Item 3.4 Workers Compensation Coverageot CIe F o
MINNESOTA
DEPARTMENT INFORMATION
Request for
City Council Action
ORIGINATING DEPARTMENT
REQUESTOR:
MEETING DATE:
Administration
City Administrator/Finance Director Flaherty
April 12, 2021
PRESENTER(s)
REVIEWED BY:
ITEM #:
Consent
3.4 City's Workers
Compensation Coverage
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, 2021 through June 30, 2022.
ARE YOU SEEKING APPROVAL OF A CONTRACT?
ABLIC HEARING REQUIRED?
No
No
BACKGROUND/J USTI FICATION:
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, 2021—June 30, 2022.
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 2022 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 2021-22 premiums are based on 201748, 2018-19 and
2019-20 actual claim experiences (aka Experience Modification).
The quoted premium for 2021-2022 is $89,615. This is an 8% increase from the 2020-2021 quoted
premium of $82,987, The increase is the net result of the City's experience rating decreasing from 0.94 to
0.85 which reflects the number and cost of claims during the current coverage period compared to the
previous coverage period. The change in the City's experience rating is offset by reporting additional wages
for the 2021-2022 renewal compared to the previous year.
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 2021-2022
• Workers Compensation Allocation
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 2021-2022 coverage periods.
RI II'1C�FT INFfIRM�TI[�N
FUNDING
BUDGETED:
Workers compensation coverage is allocated by
Yes
employee to each fund/department of the City.
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League of Minnesota Cities Insurance Trust
Group Self -Insured Workers' Compensation Plan
145 University Avenue West St. Paul, MN 55103-2044 Phone (651) 2154173
Notice of Premium Options for Standard Premiums of $501000 = $100,000
OTSEGO, CITY OF Agreement No.: WC 1003689_Q-5
13400 90TH STREET NE Agreement Period:
OTSEGO, MN 55330-7259 From: 07/01/2021
To: 07/01 /2022
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 115,879
Credit 0.85-17,382
Standard Premium 98,497
Deductible Credit 0.00% 0
Premium Discount -81882
Net Deposit Premium $89,615
Adjustment for Commission* 0
Total Net Deposit Premium $89,615
*Workers compensation rates assume a 2% standard commission. The commission adjustment accounts for the
commission difference, above or below 2%.
Agent:
01522 Associated Benefits &Risk Consulting
6000 Clearwater Dr
Minnetonka, MN 55343-9448
Page 1 of 3 LM4514 (3/02)(Rev.01/20)
Notice of Premium Options for Standard Premiums of $50,000 - $1001000
(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
89,615
Commission
Adjustment
C
Total Net Deposit
Premium
89,615
2. ❑ Deductible Premium Option
Deductible options are available in return for a premium credit applied to your estimated standard
Premium of $ 98,497. The deductible will apply per occurrence to paid medical costs only.
There is no aggregate limit.
Deductible
per Premium
Occurrence Credit
$250
$500
$1,000
$2,500
$5,000
$10,000
$25,000
$50,000
1.00%
1.70%
2.90%
5.00%
7.50%
10.50%
17.00%
22.50%
Credit Net Deposit
Amount Premium
-985
-1,674
-2,856
-4,925
-7,387
-10,342
-16,744
-22,162
3. ❑ Retrospective Rates Premium Option
88630
,
87,941
86,759
84,690
82,228
79,273
72,871
67,453
Commission
Adjustment
0
0
0
0
0
0
0
0
Total Net
Deposit
Premium
88,630
87,941
86,759
84,690
82,228
79,273
72,871
67,453
Retro-Rated Est. Minimum Retro-Rated Est. Maximum
Minimum Factor Premium MaximumFactor Premium
❑ 0.556 % 54,764 1.300 % 128,046
❑ 0.517 % 50,923 1.500 % 147,746
❑ 0.441 % 439437 2.000 % 196,994
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.01/20)
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
556,089 10.41 5506 STREET CONSTRUCTION 57,889
219,025 4,38 7520 WATERWORKS 91593
316,020 5.25 7580 SEWEAGE DISPOSAL PLANT 16,591
71,233 4.90 8227 CITY SHOP & YARD 31490
783,661 0.82 8810 CLERICAL OFFICE EMPLOYEES NOC 61426
20,000 7.76 9015 BUILDINGS-OPER BY OWNER 11552
320,694 6.31 9102 PARKS 20,236
18,200 0.56 9411 ELECTED OR APPOINTED OFFICIALS 102
Manual Premium 115,879
Page 3 of 3 LM4514 (3/02)(Rev.01/20)