Item 3.3 Insurance Renewal
Request for
City Council Action
DEPARTMENT INFORMATION
ORIGINATING DEPARTMENT REQUESTOR: MEETING DATE:
Administration City Administrator/Finance Director Flaherty May 28, 2024
PRESENTER(s) REVIEWED BY: ITEM #:
Consent 3.3 – Insurance Renewal
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.
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, 2024 – June 30, 2025.
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 2025 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 2024-25 premiums are based on 2020-21, 2021-22 and 2022-23 actual claim
experiences (aka Experience Modification).
The quoted premium for 2024-2025 is $87,325. This is a 5.73% decrease from the 2023-2024 quoted premium of
$92,637. The increase is the net result of the City’s experience rating decreasing from 0.70 to 0.67, which reflects the
number and cost of claims during the current coverage period compared to the previous coverage period. The change
can also be attributed to lower class code rates from LMCIT when compared to the prior 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 cheaper premiums if the City has good claim experience in the given period, but also
has the possibility of 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
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 2024-2025 coverage period.
BUDGET INFORMATION
FUNDING: BUDGETED:
Fund 101 – General
Fund 601 – Water Utility
Fund 602 – Sanitary Sewer Utility
Workers’ compensation coverage is allocated by the
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_LM4514_01/24
Page 1 of 4 LM4514 (3/02)(Rev.1/24)
Notice of Premium Options for Standard Premiums of $50,000 - $100,000
OTSEGO, CITY OF
13400 90TH STREET NE
OTSEGO,MN 55330-7259
Agreement No.:WC 1003689_Q-8
Agreement Period:
From:07/01/2024
To:07/01/2025
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 CODE RATE
ESTIMATED
PAYROLL
DEPOSIT
PREMIUM
SEE ATTACHED SCHEDULE FOR DETAILS
Manual Premium 143,235
Experience Modification 0.67 -47,268
Standard Premium 95,967
Deductible Credit 0.00%0
Premium Discount -8,642
Net Deposit Premium $87,325
Adjustment for Commission*0
Total Net Deposit Premium $87,325
*Workers compensation rates assume a 2% standard commission.The commission adjustment accounts for the
commission difference, above or below 2%.
Agent:
01522 USI INsurance Services LLC
8000 Norman Center Dr #400
Bloomington,MN 55437-1180
Notice of Premium Options for Standard Premiums of $50,000 - $100,000
(Con't)
Page 2 of 4 LM4514 (3/02)(Rev.1/24)
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
Commission
Adjustment
Total Net
Deposit
Premium
87,325 0 87,325
2.*Deductible Premium Option
Deductible options are available in return for a premium credit applied to your estimated standard
Premium of $95,967.The deductible will apply per occurrence to paid medical costs only.
There is no aggregate limit.
Deductible
per
Occurrence
Premium
Credit
Credit
Amount
Net Deposit
Premium
Commission
Adjustment
Total Net
Deposit
Premium
*$250 0.50%-480 86,845 0 86,845
*$500 0.90%-864 86,461 0 86,461
*$1,000 1.70%-1,631 85,694 0 85,694
*$2,500 3.00%-2,879 84,446 0 84,446
*$5,000 4.50%-4,319 83,006 0 83,006
*$10,000 6.00%-5,758 81,567 0 81,567
*$25,000 10.00%-9,597 77,728 0 77,728
*$50,000 14.00%-13,435 73,890 0 73,890
3.*Retrospective Rates Premium Option
Retro-Rated
Minimum Factor
Est. Minimum
Premium
Retro-Rated
MaximumFactor
Est. Maximum
Premium
*0.668 %64,106 1.300 %124,757
*0.635 %60,939 1.500 %143,950
*0.573 %54,989 2.000 %191,934
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 dividend 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 member requesting coverage.
Notice of Premium Options for Standard Premiums of $50,000 - $100,000
(Con't)
Page 3 of 4 LM4514 (3/02)(Rev.1/24)
Signature Title Date
Notice of Premium Options for Standard Premiums of $50,000 - $100,000
(Con't)
Page 4 of 4 LM4514 (3/02)(Rev.1/24)
CONTINUATION SCHEDULE FOR QUOTATION PAGE
REMUNERATION RATE CODE DESCRIPTION EST. PREM
694,159 8.21 5506 STREET CONSTRUCTION 56,990
156,634 3.45 7520 WATERWORKS 5,404
809,092 4.14 7580 SEWEAGE DISPOSAL PLANT 33,496
156,811 3.86 8227 CITY SHOP & YARD 6,053
1,437,141 0.65 8810 CLERICAL OFFICE EMPLOYEES NOC 9,341
25,000 6.41 9015 BUILDINGS-OPER BY OWNER 1,603
450,411 6.72 9102 PARKS 30,268
31,000 0.00 9411 ELECTED OR APPOINTED OFFICIALS 80
Manual Premium 143235.0