
13.5%
18%
2 0
3 0
4 0
5 0
6 0
7 0
8 0
9' 0
100
Retrospectively Rated Premium Options:
Retro-Rated Est. Minimum
Minimum Factor Premium
67.0% 47173.
57.3% 40343.
43.2% 30416.
NET DEPOSIT PREMIUM
64193.
Credit
Amount
2112.
3168.
4224.
7041.
9505.
12673.
62081 .
61025.
59969.
57152.
5l~688 .
51520.
Maximum
Factor
130%
150%
200%
Est. Maximum (See # 1 above
Premium for net deposit
91529. premium)
105611.
140814.
This should be signed by an authorized representative ofthe city requesting coverage. One ofthe above options must
_elected. Please return a signed copy oftms notice to us with payment and make checks payable to the LMCIT.
Signature Title Date
For more information on the premium options that apply to your city, refer to the enclosed brochures.
LM4503(1l/98)
.
.
.
League of Minnesota Cities Insurance Trust
Group Self-Insured Workers' Compensation Plan
Administrator
Berkley Administrators
145 University Avenue West St. Paul, MN 55103-2044 Phone (651) 215-4169
Self-Insured Workers' Compens~tion Quotation
(RENEWAL of Agreement No. 02-000513-13)
ELK RIVER, ELK RIVER UTILITIES, HRA & EDA
10/01/! 999
10/01/2000
DEPOSIT
PREMIUM
108318.
70407.
O.
O.
6214.
64193.
O.
64193.
"3 ~ ~o
.
q $' C> '5'
.
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~~~'TS. .
The foregoing quotation is for a deposit premimn 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 ofPremimn Options" and return it
and your check for the deposit premium (made payable to the LMCIT) to us at the above address.
CODE
RATE
EST! MATED
PAYROLL
SEE ATTACHED SCHEDULE FOR DETAILS
Manual Premium
Experience Modification 0.65
Standard Premium
Managed Care Credit OX
Deductible Credit Or.
Premium Discount
Discounted Standard Premium
LMC Insurance Trust Discount OX
Net Deposit Premium
f"'\A W'\ ~ 'tr c\. c........ '- ~4! cL ~ \-
~ed.v..~I'A\c.. ("fLit-
~\ 1)00)
LM4410 (11/98)
.
League of Minnesota Cities Insurance Trust
Group Self-Insured Workers' Compensation Plan
administrator
Berkley Administrators
145 University Avenue West
St. Paul, MN 55103-2044
(651) 215-4173
The "City"
ELK RIVER~ ELK RIVER UTILITIES~ HRA & EDA
PO BOX 490~ 13065 ORONO PARKWAY
ELK RIVER MN 55330-0490
Agreement No. 02-000513-14
AGREEMENT PERIOD FROM: 10/01/1999
TO: 10/01/2000
CONTINUATION SCHEDULE FOR QUOTATION PAGE
REMUNERATION RATE CODE DESCRIPTION EST. PRE/i.
383460. 4.00 5506 STREET CONSTRUCTION & MAINTENANCE 15338.
89700. 2.81 7520 WATERWORKS 2521 .
700050. 2.84 7539 ELECTRIC & STEAM PLANT 19881.
175000. 2.74 7580 SEWAGE DISPOSAL PLANT 4795.
109650. 3.89 7706 FIREFIGHTERS (NOT VOLUNTEER) 4265.
POP 15293. 30.54 7708 FIREFIGHTERS (VOLUNTEER) 4670.
1391000. 2.74 7720 POLICE 38113.
221200. 1.19 8017 OFF SALE LIQUOR STORE 2632.
77250. 3.22 8227 CITY SHOP & YARD 2487.
770970. o . l~3 8810 CLERICAL 3315.
. 52430. 4.30 9015 BUILDING MAINTENANCE & REPAIR 2254.
116800. 2.34 9102 PARKS 2733.
606320. 0.86 9410 MUNICIPAL EMPLOYEES 5214.
30300. 0.33 9411 ELECTED OR APPOINTED OFFICIALS 100.
Manual Premium 108318.
.
F-416021790
FIRST NATL INS AGCY
716 MAIN ST STE 107
ELK RIVER,MN 55330
LM 46BO (111gB)
09/07/1999