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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. rffl Cottingham & Butler a. ....m. mcuIItrwm 1 mq M...p 0.l 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 $36,005,935 CITY OF DUBUQUE WORKERS' COMPENSATION COVERAGE SPECIFICATIONS - CONTINUED Rating Basis: Please refer to the policy for specific terms, conditions, limitations, and exclusions. A specimen copy of the policy is available for review. Adequate lead time required 10 secure coverage. Adequate lead time will vary by line of coverage and company, but generally is a nzinimuuz of 48 hours. Adequate lead time for Assigned Risk policies will vary by state, but generally is a minimum of 5 business days. Cottingham & Butler rSI Wynne. I, w In.mr.m IfeM'wnyen.n Page 9 CITY OF DUBUQUE W Punitive Damages W Injury to employees knowingly illegally employed Intentional Injury W Serious and willful misconduct of the employer including intentional acts or omissions resulting in an injury Injuries outside of U.S., its territories and possessions, and Canada W Employment Related Practices W Crew Members of any vessel Fines or Penalties t$ 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 C,S bxnert usn, I Iletld)ComI WM'' Wnr! 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. I■3B Cottingham & Butler [v Imo.I suet/ I ibmK.R Is.M wnu,ewn 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 Cx, Mammas j SIN 1M.G. Ivuk M..,,...,. 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 laBB Cottingham & Butler CW Inmmn 15.0 1tyery ua.y,rn 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.