Loading...
5.1. SR 09-05-1995'^~( ~~ ITEM 5.1. ~~ ity of ~~ MEMORANDUM l~ ~ TO: Mayor & City Council Rover FROM: Lori Johnson, Assistant City Administrator DATE: September 18, 1995 SUBJECT: Property, Liability, Worker's Compensation, and Other Insurance Renewals The city's worker's compensation, property, liability, boiler and machinery, and other insurance policies are subject to renewal on October 1, 1995. Dan Greene of First National Insurance Agency of Elk River will be at Monday's meeting to present renewal information and answer questions the Council may have. Consistent with past years, the City requested quotes from all carriers writing municipal coverage. Once again the League of Minnesota Cities Insurance Trust quoted the broadest coverage at the lowest rate. Copies of the LMCIT quotes are attached for your review. Also attached is a recent publication from the LMCIT on why it is beneficial to remain with • their program. The Council will be asked to approve the worker's compensation contract and the property, liability and other insurance coverage contract. In addition, as was the case last year, there will be several other issues which the Council will be asked to consider. Although much of the information will be presented verbally, this memo outlines some of the issues to be discussed. Worher's Compensation Insurance The League of Minnesota Cities Insurance Trust has submitted a quote for worker's compensation insurance beginning October 1, 1995. The renewal shows an experience modification of .82; this is down from .89 the previous year. For the first time last year the city enrolled in the deductible option with a $2500 per occurrence deductible resulting in a premium reduction of $10,015. To date, for claims incurred in 1995, the city has paid deductibles of $3,985.30. A summary of the claims is attached for your information. As you can see, most of our claims are relatively small, usually less than $1,000. The $2,500 deductible will result in a premium savings of $10,059 on the upcoming renewal. If the deductible per occurrence is increased to $5,000, an additional savings of $3,353 would be realized. 13065 Orono Parkway • P.O. Box 490 • Elk River, MN 55330 • (612) 441-7420 • Fax: (612) 441-7425 As part of the insurance presentation last year the Council was made aware . of a managed care option which provides an additional five percent premium credit. The Council did not approve the managed care option last year, however, there are some cases in which the employees may have received more appropriate care had a managed care option been in place. The managed care program helps employees through the process of dealing with worker's compensation and ensuring that the injured employee receives appropriate and timely medical attention. It does require that employees be treated by network providers. In most cases the local providers are part of the network. It is anticipated that managed care will be required in the future. The Council should decide whether or not to implement the managed care program. Property Liability and Other Insurance Attached is a renewal premium summary for property, liability, boiler and machinery, and other insurance coverage. The total 1995-96 premium is $188,664 which is a decrease of over $8,000 from the 1994-95 premium. This is in spite of the fact that there is additional property to be insured and revenues and expenditures have increased which are the basis for a portion of the premiums. The premium quoted includes coverage for the Elk River Municipal Utilities. The main reason for the decrease is because a large • claim which was to be on our record for three years was determined to be a shock loss, meaning it was a highly unusual, one-time occurrence , so it was not factored in as a loss when our renewal rates were determined. Last year the City Council approved the purchase of Open Meeting Law coverage. The cost of that coverage for the upcoming year is $1,837. Excess liability coverage was also discussed last year. Due to the high cost of the coverage the City Council chose not to purchase excess liability. The 1995-96 quote for excess liability without waiver of immunity is $32,360 and with waiver of immunity is $43,888. Last year City Attorney Peter Beck reviewed the need for excess liability. He was unable to find areas of potential liability that were not already covered by other policies. If the Council wishes, additional research can be done to determine whether it is necessary to purchase excess liability. Summary At Monday night's meeting the City Council is asked to approve the October 1, 1995, to October 1, 1996, worker's compensation policy, property, liability, open meeting law, and other insurance coverage with League of Minnesota Cities Insurance Trust. In addition, the Council needs to determine the level of deductible for worker's compensation insurance. Other items to be discussed, but not requiring immediate action, include a managed care program for worker's compensation and excess liability coverage. - League of Minnesota Cities Insurance Trust Group Self-Insured Workers' Compensation Plan ~~(;1~1V~~ Administrator . Berkley Administrators s~~p ~ ~ 5~` Member of the W. R. Berkley Group P.O. Box 59143 Minneapolis, MN 55459-0143 Phone (612) 544-0311 ~S'~ __ ----.------- NOTICE OF PREMIUM OPTIONS FOR STANDARD PREMIUMS OF $50,000 - $150,000 The 'City" Agreement No.: Agreement Period: - 02-000513-10 ELK RIVER, ELK RIVER UTILITIES, From: HOUSING & REDEV. AUTH. ECON.AU & SCHOOL BOARD To: 10/01/1995 PO BOX 490, 13065 ORONO PARKWAY 10/01/1996 ELK RIVER hfN 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 $ .The deductible will apply per occurrence to paid medical costs only. There is no aggregate lirr~i}1765. 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 ~tions during the agreement period. OPTIONS NET DEPOSIT PREMIUM 1 ^ Regular Premium Option Deductible Options: 101340. Deductible Premium Credit per Occurrence Credit Amount $ 2235. 99105. 500 3 ^ 4% 44?1. 9b869. 4 ^ 1,000 Solo 5588. 9J752. 5 ^ 2,500 9% 10059. 91281. 6 ^ 5,000 12% 13412. 87928. 7 ^ 10,000 17% 19000. 82340. Retrospectively Rated Premium Options: Retro-Rated Est. Minimum Maximum Est. Maximum (See #1 above Minimum Factor Premium Factor Premium for net deposit 8 ^ 52.9% 59124. 130% 145295. premium) 9 ^ 49.9% 55771. 140% 156471. 10 ^ 47.3% 52865. 150% 167648. This should be signed by an authorized representative of the city requesting coverage.Oneof the above options must selected. Please return a signed cop y of this notice to the Administrator with payment and make checks payable o the LMCIT. Signature Title Date For more information on the premium options that apply to your city, refer to t he enclosed brochures. T A ncn~~~ iininn~ - League of Minnesota Cities Insurance Trust Group Selt-Insured Workers' Compensation Plan Workers' Compensation and Employers' Liability Agreement Administrator Berkley Administrators a member of th• Berkley Risk Management Services Group P.O. Box 59143 Minneapolis, MN 55459-0143 Phone (612) 544-0311 The "City" x 02-000513-10 ELK RIVER, ELk RIVER UTILITIES, Ab~~~-F'~RIOD FROM: 10/01/1995 HOUSING & REDEV. AUTH. ECON,AU & SCHOOL BQARD 70: 10/01/1996 FO BOX 440, 13065 ORONO PARKWAY. ELK RIVER MN 55330-0490 CONTINUATION SCHEDULE FDR QUOTATIDN PAGE NEW OLD REMUNERATION RATE RATE CODE DESCRIPTION EST. PREM. 179400. 7.20 7.47 5506 STREET CONSTRUCTION & MAINTENANCE 12917. 48360. 5.72 4.77 7520 WATERWORKS 2766. 545410. 5.93 5.54 7539 ELECTRIC & STEAM PLANT 32372. 163700. 5.86 7.32 7580 SEWAGE DISPOSAL PLANT 9593. FOP 17676. 65.46 81.82 7708 FIREFIGHTERS (VOLUNTEER) 11571. 1104200. 5.23 6.54 7720 POLICE 57750. 164900. 2.25 2.81 8017 OFF SALE LIQUOR STDRE 3710. 104300. 6.86 5.72 8227 CITY SHOP & YARD 7155. 726000. O.bS •54 8810 CLERICAL 4719. 74500. 4.09 4.17 9102 PARKS 3047. 301400. 1.85 2.31 9410 MUNICIPAL EMPLOYEES 5376• 38700. 0.69 2.31 9411 ELECTED .OR APPOINTED OFFICIALS 267. Manual Premium 151443. STATE SUPERIOR CODE STATE FUND EMPLOYERS POOL P1UTUAL PLAN LEAGUE 5506 ~ 19.95 ~ 16.40 ~ 16.39 ~ 7.47 7539 ~ 7.91 ~ 6.18 ~ 6.63 ~ 5.45 7708 ~ ~ 88.78 ~ 74.52 ~ 65.46 7720 ~ 9.26 ~ 7.81 ~ 7.81 ~ 6.54 8227 ~ 11.87 ~ 9.27 ~ 9.26 ~ 6.86 9410 ~ 3.75 ~ 3.17 ~ 3.16 ~ 1.85 • F-416021790 FIRST NAIL INS AGCY 729 MAIN STREET ELK RIVER, MN 55330 BA 468 (3/92) Date: 08/29/1995 1~ League of Minnesota Cities Insurance Trust Group Self-Insured Workers' Compensation Plan Administrator Berkley Administrators a member of the Berkley Risk Management Services Group P.O. Box 59143 Minneapolis, MN 55459-0143 Phone (612) 544-0311 Self-Insured Workers' Compensation Quotation (REhtEWAL of Agreement No. 02-000513-9) ELK RIVER, ELK RIVER UTILITIES, 10/Oi/1995 10/01/1996 ESTIMATED CODE RATE PAYROLL SEE ATTACHED SCHEDULE FOR DETAILS Manual Premium 10% Sick, Holiday, & Vacation Allowance Add. Manual Premium Experience Modification 0.82 Standard Premium Managed Care Credit OY Deductible $2,500. Deductible Credit 9I Premium Discount Discounted Standard Fremium LMC Insurance Trust Discount 0'/, l~let Deposit Fremium DEPOSIT PREMIUM 151443. 15144. 136299. 111765. 0. 0. 10425. IOI340. 0. 10i340. 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 area 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 "Application for Coverage" and return it and your check for the deposit premium (made payable to the LMC Insurance Trust) to the Plan Administrator, Berkley Administrators. BA 441CG (12/92) 9/13/95 • • SELF INSURANCE COSTS LEAGUE OF MINNESOTA CITIES Employee A Employee B Employee C Employee D Employee E Employee F Employes. G Employee H TOTAL S 137.88 406.16 .243.39 1,144.39 732.30 1,123.98 91.20 106.00 $3,985.30 Berkley Risk Services, Inc. DAN GREENE/SANDY GREENE ~ FIRST NATIONAL INSURANCE 729 MAIN STREET ELK RIVER, MN 55330 Date: SEPTEMBER 8, 1995 Re: CITY OF ELK RIVER Eff. Date: 10/1/95 RENEWAL PREMIUM SUMMARY AND BINDER • 95-96 94-95 PROPERTY - 6% PROPERTY INCREASE $ 20,060. $ 21,048. MOBILE EQUIPMENT 2,757. 2,996. MUNICIPAL LIABILITY- 6% RATE INCREASE 110,450. 117,076. AUTOMOBILE LIABILITY 15,923. 18,804. AUTOMOBILE PHYSICAL DAMAGE 7,586. 6,697. MISC. EQUIPMENT ON AUTOS 824. 742. CRIME 162. 180. BONDS 1,194. 1,142. OPEN MEETING LAW 1,837. 1,756. BOILER & MACHINERY 26,250. 25,000. SYSTEMS BREAKDOWN 1,621. 1,537. TOTAL $188,664. $196,978. * EXCESS LIABILITY - SEE ATTACHED • ._. _ _ = f ',i L t1 • t~l' ~ ~ ~'~`Yti ~, - FROM: ill Berkley Risk Services, Inc. 920 Second Avenue South, Suite 700 Minneapolis, Minnesota >j402-4023 (612) 376-4200 FAX (612) 376-4299 SUt3JtG f ( DATE EXCESS LIABILITY QUOTATION FOR THE CITY OF: ~~~ pii~ q ~ 8 ~ G~ -FOLD- Dear ~~(~ ~. Liability Limit: Annual Premium With Waiver of Immunity: Annual Premium Without Waiver of Immunity: Quotation Expires: Follow Form: Special Exclusions: Other Endorsements: Remarks: $1,000,000. ~ ~, 3~0. C~..~ ~ Underlying Coverage as Scheduled Child Molestation An Election form must be completed, signed, and returned to us before the effective date if coverage is desired. C~ll'1IC._ (~~.L.~. DATE SIGNED I ' ._~ • `. ..~~ ~...~ League of Minnesota Cities August 28, 1995 To: City officials ~z'' s~ 3490 Lexington Avenue North St. Paul, MN 55126-8044 From: LMCIT Board of Trustees Over the past year, private insurance companies have shown renewed interest in selling insurance to cities. Since your city's renewal is coming up soon, you may well have heard from the St. Paul Companies, the Employers Mutual program sponsored by the MMUA, or one of the other insurance companies that would like to sell you some insurance. LMCIT has done a pretty good job for cities for quite a few years, and we'd like to take a little time to talk about that record. Ultimately it comes down to one key question: Are cities likely to get better coverage, lower cost, or better service by leaving LMCIT and going to a private insurance company? • Can we get better coverage by leaving LMCIT? We've yet to see an insurance company match the coverage LMCIT provides cities. Every year for many. years, LMCIT has introduced improvements and refinements to broaden the coverage. and better protect cities. Some are relatively minor things that would only rarely come up, like covering the liability fora physician's administrative acts as the city ambulance service's medical adviser. Others are much more significant, such as adding coverage for inverse condemnation .liability arising out of land use regulations, picking up employment-related charges at the EEOC or Human Rights Commission level, or offering coverage for open meeting law defense costs. We're working on additional changes right now for 1996. ...Many of these coverage changes and,improvements came about because city officials identified problems or gaps in coverages and asked LMCIT to find a way to address them.. In other cases, LMCIT's Board or staff suggested the changes in response to questions or problems we encountered in handling c}aims or working with the coverage. The result of this continual process of revision and improvement is that LMCIT member cities have broader coverage than any we've seen offered to cities anywhere. But the important thing isn't just to toot our horn about how good your LMCIT coverage is (though we have to admit that we kind of enjoy horn-tooting once in a while). The real point we'd like you to keep in mind is that if you see a problem with some aspect of your LMCIT • coverage, you don't have to shop elsewhere to fix that problem. Instead, the first thing to do is to talk to us about it. If it's feasible and it makes sense for cities, we'll do it. AN EQUAL OPPORTUNITY/AFFIRMATIVE ACTION EMPL01rER (612)490-5600 1-800-925-1122 TDD(612)490-9038 Fax(612)490-0072 LMCIT Auto Rates ~~ ,-° 250 . 's 200 ~ 150 ° 100 50 0 '90 '91 '92 '93 5A '95 Underwritingyear ~ ®Liabiiy C]Physical ~rtege - ~..~...~.,m..•..~•...~ Can we reduce our costs by Leaving LMCIT? It's pretty easy to promise lower costs. We could • get into along-winded discussion about whether a private insurance company would be able to reduce losses or expenses enough to bring its costs below LMCIT's while. still providing the same coverage and making a profit. But we thought it might be more. helpful to just take a look at what LMCIT's rates have actually done over the past several years. Here are some figures. • Workers compensation - LMCIT's average rate per $100 of payroll for 1995 is 10% lower than the 1990 rate. • Municipal liability - For 1994-95, LMCIT's average rate per $1000 of city. expenditures is about 9.6% higher than 1989-90 rates. That's an average increase of less than 2% per year. • • Property - LMCIT's 1994-95 rates per $100 of value for property coverage are 3S% lower than 1989-90 levels. • .Auto - LMCIT's average rate per vehicle far auto liability coverage for 1994-95 is 2% lower than the 1989-90 rate. Per-vehicle rates for auto physical damage are 20% lower than 1989-90 levels. In short, LMCIT has a pretty solid record of giving cities stable or decreasing premium rates. • Of course, we also have to look at LMCIT's dividend history. In the last five years, LMCIT's property/casualty program has returned $41.5 million to mernber cities. That's equal to 31 % of premiums for that period. Besides these dividends, in 1993 the LMCIT workers compensation program passed a $5.2 million refund from the WCRA through to the mernber cities. After a long court fight, private insurance companies ended up keeping their portion of the WCRA refund, .rather than returning it to the insurance buyers as the legislature had directed. LMCIT Property/Casua~y Premituns and Dividends $30 o $20 ^Premituus ®Dividends $70 $o '90 '91 '92 '93 '94 • In short, we think LMCIT's record in controlling costs is pretty impressive. Of course, that's not to say we can rest on our laurels. We're constantly looking for ways we can reduce expenses by operating more efficiently. LMCIT also puts a lot of emphasis on finding ways to help cities reduce losses as well, though the spring loss control seminars, the Loss Control Quarterly, individual consulting assistance and inspections, and so on. But we realize very well that we can always do better, and we'll continue to try to do so. It's easy to promise a lower cast. It can be quite another thing to deliver. LMCIT has been delivering on its promise for a long time. Can we get better service by going son:eivhere else? __ __ __ This one's pretty easy to answer. If yors have a problem wfth service from LMCIT, whether it's from LMCI7"s own staff or from arty of o~ir contract service providers - we want to hear about it right now. Call Pete Tritz ar Tom Grundhoefer at the League office - 490-5600, or 1-800-925-1122. Or call any of the individual trustees. We can't guarantee that we'll never make a mistake, or that we'll always be able to deliver everything. you need exactly when you need it. But we can guarantee that if you tell us about a problem, we'll be listening and that we will get it fixed just as quickly as we can. • We can't emphasize strongly enough that we want to hear about it when you run into problems. The worst problem is the one we can't fix because you didn't tell us about it. ti- A final comment We think LMCIT has done a pretty good job of meeting cities' coverage needs since 1980. We also recognize that there is still plenty of room for LMCIT to improve and to do an even better job for cities in the future. For along time, cities didn't have many options for their risk management needs. Few insurance companies would even consider writing insurance for cities, and those that did charged steep premiums. That's changed over the past year or so. Cities are beginning to see private insurance companies offering some very attractive-looking premiums. Whether those companies will keep rates as stable over time as LMCIT has remains to be seen. Whether. they'll also match LMCIT's record of returning unneeded funds to member cities as dividends seems doubtful. Another point to keep in mind is that with a closer look those low premiums may not be quite the good deal they seem. We've looked at the actual policy forms that some of the private insurance companies are offering to cities. What we've found is a list of exclusions, restrictive language, and coverage limits that add up to a lot less coverage than what LMCIT gives cities. If you're considering an insurance quote from a commercial insurance company, feel free to give the LMCIT staff a call. We'll be glad to help you identify in detail how their coverage differs from what you have with LMCIT. • But the real question we'd like you to think about is this: Which alternative is more ikely to produce the results for you in the future - a private insurance company or LMCIT? LMCIT is anon-profit cooperative organization of cities, formed by cities, and governed by city officials, whose sole purpose is to meet cities' coverage and risk management needs. LMCIT is not going to suddenly decide to stop covering cities in order to get into some other line of business that might be more profitable. A private insurance company's basic goal and purpose is to make a profit by selling insurance. We think the choice is obvious.