ITEM 3.6 Worker's CompOF
O tST
e o
MINNESOTA
DEPARTMENT INFORMATION
Request for
City Council Action
ORIGINATING DEPARTMENT
REQUESTOR:
MEETING DATE:
Administration
City Administrator/ Finance Director
Flaherty
June 26, 2017
PRESENTER(s)
REVIEWED BY:
ITEM #:
Consent Item
LMCIT provides a quotation for a "deposit premium" based on payroll information provided by City staff,
3.6
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, 2017 through June 30, 2018.
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, 2017 —June 30, 2018.
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 2018 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 2017-18 premiums are based on 2013-14, 2014-15 and
2015-16 actual claim experiences (aka Experience Modification).
The quoted premium for 2017-2018 is $59,657. This is a 2% increase from the 2016-2017 quoted premium
of $58,250.
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.
Staff would recommend that the City accept the regular premium option.
SUPPORTING DOCUMENTS ATTACHED:
• LMCIT Notice of Premium Options for 2017-2018
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 2017-2018 coverage periods.
Rlinr.FT 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-1
13400 90TH STREET NORTHEAST Agreement Period:
OTSEGO, MN 55330-7259 From: 07/01/2017
To: 07/01/2018
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 0.98
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
66,729
-1,335
65,394
0
-5,737
59,657
Page 1 of 3 LM4614 (3102)(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
59,657
2. ❑ Deductible Premium Option
Deductible options are available in return for a premium credit applied to your estimated standard
Premium of $ 65,394. 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
0.90%
-589
59,068
❑ $500
1.70%
-1,112
58,545
❑ $1,000
2.90%
-1,896
57,761
❑ $2,500
5.00%
-3,270
56,387
❑ $5,000
7.50%
-4,905
54,752
0 $10,000
11.00%
-7,193
52,464
0 $25,000
16.50%
-10,790
48,867
0 $50,000
22.50%
-14,714
44,943
3. ❑ Retrospective Rates Premium Option
Retro -Rated
Minimum Factor
Est. Minimum
Premium
Retro -Rated Est. Maximum
MaximumFactor Premium
0
0.587%
38,386
1.300%
85,012
11
0,543%
35,509
1.500%
98,091
0
0.462%
30,212
2.000%
130,788
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 - $900,000
(Con't)
CONTINUATION SCHEDULE FOR QUOTATION PAGE
REMUNERATION
RATE
CODE
DESCRIPTION
EST. PREM
370,570
9.48
5506
STREET CONSTRUCTION
35,130
51,272
4.34
7520
WATERWORKS
2,225
235,757
4.80
7580
SEWEAGE DISPOSAL PLANT
11,316
62,254
3.80
8227
CITY SHOP & YARD
2,366
554,339
0.71
8810
CLERICAL OFFICE EMPLOYEES NOC
3,936
8,000
5.13
9015
BUILDINGS -OPER BY OWNER
410
218,422
5.16
9102
PARKS
11,271
18,200
0.41
9411
ELECTED OR APPOINTED OFFICIALS
75
Manual Premium
66,729
Page 3 of 3 LM4514 (3/02)(Rev.1/16)