ITEM 7.4 Workers Comp4
Otkgo
MINNESOTA
DEPARTMENT INFORMATION
Request for
City Council Action
ORIGINATING DEPARTMENT:
REQUESTOR:
MEETING DATE:
Administration
Adam Flaherty, Finance Director
June 13, 2016
PRESENTER(s):
REVIEWED BY:
ITEM #:
Adam Flaherty, Finance Director
City Administrator Johnson
7.4
AGENDA ITEM DETAILS
RECOMMENDATION:
It is recommended by staff that the City Council approve the renewal of the City's workers
compensation coverage for July 1, 2016 through June 30, 2017.
ARE YOU SEEKING APPROVAL OF A CONTRACT?
No
IS A PUBLIC HEARING REQUIRED?
No
BACKGROUNDMUSTIFICATION:
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, 2016 —June 30, 2017.
LMCIT provides a quotation for a "deposit premium" based on payroll information provided by City staff,
which for this renewal period was based off of preliminary 2017 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 of actual claim experience in the 3 oldest coverage periods out of
the 4 most recent coverage periods. This means the 2016-17 premiums are based on 2012-13, 2013-14
and 2014-15 actual claim experiences (aka Experience Modification).
The quoted premium for 2016-2017 is $58,250. This is a 64% increase from the 2015-2016 quoted
premium of $35,378. The reason for the increase is that the City's Experience Modification went from
0.73 in 2015-16 to 1.00 in 2016-17. This was the result of a significant claim to the policy in 2014-15.
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 of the 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.
SUPPORTING DOCUMENTS: ATTACHED NONE
• LMCIT Notice of Premium Options for 2016-17
POSSIBLE MOTION
Please word motion as you would like it to appear in the minutes.
-Motion to authorize the Finance Director to accept the coverage offered from LMCIT with the regular
premium option for 2016-2017 coverage period.
R1 inr,FT INFORMATION
FUNDING: BUDGETED:
Each Respective Fund and/or Department Yes
XXX-XXXXX-150
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 $50,0004100,000
OTSEGO, CITY OF
13400 90TH ST NE
OTSEGO MN 55330-7259
Agreement No.: 0200087525
Agreement Period: From: 7/01/2016
To: 7/01/2017
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
Experience Modification 1.00
Standard Premium
Deductible Credit 0%
Premium Discount
Net Deposit Premium
OPTIONS
63840.
5590.
58250.
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
58250.
LM4514 (3/02)(Rev.1/16)
The "City"
OTSEGO, CITY OF
13400 90TH ST NE
OTSEGO
REMUNERATION
357866,
48922.
222549,
61048.
636223.
12000.
221S42.
13850.
18200.
League of Minnesota Cities Insurance Trust
Group Self -Insured Workers' Compensation Plan
145 University Avenue West
St. Paul, MN 55103-2044
(651)215-4173
Agreement No.: 0200087525
Agreement Period From: 7/01/2016
To: 7/01/2017
MN 55330-7259
CONTINUATION SCHEDULE FOR QUOTATION PAGE
RATE
CODE
DESCRIPTION
9.20
5506
STREET CONSTRUCTION
4.21
7520
WATERWORKS
4.66
7580
SEWAGE DISPOSAL PLANT
3.69
8227
CITY SHOP & YARD
.69
8810
CLERICAL OFFICE EMPLOYEES NOC
4.98
9015
BUILDINGS-OPER BY OWNER
5.01
9102
PARKS
.52
9410
MUNICIPAL EMPLOYEES
.40
9411
ELECTED OR APPOINTED OFFICIALS
Manual Premium
Agent: 411592207
00512: LIBERTY INSURANCE AGENCY
818 2ND ST S STE 120
PO BOX 397
WAITE PARK MN 56387-0397
EST. PREM
32924.
2060,
10371.
2253.
4390.
598.
11099.
72.
73.
63840.
6/01/2016 LM4680 (8/99)
2. Deductible Premium Option
Deductible options are available in return for a premium credit applied to your estimated standard
premium of $ 63840. 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
1.006
638.
57612.
$500
1.906
1213.
57037.
$1,000
3.20%
2043.
56207.
$2,500
5.50%
3511.
54739.
$5,000
8.50%
5426.
52824.
$10,000
12.00%
7661.
50589.
$25,000
18.50%
11810.
46440.
$50,000
25.00%
15960.
42290.
3. Retrospective Rates Premium
Option
Retro-Rated
Est.Minimum
Retro-Rated
Est.Maximum
Minimum Factor
Premium
Maximum Factor
Premium
.567%
36197.
1.300%
82992.
.528%
33708.
1.500%
95760.
.454%
28983.
2.000%
127680.
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 city requesting coverage.
Signature Title
Date
LM4513 (3/02)(Rev.01/15)