Worker's Comp Excess Insurance
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MEMORANDUM
August 29, 2005
TO:
The Honorable Mayor and City Council Members
FROM:
Michael C. Van Milligen, City Manager
SUBJECT: Workers' Compensation Excess Insurance
Personnel Manager Randy Peck recommends City Council approval of the renewal rate
of $.125 per $100 of payroll submitted by Safety National effective July 1, 2005 through
June 30, 2007, for the workers' compensation excess insurance.
I concur with the recommendation and respectfully request Mayor and City Council
approval.
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Michael C. Van Milligen -
MCVM/jh
Attachment
cc: Barry Lindahl, Corporation Counsel
Cindy Steinhauser, Assistant City Manager
Randy Peck, Personnel Manager
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Memorandum
August 29, 2005
FROM:
Michael C. Van Milligen
City Manager [()
Randy Peck ~
Personnel Manager
TO:
SUBJECT:
Workers' Compensation Excess Insurance
Cottingham and Butler presented to me the workers' compensation excess insurance renewal
options for coverage effective July 1, 2005. I have attached the renewal proposal for your
review. Quotes were obtained from our current carrier, Safety National, and Midwest Employers
Casualty Company. Safety National presented the most competitive proposal for the existing
coverages. The current rate is $.122 per $100 of payroll. Safety National proposed a rate of
$.125 per $100 of payroll effective July 1, 2005 through June 30, 2007. The renewal proposal
provides for an estimated annual premium of $22,650 for Fiscal Year 2006. The current annual
premium is $21,689. The increase is related to the increase in the rate and the increase in our
payroll. $29,185 has been budgeted in Fiscal Year 2006 for this purpose.
If we were to include sworn police officers and firefighters for medical claims under the
$450,000 retention, Safety National would charge a premium of $31 ,641. Safety National would
also provide an aggregate protection option with a $1,000,000 aggregate limit for a total annual
premium of $50,000.
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 $450,000
retention limit. We have also discussed whether the aggregate protection of $1,000,000 would
be of value. Since we would be liable for the first $450,000 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.
Ken and I recommend that we continue with Safety National as our excess workers'
compensation carrier effective July 1, 2005 through June 30, 2007. Cottingham and Butler has
issued a binder to make sure that there would be no lapse in coverage on July 1 , 2005.
The requested action is for the City Council to pass a motion approving the renewal rate of
$.125 per $100 of payroll submitted by Safety National effective July 1, 2005 through June 30,
2007, 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