Worker's Comp. Excess Ins
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MEMORANDUM
July 27,2004
TO:
The Honorable Mayor and City Council Members
FROM:
Michael C. Van Milligen, City Manager
SUBJECT: Workers' Compensation Excess Insurance
Personnel Manager Randy Peck is recommending City Council approval to continue
with Safety National as the City's excess workers' compensation carrier effective July 1,
2004, and increase the self-insured retention from $400,000 to $450,000. The rate
would be $.122 per $100 of payroll and the estimated annual premium would be
$21,689. Cottingham and Butler has issued a binder to make sure that there is no lapse
in coverage on July 1, 2004.
I concur with the recommendation and respectfully request Mayor and City Council
approval.
MCVM/jh
Attachment
cc: Barry Lindahl, Corporation Counsel
Cindy Steinhauser, Assistant City Manager
Randy Peck, Personnel Manager
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CITY OF DUBUQUE, IOWA
MEMORANDUM
July 20, 2004
TO:
Michael C. Van Milligen
City Manager
FROM:
Randy Peck '(2.(2
Personnel Manager \ \)
SUBJECT: Workers' Compensation Excess Insurance
Cottingham and Butler presented to me the workers' compensation excess
insurance renewal options for coverage effective July 1, 2004. I have attached the
renewal proposal for your review. Quotes were obtained from our current carrier, Safety
National, Employers RE and Midwest Employers Casualty Company. Safety National
presented the most competitive proposal for the existing coverages. The current rate is
$.155 per $100 of payroll. Safety National proposed a rate of $.1628 per $100 of
payroll. The renewal proposal provides for an estimated annual premium of $28,942.
The current annual premium is $26, 532. The increase is related to their increase in
rate as well as an increase in payroll. $34,877 has been budgeted in Fiscal Year 2005
for this purpose.
If we were to include sworn police officers and firefighters for medical claims
under the $400,000 retention, Safety National would charge a premium of $32,272.
Safety National would also provide an aggregate protection option with a $1,000,000
aggregate limit for a total annual premium of $50,000. Safety National also proposed a
self-insured retention for each accident of $450,000. The current retention is $400,000,
The estimated annual premium would be $21,689 if the retention amount is increased to
$450,000.
Finance Director Ken TeKippe and I have discussed whether there would be any
financial advantage to include sworn police officers and firefighter medical claims under
the $400,000 retention limit. We have also discussed the possibility of increasing the
retention limit to $450,000 and whether the aggregate protection of $1,000,000 would
be of value. Since we would be liable for the first $400,000 of medical expenses and
we would have to incur $1,000,000 in claims before the aggregate protection would
begin covering claims, it is our recommendation that we should continue to exclude
sworn police officers and firefighters from the workers' compensation policy and not to
purchase the $1,000,000 aggregate protection option. Given our claims history, we
believe that it would be advantageous to increase the self insured retention for each
accident to $450,000.
Michael C. Van Milligen
July 20, 2004
Page 2
Ken and I recommend that we continue with Safety National as our excess
workers' compensation carrier effective July 1, 2004 and increase the self insured
retention to $450,000. The rate would be $.122 per $100 of payroll and the estimated
annual premium would be $21,689. Cottingham and Butler has issued a binder to make
sure that there is no lapse in coverage on July 1, 2004.
The requested action is for the City Council to pass a motion approving the
increase in the self insured retention to $450,000 and the renewal rate of $.122 per
$100 of payroll submitted by Safety National effective July 1, 2004 for the workers'
compensation excess insurance.
If you have any questions, please feel free to call.
RP:bf
cc:
Ken TeKippe, Finance Director
Dawn Lang, Budget Director