ITEM 3.6 Worker's Comp4
OtsTYF o
MINNESOTA
DEPARTMENT INFORMATION
Request for
City Council Action
ORIGINATING DEPARTMENT REQUESTOR:
MEETING DATE:
Administration City Administrator/Finance Director Flaherty
May 13, 2019
PRESENTER(s) REVIEWED BY:
ITEM #:
Consent
3.6
STRATEGIC VISION
MEETS: ]I
THE CITY OF OTSEGO:
X
Is a strong organization that is committed to leading the community through innovative
communication.
IS A PUBLIC HEARING REQUIRED?
Has proactively expanded infrastructure to responsibly provide core services.
No
Is committed to delivery of quality emergency service responsive to community needs and
expectations in a cost-effective manner.
The City obtains workers compensation insurance coverage through the League of Minnesota Cities
Is a social community with diverse housing, service options, and employment opportunities.
LMCIT provides a quotation for a "deposit premium" based on payroll information provided by City staff,
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, 2019 through June 30, 2020.
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 (LMCIT). The coverage period for the renewal runs from July 1, 2019 —June 30, 2020.
LMCIT provides a quotation for a "deposit premium" based on payroll information provided by City staff,
which for this renewal period was based off preliminary 2020 budgeted personnel costs. This deposit
premium serves as the City's cost until the LMCIT 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 2019-20 premiums are based on 2015-16, 2016-17 and
2017-18 actual claim experiences (aka Experience Modification).
The quoted premium for 2019-2020 is $64,820. This is a 4% decrease from the 2018-2019 quoted premium
of $67,768. The decrease is the net result of the City's experience rating decreasing from 0.98 to 0.84
which was offset with additional wages reported by the City in comparison to previous renewals.
LMCIT 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.
SUPPORTING DOCUMENTS ATTACHED:
• LMCIT Notice of Premium Options for 2019-2020
Pn.RRIRL_F 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 2019-2020 coverage periods.
RtiDGFT 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-3
13400 90TH STREET NORTHEAST Agreement Period:
OTSEGO, MN 55330-7259 From: 07/01/2019
To: 07/01/2020
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.
ESTIMATED DEPOSIT
PAYROLL DESCRIPTION CODE RATE PAYROLL PREMIUM
SEE ATTACHED SCHEDULE FOR DETAILS
Manual Premium
Credit 0.84
Standard Premium
Deductible Credit 0.00%
Premium Discount
Net Deposit Premium
Agent:
00491 Associated Benefits and Risk Consulting
6000 Clearwater Dr
Minnetonka, MN 55343-9448
84,642
-13,543
71,099
0
-6,279
64,820
Page 1 of 3 LM4514 (3/02)(Rev.1116)
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.
NET DEPOSIT PREMIUM
1. ❑ Regular Premium Option 64,820
2. ❑ Deductible Premium Option
Deductible options are available in return for a premium credit applied to your estimated standard
Premium of $ 71,099. The deductible will apply per occurrence to paid medical costs only.
There is no aggregate limit.
3. ❑ Retrospective Rates Premium Option
Retro -Rated
Minimum Factor
Premium
Deductible
Net Deposit
per Occurrence
❑
$250
❑
$500
❑
$1,000
❑
$2,500
❑
$5,000
❑
$10,000
❑
$25,000
❑
$50,000
3. ❑ Retrospective Rates Premium Option
Retro -Rated
Minimum Factor
Premium
Credit
Net Deposit
Credit
Amount
Premium
1.00%
-711
64,109
1.70%
-1,209
63,611
2.90%
-2,062
62,758
5.00%
-3,555
61,265
7.50%
-5,332
59,488
10.50%
-7,465
57,355
17.00%
-12,087
52,733
22.50%
-15,997
48,823
Est. Minimum
Retro -Rated
Est. Maximum
Premium
MaximumFactor
Premium
❑ 0.533%
37,896
1.300%
92,429
❑ 0.494%
35,123
1.500%
106,648
❑ 0.422%
30,004
2.000%
142,198
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
453,636
9.14
5506
STREET CONSTRUCTION
41,462
134,723
3.85
7520
WATERWORKS
5,187
293,730
4.61
7580
SEWEAGE DISPOSAL PLANT
13,541
62,727
4.30
8227
CITY SHOP & YARD
2,697
662,063
0.72
8810
CLERICAL OFFICE EMPLOYEES NOC
4,767
15,000
6.82
9015
BUILDINGS -OPER BY OWNER
1,023
286,574
5.54
9102
PARKS
15,876
18,200
0.49
9411
ELECTED OR APPOINTED OFFICIALS
89
Manual Premium
84,642
Page 3 of 3 LM4514 (3/02)(Rev.1/16)