Workers' Compensation Excess Insurance ProposalTHE CITY OF
DUB E
Masterpiece on the Mississippi
MEMORANDUM
August 28, 2007
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 that the City continue with Safety
National as the City's excess workers' compensation carrier effective July 1, 2007,
through June 30, 2009, at a renewal rate of $.125 per $100 of payroll, for an estimated
annual premium of $24,024.
concur with the recommendation and respectfully request Mayor and City Council
approval.
i"~~
Michael C. Van Milligen
MCVM/jh
Attachment
cc: Barry Lindahl, City Attorney
Cindy Steinhauser, Assistant City Manager
Randy Peck, Personnel Manager
THE CITY OF
DuB E
~~
TO: Michael C. Van Milligen
City Manager
FROM: Randy Peck
Personnel Manager
Memorandum
August 27, 2007
SUBJECT: Workers' Compensation Excess Insurance
Cottingham and Butler presented the workers' compensation excess insurance renewal options
for coverage effective July 1, 2007. I have attached the renewal proposal for your review.
Quotes were obtained from our current carrier, Safety National, and Midwest Employers
Casualty Company, AIG and ACE. Safety National presented the most competitive proposal for
the existing coverages. Safety National proposed to continue with the current rate of $.125 per
$100 of payroll effective July 1, 2007 through June 30, 2009. The renewal proposal provides for
an estimated annual premium of $24,024 for Fiscal Year 2008. The current annual premium is
$23,329. The increase is related to the increase in our payroll.
If we were to include sworn police officers and firefighters medical claims under the $450,000
retention, Safety National would charge a premium of between $45,000 to $50,000. Finance
Director Ken TeKippe and I have discussed whether there would be any financial advantage to
include sworn police officers and firefighters medical claims under the $450,000 retention limit.
Since we would be liable for the first $450,000 of medical expenses, we recommend to continue
excluding sworn police officers and firefighters medical claims from the $450,000 retention limit.
Ken and I recommend that we continue with Safety National as our excess workers'
compensation carrier effective July 1, 2007 through June 30, 2009. Cottingham and Butler has
issued a binder to make sure that there would be no lapse in coverage on July 1, 2007.
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, 2007 through June 30,
2009, for the workers' compensation excess insurance.
If you have any questions, please feel free to call.
RP:tlb
cc: Ken TeKippe, Finance Director
Jenny Larson, Budget Director
Excess Workers' Compensatl'on
Insurance Program
for the
Prese~zted by:
Eric R. Larsen, Sales Executive
Policy Year:
2007/2008
This is a com~enient coverage swmnun not a legal c•ontrac•t. This proposal is provided to facilitate your wzderstanding of your insurance program.
Please refer to the actual policie.r.for specific terms condidnrzs lintitutions and excdusirnu that rill govern in the everu of a loss. Specimen copies of
all policies are available for review prior to rice bindirtg of c•nreruge.
Irr esuluating your exposures to loss, H~e hove been dependent upon information provided by vou. if there ore any other ureus that need to be
eruluated prior to binding of coverage, please bring these ureus to our attention. Should any of your exposures change after coverage is bound, such
us your beginning new operations, hiring entplrwees in new states, buying additional property, etc.. please let us know so proper coverage c•un be
discussed.
Cottinghum & Butler, htc. is compensated through fees and/or c•anunissiorzs for' sen•ic•es provided to clients related to nurnaging, reducing, and
tratsferring risk. /n addition, Cottirzgltarn & Butler, bze. Wray enter into agreements with some inswunce carriers through which it is compensated
for services provided on behalf of dze carriers. This compensation is based on sereral,fucrucs such as orerull volwne, groxth, and in some cases
profitability of the aggregate premium pluc•ed x•itlr suc•!t cur-riers. Cottinghum & Butler subsidiaries tour also receire compensation for sen-ices such
us utilization revieH•. case murtagenzent acrd cluinrs l:undling perforated directly for the carriers
Cottingham ~ Butler
C&B Insurance ~ S1SC0 ~ HealthCorp (Safety Management
Established 1887
CITY OF DUBUQUE
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CITY OF DUBUQUE
TABLE OF CONTENTS
Service Team
Excess Workers' Compensation
Premium Payment Policy
Appendix A - A.M. Best Rating & Analysis
Definitions
Additional Coverages
Please refer to the policy for specific terms, conditions, limitations, med exclusions. A specimen copy of die policy is available for review.
adequate lead time required to secure coverage. Adequate lead time will vary by line of coverage and company, but generall}' is a minimum of 48
hours. Adequate lead time for Assigned Risk policies will vary 6}'state, but generally is a minimum of 5 business days.
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Cottingham & Butler
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CITY OF DUBUQUE
SERVICE TEAM LISTING
Sales Executive
Eric R. Larsen
563-587-5288
eric.larsen @ cb-sisco.com
Account Administrator
Account Service Representative
Brokerage Claims Representative
Bond Specialist
Erin M. Dillavou
Carey A. Welch
Sheri A. Risley
Molly C. Weber
563-587-5544
erin.dillavou@cb-sisco.com
563-587-5318
carey.welch@cb-sisco.com
563-587-5245
sheri.risley @ cb-sisco.com
563-587-5169
molly.weber@ cb-sisco.com
PO Box 28 800 Main Street
Dubuque, IA 52004-0028 300 Security Building
Dubuque, IA 52001
(563) 583-7344 • (800) 793-5235
www.cb-sisco.com
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, bul gerteraU}' is a minimum of 48
hours. Adequate lead time for Assigned Risk policies will vary by state, but generally is a mii:imum of .S business dada.
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PAGE 2
CITY OF DUBUQUE
EXCESS WORKERS' COMPENSATION COVERAGE SPECIFICATIONS
POLICY NUMBER: SP -1R14 - IA 7/1/2007-2009
Company: Safety National
A.M. Best Rating: A, IX
Status: Admitted
Rati~lg mzd Status as of.• 06/19/07
LIMITS
Workers' Compensation (each accident) Statutory
Employers Liability (each accident) $1,000,000
SELF-INSURED RETENTION (EACH ACCIDENT) $450,000
Aggregate Protection None
Estimated Payrollt $20,020,265
Rate per $100 of Payroll .125
Policy Term: * 2 Years
ESTIMATED ANNUAL PREMIUM $24,024/YEAR
Minimum Premium $24,024
*Multi year term quotes are subject to annual review of SIR and possible change
PAYMENT TERMS: Annual Payment
fThe payroll estimate does NOT include payrolls for Fire/Police Department employees; coverage is excluded
for these classes of employees. Safety National can provide coverage for these classes, if interested.
Note: Higher limits may be available. Please let us ktaow if you K~ould like a quote for higher limits.
Please refer to the policy for specific terms, conditions, limitations, attd exclusions. A specimen copy of the policy is availah[e for review.
Adequate lead time required to secure coverage. Adequate lead time wiU vary by line of coverage and company, but generally is a minimum of 48
Irours. Adequate lead lime for Assigned Risk policies will vary by state, but generally is a minimum of 5 business days.
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CITY OF DUBUQUE
WORKERS' COMPENSATION COVERAGE SPECIFICATIONS -CONTINUED
Exclusions include but are riot limited to the folloxring:
~ Punitive Damages
`~ Injury to employees knowingly illegally employed
~ Intentional Injury
~ Injuries outside of U.S., its territories and possessions, and Canada
~ Employment Related Practices
~ Crew Members of any vessel
~ Fines or Penalties
~ 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
Other exclusions mzd coverage limitations apply
Please refer to the policy for specific terms, conditions, limitations, and exclusions. A specimen copy of the policy is ¢vailable for review.
Adequate lead time required to secure coverage. Adequate lead time wiU nary 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 hasiness days.
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PacE 4
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CITY OF DUBUQUE
PREMIUM PAYMENT POLICY
AGENCY BILLED POLICIES
During the policy period, if cancellation of a policy(s) results due to non-payment of premium, coverage
will be reinstated only twice. If a policy(s) is cancelled a third time, Cottingham & Butler, Inc. will not
reinstate coverage or present a renewal offer on any coverages.
FINANCED ANll DIRECT BILLFD POLICIES
If cancellation and reinstatement of a policy(s) takes place more than twice during the policy period,
Cottingham & Butler, Inc. will not present a renewal offer on any coverages.
Please refer to the policy for specifcc terms, conditions, limitations, and exclusions. A specimen copy of tl:e policy is available for review.
Adequate lead time required to secure coverage. Adequate lead time N~ill vary by line of coverage and canpany, but generally is a urinimum of 48
hours. Adequate lead time for Assigned Risk policies will vary by state, but generally is a minimum of 5 husiness days_
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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 financia] 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.
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
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 accounts. Many insurance buyers only want to consider buying insurance coverage from companies that they
believe have sufficient financial capacity to provide the necessary policy limits to insure their risks. Although companies
utilize reinsurance to reduce their net retention on the policy limits they underwrite, many buyers still feel more
comfortable buying from companies perceived to have greater financial capacity.
FSC I Up to 1,000 FSC IX 250,000 to 500,000
FSC II 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 N 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 ],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.
Please refer to the policy for specific teens, conditions, limitations, and exclusions. A specimen copy of tJte policy is availaGls for review.
Adequate lead time required to secure coverage. Adequate lead time will vaq~ by line of eorerage and company, but generally is a minimum of 48
hours. Adequate lead time for Assigned Risk policies will racy by state, but generall}' is a nainimura o f 5 husiness days.
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Cottingham & Butler
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PAGE 6
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CITY OF DUBUQUE
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. Anon-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 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 oF48
hours. Adequate lead time far Assigued Risk policies will rar}• by state, but generally is a minimum of S husiness days
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PAGE 7
Marketing Results on the Excess WC
Page 1 of 1
Randy Peck -Marketing Results on the Excess WC
From: "ERIC LARSEN" <eric.larsen@cb-sisco.com>
To: <citypers@cityofdubuque.org>
Date: 6/29/2007 5:05 PM
Subject: Marketing Results on the Excess WC
CC: "JOHN LINK" <john.link@cb-sisco.com>, "ERIN DILLAVOU" <erin.dillavou@cb-
sisco.com>
Randy,
Per your request here are the companies that we approached to quote the City of Dubuque excess Workers
Compensation policy.
AIG -Minimum premium required for them to consider a quote was $100,000
ACE -Minimum premium was also 100,000, they have done some policies for $75,000. but that was the
exception and was not interested in anything smaller than that amount.
Midwest Employers Casualty - provided a initial quote that started in the forty thousand range and upon
further discussions with the carrier they indicated that they could not get below $35,000.
Our belief was if the carrier could not get below 30,000, that was not competitive and 35,000 was the most
competitive price to your renewal at $24,024.
If you have any other questions or need to discuss the marketing process please call me. Thank you again and I
look forward to working with you.
Sincerely,
Eric
Eric R. Larsen
Sales Executive, C&B Insurance
300 Security Building
PO Box 28
Dubuque, IA 52004-0028
563-587-5602 (direct)
563-580-1831 (cell)
563-587-5780 (fax)
eric.larsen(a?cb-sisco.com
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