Workers' Compensation Excess Insurance Proposal FY 2011Masterpiece on the Mississippi
TO: The Honorable Mayor and City Council Members
FROM: Michael C. Van Milligen, City Manager
SUBJECT: Fiscal Year 2011 Workers' Compensation Excess Insurance
DATE: July 13, 2010
MCVM:jh
Attachment
cc: Barry Lindahl, City Attorney
Cindy Steinhauser, Assistant City Manager
Randy Peck, Personnel Manager
Mi ael C. Van Milligen
Dubuque
katil
All- AmmicaCAy
1
2007
Cottingham and Butler presented workers' compensation excess insurance renewal
options to the City. Personnel Director Randy Peck is recommending approval of the
renewal rate of $.115 per $100 of payroll submitted by Safety National and to include
sworn police officer and firefighter medical claims under the $600,000 retention limit
(each accident) effective July 1, 2010 through June 30, 2011, for a total premium of
$35,196.
I concur with the recommendation and respectfully request Mayor and City Council
approval.
Masterpiece on the Mississippi
TO:
FROM:
SUBJECT:
DATE:
Michael C. Van Milligen, City Manager
Randy Peck, Personnel Manager ,t6
Fiscal Year 2011 Workers' Compensation Excess Insurance
July 6, 2010
Cottingham and Butler presented the workers' compensation excess insurance renewal options
for coverage effective July 1, 2010. I have attached the renewal proposal for your review.
Quotes were obtained from our current carrier, Safety National, Midwest Employers, ACE and
Chartis. Safety National presented the most competitive proposal for the existing coverages
which provides for a $500,000 self insured retention limit (each accident). Safety National
proposes to continue with a rate of $.115 per $100 of payroll effective July 1, 2010 through June
30, 2011. The renewal proposal provides for an estimated annual premium of $27,779 for Fiscal
Year 2011. The current annual premium is $25,995. The increase is related to the increase in
our payroll.
Safety National also presented a proposal to include sworn police officer and firefighter medical
claims under the self insured retention. They presented a quote based on a self insured
retention amount of $600,000 for each accident. If we were to include sworn police officer and
firefighter medical claims under the $600,000 retention limit, the premium would increase by
$7,417.
Finance Director Ken TeKippe and I recommend that we continue with Safety National as our
excess workers' compensation carrier effective July 1, 2010 through June 30, 2011. We
recommend maintaining the retention limit at $500,000 (each accident) and including sworn
police officer and firefighter medical claims under the $600,000 retention limit. For the last
several years I have obtained quotes to cover sworn police officer and firefighter medical claims
under the self insured retention. The cost of this coverage has not been competitive. This
year's quote is a competitive proposal and would provide some catastrophic protection.
The requested action is for the City Council to pass a motion approving the renewal rate of
$.115 per $100 of payroll submitted by Safety National and to include sworn police officer and
firefighter medical claims under the $600,000 retention limit (each accident) effective July 1,
2010 through June 30, 2011 for a total premium of $35,196. Cottingham and Butler has issued a
binder to make sure that there would be no lapse in coverage on July 1, 2010.
If you have any questions, please feel free to call.
RP:sya
cc:
Ken TeKippe, Finance Director
Jenny Larson, Budget Director
Dan Brown, Fire Chief
Mark Dalsing, Police Chief
Dubuque
had
AI- AmerlcaCity
f
2007
1,
Excess Workers' Compensation Insurance Proposal
for
CITY OF DUBUQUE
Presented by:
Eric Larsen, Sales Executive
Policy Period:
2010 -2011
This is a convenient coverage sununary not a legal contract. This proposal is provided to facilitate your understanding of your insurance program.
Please refer to the actual policies for specific terms conditions limitations and exclusions that will govern in the event of a loss. Specimen copies of
all policies are available for review prior to the binding of coverage.
In evaluating your exposures to loss, we have been dependent upon information provided by you. If there are any other areas that need to be
evaluated prior to binding of coverage. please bring these areas to our attention. Should any of your exposures change after coverage is bound, such
as your beginning new operations, hiring employees in new states, buying additional property, etc., please let us know so proper coverage can be
discussed.
Cottingham & Butler, Inc. is compensated through fees and/or connnissions for services provided to clients related to managing, reducing, and
transferring risk. In addition, Cottingham & Butler, Inc. may enter into agreements with some insurance carriers through which it is compensated
for services provided on behalf of the carriers. This compensation is based on several factors such as overall volume, growth, and in some cases
profitability of the aggregate premium placed with such carriers. Cottingham & Butler subsidiaries may also receive compensation for services such
as utilization review, case management and claims handling performed directly for the carriers.
C
B
Cottingham & Butler
C &B Insurance 1 SISCO 1 HealthCorp 1 Safety Management
Established 1887
CITY OF DUBUQUE
MARKETING SUMMARY
• Safety National - Provided a very competitive renewal quote along with an option to add the
Medical coverage for Police/ Firemen. Please see proposal for additional details.
• Midwest Employers -Due to the frequency of claim activity over $50,000 they indicated their
premium would be at $187,000 in premium excluding Police/Firemen. Did not pursue since
they were not competitive.
• ACE- Declined to quote opportunity since their Minimum Premium for each account starts at
$100,000.
• Chartis- Declined to quote opportunity since their Minimum Premium for each account starts at
$100,000.
Please refer to the policy for specific terms, conditions, limitations, and exclusions. A specimen copy of the policy is available for review.
Adequate lead time required to secure coverage. Adequate lead time will vary by line of coverage and company, but generally is a minimum of 48
hours. Adequate lead time for Assigned Risk policies will vary by state, but generally is a minimum of 5 business days.
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Page 5
CITY OF DUBUQUE
WORKERS' COMPENSATION COVERAGE SPECIFICATIONS
2009/2010 2010/2011
Company: Safety National Safety National
A.M. Best Rating: A, X A, X
Status: Admitted Admitted
Rating and Status as of: 06/05/2009 06/05/2009
Limits:
Workers' Compensation (each accident) Statutory Statutory
Employer's Liability (each accident) $1,000,000 $1,000,000
Self - Insured Retention (each accident)
Aggregate Protection
Estimated Payroll
Rate per $100 of Payroll
Policy subject to Annual Audit:
TOTAL ESTIMATED ANNUAL PREMIUM
Minimum Premium
Note: Higher limits may be available. Please let us know if you would like a quote for higher limits.
Please refer to the policy for specific terms, conditions, limitations, and exclusions. A specimen copy of the policy is available for review.
Adequate lead time required to secure coverage. Adequate lead time will vary by line of coverage and company, but generally is a minimum of 48
hours. Adequate lead time for Assigned Risk policies will vary by state, but generally is a minimum of 5 business days.
Cottingham & Butler
Page 7
$500,000 $500,000
None None
$22,604,201 $24,155,308
.115 .115
Yes
$25,995
$25,995
Yes
$27,779
$27,779
CITY OF DUBUQUE
WORKERS' COMPENSATION COVERAGE SPECIFICATIONS - CONTINUED
OPTIONS — INCLUDING POLICE & FIRE:
Company:
A.M. Best Rating:
Status:
Rating and Status as of:
Limits:
Workers' Compensation (each accident)
Employer' s Liability (each accident)
Self - Insured Retention (each accident)
All Other
Police/Fire
Aggregate Protection
Estimated Payroll
Rate per $100 of Payroll
Policy subject to Annual Audit:
TOTAL ESTIMATED ANNUAL PREMIUM
Minimum Premium
Note: Higher limits may be available. Please let us know if you would like a quote for higher limits.
Please refer to the policy for specific tenns, conditions, limitations, and exclusions. A specimen copy of the policy is available for review.
Adequate lead time required to secure coverage. Adequate lead time will vary by line of coverage and company, but generally is a minimum of 48
hours. Adequate lead time for Assigned Risk policies will vary by state, but generally is a minimum of 5 business days.
B
Cottingham & Butler
Page 8
2010/2011
Safety National
A, X
Admitted
06/05/2009
Statutory
$1,000,000
$450,000
$600,000
None
$36,005,935
.12
Yes
$36,726
$36,726
2010/2011
Safety National
A, X
Admitted
06/05/2009
Statutory
$1,000,000
$500,000
$600,000
None
$36,005,935
.115
Yes
$35,196
$35,196
S I \ 1 I _
IA
(I.,%SS
Coin
0106
CL:kSSIFI(':kTION
Tree Pruning
P:tl itOLL
$180,336
IA
3724
Millwright Work NOC & Drivers
$130,268
IA
5192
Parking Meters Install Service or Repair
$99,337
IA
5506
Street or Road Construction Paving/Repaving
$906,070
IA
7382
Bus Co—All Other Employees & Drivers
$1,082,277
IA
7403
Aircraft of Helicopter Ops: Air Carrier - Scheduled or Supplemental
$389,028
IA
7403
Aircraft of Helicopter Ops: Sales or Service Agency All Other Employees
Included Above
IA
7520
Waterworks Operation & SD
$1,250,371
IA
7580
Sewage Disposal Plan Operation & Drivers
$1,225,999
IA
8385
Business Co Garage Employees
$76,235
IA
8392
Automobile Storage Garage or Parking Station & Drivers
$630,055
IA
8810
Clerical Office Employees
$9,962,438
IA
8810
Public Library Museum Professional Employees
Included Above
IA
8831
Hospital Veterinary & Drivers
$66,517
IA
8835
Public Health Nursing Association —All Employees
$112,784
IA
9015
Building NOC— Operated by Owner
$694,325
IA
9015
Swimming Pool Public Operation
Included Above
IA
9016
Skating Rink Ops & Drivers
$0
IA
9060
Club— Country
$263,975
IA
9101
All Other Employees
$88,590
IA
9182
Park NOC —All Other Employees & Drivers
$1,927,512
IA
9154
Theater NOC —All Other Employees
$0
IA
9402
Street Cleaning & Drivers
$514,499
IA
9410
Municipal, Township, County or State Employees
$2,889,724
IA
9419
Municipal, Township County or State Employees NOC
Included Above
IA
9403
Garbage and Refuse Collecting in Containers & Dumping
$1,664,968
Total Estimated Annual Payroll
$24,155,308
To ADD POLICEMEN & FIREMEN:
IA
7720
Police Officers
$6,275,948
IA
7710
Firefighters
$5,574,679
Total Estimated Annual Payroll
$36,005,935
CITY OF DUBUQUE
WORKERS' COMPENSATION COVERAGE SPECIFICATIONS - CONTINUED
Rating Basis:
Please refer to the policy for specific terms, conditions, limitations, and exclusions. A specimen copy of the policy is available for review.
Adequate lead time required 10 secure coverage. Adequate lead time will vary by line of coverage and company, but generally is a nzinimuuz of 48
hours. Adequate lead time for Assigned Risk policies will vary by state, but generally is a minimum of 5 business days.
Cottingham & Butler
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Page 9
CITY OF DUBUQUE
W Punitive Damages
W Injury to employees knowingly illegally employed
Intentional Injury
W Serious and willful misconduct of the employer including intentional acts or omissions resulting in an injury
Injuries outside of U.S., its territories and possessions, and Canada
W Employment Related Practices
W Crew Members of any vessel
Fines or Penalties
t$ Damages to any employee under the USL &H Act, the Federal Employer's Liability Act, or Migrant and Seasonal
Agricultural Worker Protection Act.
W Monopolistic States are not covered: North Dakota, Ohio, Washington, West Virginia, and Wyoming
t$ Failure to comply with any health, safety, or notification law or regulation
W Firefighter and Policy Officer Employees (see option for Medical Benefits Only)
t$ Relating to any employer owned, leased, or regularly chartered aircraft
WORKERS' COMPENSATION COVERAGE SPECIFICATIONS - CONTINUED
Exclusions include but are not limited to the following:
Other exclusions and coverage limitations apply.
Additional Options:
Voluntary Compensation
United States Longshore & Harborman's Act (USL &H)
Jones Act
Alternate Employer
Scheduled Waivers of Subrogation
Blanket Waiver of Subrogation
Foreign Voluntary Compensation and Employer's Liability Coverage
Repatriation
Endemic Disease
Stop Gap (Coverage for Monopolistic States)
Please refer to the policy for specific terms, conditions, limitations, and exclusions. A specimen copy of the policy is available for review.
Adequate lead time required to secure coverage. Adequate lead time will vary by line of coverage and company, but generally is a minimum of 48
hours. Adequate lead time for Assigned Risk policies will vary by state, but generally is a minimum of 5 business days.
Cottingham & Butler
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Page 10
Level
Category
Level
Category
Level
Category
A + +, A+
Superior
B, B-
Fair
D
Poor
A, A-
Excellent
C + +, C+
Marginal
E
Under Regulatory Supervision
B + +, B+
Very Good
C, C-
Weak
F
In Liquidation
S
Rating Suspended
CITY OF DUBUQUE
A.M. BEST RATING & ANALYSIS
The objective of Best's rating system is to provide an opinion as to an insurer's financial strength and ability to meet
ongoing obligations to policyholders. A.M. Best's opinions are derived from an evaluation of a company's balance sheet
strength, operating performance and business profile as compared with Best's quantitative and qualitative standards.
Financial Size Categories
(In $000 of Reported Policyholders' Surplus Plus Conditional Reserve Funds)
Assigned to all companies and reflects their size based on their capital, surplus and conditional reserve funds in millions of
US dollars, using the scale below.
To enhance the usefulness of our ratings, A.M. Best assigns each company a Financial Size Category (FSC). The FSC is
designed to provide the subscriber with a convenient indicator of the size of a company in terms of its statutory surplus and
related ,ra;_,unts. Many insurance buyers only want to consider buying insurance coverage from companies that they
sufficient financial capacity to provide the necessary policy limits to insure their risks. Although companies
lize reinsurance to reduce their net retention on the policy limits they underwrite, many buyers still feel more
mfortahle buying from companies perceived to have greater financial capacity.
FS( Up to 1,000 FSC IX 250,000 to 500,000
FSC 11 1,000 to 2,000 FSC X 500,000 to 750,000
FSC III 2,000 to 5,000 FSC XI 750,000 to 1,000,000
FSC IV 5,000 to 10,000 FSC XII 1,000,000 to 1,250,000
FSC V 10,000 to 25,000 FSC XIII 1,250,000 to 1,500,000
FSC VI 25,000 to 50,000 FSC XIV 1,500,000 to 2,000,000
FSC VII 50,000 to 100,000 FSC XV 2,000,000 or more
FSC VIII 100,000 to 250,000
Best's Insurance Reports, published annually by A.M. Best Company, Inc., presents comprehensive reports on the financial
position, history, and transactions of insurance companies operating in the United States and Canada. Companies licensed
to do business in the United States are assigned a Best's Rating which attempts to measure the comparative position of the
company or association against industry averages.
Copies of the Best's Insurance Reports on the insurance companies are available upon your request.
Cottingham & Butler uses A.M. Best & Co.'s rating services to evaluate the financial condition of insurers whose policies
we propose to deliver. The rating of the carrier and the year of publication of that rating are indicated. Cottingham &
Butler makes no representations and warranties concerning the solvency of any carrier, nor does it make any representation
or warranty concerning the rating of the carrier which may change.
ADMITTED/NON- ADMITTED /GUARANTY FUND DATA
The term admitted or authorized carrier refers to an insurer, which has been approved (authorized) by a given state's
insurance department to write business within that state. An admitted or authorized carrier is protected by the State
Guaranty Fund should an insolvency (bankruptcy) of the insurer occur. A non - admitted or unauthorized carrier in a given
state is not protected by the Guaranty Fund in that state should the carrier become insolvent.
It is important to keep in mind that an admitted or non - admitted status as well as the resulting applicability of any state's
guaranty fund are issues only if /when a carrier is declared insolvent.
Please refer to the policy for speci terms, conditions, limitations, and exclusions. A specimen copy of the policy is available for review.
Adequate lead time required to secure coverage. Adequate lead time will vary by line of coverage and company, but generally is a minimum of 48
hours. Adequate lead time for Assigned Risk policies will vary by state, but generally is a minimum of 5 business days.
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Cottingham & Butler
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Page 11
CITY OF DUBUQUE
ADDITIONAL COVERAGES
Additional coverages that may be available but not limited to the following:
Auto Liability
Auto Physical Damage
Uninsured/Underinsured Motorist Coverage
General Liability
Employee Benefits Liability
Garage Liability
Garagekeepers
Property
Equipment Breakdown
Flood
Earthquake
Directors & Officers Liability
Crime/Employee Dishonesty
Fiduciary Liability — (The responsibility on trustees, employers, fiduciaries, professional administrators, and the
plan itself with respect to errors and omissions in the administration of employee benefit programs as
imposed by the Employee Retirement Income Security Act of 1974)
Kidnap & Ransom
Higher Liability Limits
Higher Umbrella Limits
Deductible Options
Pollution
Employment Practices Liability — (Wrongful termination, sexual harassment, sexual discrimination, etc.)
Business Income
Extra Expense
Professional Errors and Omissions
Internet Liability
Product Recall
Foreign/Intemational Coverages
If you are interested in pricing for any of the above coverages or any other coverages, please contact our office.
In evaluating your exposures to loss, we have been dependent upon information provided by you. If there are any other
areas that need to be evaluated prior to binding of coverage, please bring these areas to our attention. Should any of
your exposures change after coverage is bound, such as your beginning new operations, hiring employees in new
States, buying additional property, etc., please let us know so proper coverage can be discussed.
Please refer to the policy for specific terms, conditions, limitations, and exclusions. A specimen copy of the policy is available for review.
Adequate lead time required to secure coverage. Adequate lead time will vary by line of coverage and company, but generally is a minimum 01 48
hours. Adequate lead time for Assigned Risk policies will vary by state, but generally is a minimum of 5 business days.
O B
Cottingham & Butler
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Page 12
COMPANY NAME
INSURABILITY OF PUNITIVE DAMAGES PER STATE1
Punitive Damages are Insurable:
Alabama Alaska Arizona Delaware Georgia Hawaii Idaho
Iowa Louisiana Michigan Mississippi Montana New Hampshire New Mexico
Puerto Rico South Carolina Vermont Virgin Islands Washington Wisconsin Wyoming
Punitive Damages are NOT Insurable if directly assessed for an intentional wrong:
Arkansas Dist. Columbia Nevada North Carolina North Dakota Oregon Tennessee
Texas West Virginia
Punitive Damages are NOT Insurable unless awarded out -of -state or vicariously assessed:
California
Punitive Damages are NOT Insurable if directly assessed and not statutorily imposed:
Connecticut
Punitive Damages are NOT Insurable if directly assessed:
Florida Illinois Indiana Kansas
Rhode Island South Dakota
Punitive Damages are NOT Insurable unless awarded out -of- state:
New York
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Cottingham & Butler
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Page 13
Missouri
Punitive Damages are NOT Insurable if assessed for an intentional wrong:
Kentucky
Punitive Damages are NOT Insurable unless vicariously assessed for negligence:
Oklahoma
Ohio Pennsylvania
Punitive Damages are NOT Insurable unless assessed for Bodily Injury caused by unintentional conduct:
Virginia
Punitive Damages are NOT Insurable:
Colorado Maine Massachusetts Minnesota Nebraska New Jersey Utah
I Information obtained from International Risk Management Institute, Inc. (IRMI), as of November 2006
Please refer to the policy for specific terms, conditions, limitations, and exclusions. A specimen copy of the policy is available for review.
Adequate lead time required to secure coverage. Adequate lead time will vary by line of coverage and company, but generally is a minimum of 48 hours. Adequate lead
time for Assigned Risk policies will vary by state, but generally is a minimum of 5 business days.