ITEM 3.4 Workers Compg!
4P
CITY OF
Otkzo
MINNrSOTA (::7
DEPARTMENT INFORMATION
Request for
City Council Action
ORIGINATING DEPARTMENT
REQUESTOR:
MEETING DATE:
Administration
City Administrator/Finance Director Flaherty
May 29, 2018
PRESENTER(s)
REVIEWED BY:
ITEM #:
Consent
3.4
STRATEGIC VISION
MEETS:
THE CITY OF OTSEGO:
X
Is a strong organization that is committed to leading the community through innovative
communication.
Has proactively expanded infrastructure to responsibly provide core services.
Is committed to delivery of quality emergency service responsive to community needs and
expectations in a cost-effective manner.
Is a social community with diverse housing, service options, and employment opportunities.
Is a distinctive, connected community known for its beauty and natural surroundings.
AGENDA ITEM DETAILS
RECOMMENDATION:
City staff is recommending that the City Council approve the renewal of the City's workers compensation
coverage for July 1, 2018 through June 30, 2019.
ARE YOU SEEKING APPROVAL OF A CONTRACT?
IS A PUBLIC HEARING REQUIRED?
No
No
BACKGROUND/JUSTIFICATION:
The City obtains workers compensation insurance coverage through the League of Minnesota Cities
Insurance Trust (LIVICIT). The coverage period for the renewal runs from July 1, 2018 —June 30, 2019.
LIVICIT provides a quotation for a "deposit premium" based on payroll information provided by City staff,
which for this renewal period was based off preliminary 2019 budgeted personnel costs. This deposit
premium serves as the City's cost until the LIVICIT conducts a final coverage period audit, typically 6 -12
months following the end of a coverage period, which determines whether there is a refund to the City or a
final premium payment due.
The premiums are partially based off actual claim experience in the 3 oldest coverage periods out of the 4
most recent coverage periods. This means the 2018-19 premiums are based on 2014-15, 2015-16 and
2016-17 actual claim experiences (aka Experience Modification).
The quoted premium for 2018-2019 is $67,768, This is a 14% increase from the 2017-2018 quoted
premium of $59,657. The increase is the result of the combination of additional wages reported by the City
in comparison to previous renewals, as well as LMCIT increasing rates for all employment classifications.
LIVICIT offers three premium options: 1) Regular Premium; 2) Deductible Premium; 3) Retrospective Rates
Premium. The City has historically chosen the Regular Premium, which can only change based on actual
payroll numbers during their final audit, and actual claims will have no effect.
Both other available options provide for cheaper premiums if the City has good claim experience in the
given period, but also has the possibility for paying higher premiums if the City has significant claims. These
options can be found on the attached LMCIT quote.
Staff would recommend that the City accept the regular premium option.
I SUPPORTING DOCUMENTS ATTACHED:
• LMCIT Notice of Premium Options for 2018-2019
POSSIBLE MOTION
PLEASE WORD MOTION AS YOU WOULD LIKE IT TO APPEAR IN THE MINUTES:
Motion to authorize the City Administrator/Finance Director to accept the coverage offered from LMCIT
with the regular premium option for the 2018-2019 coverage periods.
BUDGET INFORMATION
FUNDING:
BUDGETED;
Workers compensation coverage is allocated by
employee to each fund/department of the City.
Yes
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 $50,000 - $100,000
OTSEGO, CITY OF Agreement No.: WC 1003689_Q-2
13400 90TH STREET NORTHEAST Agreement Period:
OTSEGO, MN 55330-7259 From: 07/01/2018
To: 07/01 /2019
Enclosed is a quotation for workers' compensation deposit premium. Note: Renewal Coverage will be bound as
per the expiring coverage arrangement, including coverage for elected and appointed officials, with the
premium indicated on the quote, unless the member or agent sends a written request not to bind renewal
coverage.
PAYROLL DESCRIPTION
ESTIMATED DEPOSIT
CODE RATE PAYROLL PREMIUM
SEE ATTACHED SCHEDULE FOR DETAILS
Manual Premium
Credit 0.98
Standard Premium
Deductible Credit 0.00%
Premium Discount
Net Deposit Premium
Agent:
00491 Associated Benefits and Risk Consulting
6000 Clearwater Dr
Hopkins, MN 55343-9448
75,874
-1,517
74,357
0
-6,589
67,768
Page 1 of 3 LM4514 (3/02)(Rev.1/16)
Notice of Premium Options for Standard Premiums of $50,000 - $100,000
(Con't)
OPTIONS
Please indicate below the premium option you wish to select. You may choose only one option and you
cannot change options during the agreement period.
1. ❑ Regular Premium Option
NET DEPOSIT PREMIUM
67,768
2. ❑ Deductible Premium Option
Deductible options are available in return for a premium credit applied to your estimated standard
Premium of $ 74,357. The deductible will apply per occurrence to paid medical costs only.
There is no aggregate limit.
Deductible
Premium
Credit
Net Deposit
per Occurrence
Credit
Amount
Premium
❑ $250
1.00%
-744
67,024
❑ $500
1.80%
-1,338
66,430
❑ $1,000
2.90%
-2,156
65,612
❑ $2,500
5.50%
-4,090
63,678
❑ $5,000
7.50%
-5,577
62,191
❑ $10,000
11.00%
-8,179
59,589
❑ $25,000
17.50%
-13,012
54,756
❑ $50,000
23.00%
-17,102
50,666
3. ❑ Retrospective Rates Premium Opition
Retro-Rated
Est. Minimum
Retro-Rated
Est. Maximum
Minimum Factor
Premium
MaximumFactor
Premium
❑ 0.536 %
39,855
1.300 %
96,664
❑ 0.499 %
37,104
1.500 %
111,536
❑ 0.428 %
31,825
2.000 %
148,714
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 for the option you have selected.
This quotation should be signed by an authorized representative of the city requesting coverage.
Signature
Title Date
Page 2 of 3 LM4514 (3/02)(Rev.1/16)
Notice of Premium Options for Standard Premiums of $50,000 - $100,000
(Con't)
CONTINUATION SCHEDULE FOR QUOTATION PAGE
REMUNERATION RATE CODE DESCRIPTION EST. PREM
395,343
9.67
5506
STREET CONSTRUCTION
38,230
76,343
4.43
7520
WATERWORKS
3,382
258,731
4.90
7580
SEWEAGE DISPOSAL PLANT
12,678
65,418
3.88
8227
CITY SHOP & YARD
2,538
600,402
0.72
8810
CLERICAL OFFICE EMPLOYEES NOC
4,323
15,000
5.23
9015
BUILDINGS-OPER BY OWNER
785
263,544
5.26
9102
PARKS
13,862
18,200
0.42
9411
ELECTED OR APPOINTED OFFICIALS
76
Manual Premium
75,874
Page 3 of 3 LM4514 (3/02)(Rev.1/16)