6.5 Authorize Excess Workers Compensation Insurance
CITY OF SALINA
REQUEST FOR CITY COMMISSION ACTION DATE TIME
4/9/2012 4:00 P.M.
AGENDA SECTION ORIGINATING DEPARTMENT: APPROVED FOR
NO: 6 AGENDA:
HUMAN RESOURCES
ITEM
NO. 5
BY:
BY: Natalie Fischer
ITEM: Resolution No. 12-6895
Authorize City Manager to instruct binding of coverage for Excess Workers Compensation Insurance.
BACKGROUND:
The City of Salina provides workers compensation benefits for all employees as required by the State of
Kansas. The City of Salina is approved by the State of Kansas to fund this program via a partially self-
funded program. In order to maintain our State of Kansas Self-Insurer Permit we are required to purchase
specific excess workers compensation coverage. The insurance coverage is utilized whenever a workers
compensation claim exceeds the threshold of our self-insured retention, which is currently at $350,000.
The City of Salina has purchased this coverage for over 15 years with Midwest Employers Casualty
Company (MECC). Staff has been very satisfied wi th the service received and uses their additional
services to assist with controlling losses. Our current third party administrator, CCMSI, solicited a renewal
quote on our behalf and the levels of coverage for 2012-13 are outlined below.
For the 2012-2013 excess policy, the following levels of coverage are available.
Midwest Employers’ Casualty Company
1) $350,000 Specific Retention – estimated annual premium of $56,677
2) $350,000 Specific Retention for all class codes except Police & Fire / $400,000 for Police & Fire -
estimated annual premium of $54,231
3) $400,000 Specific Retention – estimated annual premium of $49,988
4) $450,000 Specific Retention – estimated annual premium of $44,498
Bob Charlesworth of Charlesworth & Associates, L.C., independent insurance consultant, has advised the
City of Salina for over 15 years in multiple insurance lines including workers compensation, health, dental,
prescription and property/casualty. Mr. Charlesworth has recommended that the City of Salina remains at
the $350,000 Specific Retention (per accident which could involve one or multiple employees) with Midwest
Employers Casualty Company since the savings in higher specific retention are not great enough to offset
the additional risk. Based on what he has seen in the workers compensation market, he felt the $350,000
quote was more competitive than he had anticipated. He also added that moving to a higher retention level
results in giving up the ability to receive a quote at a lower specific retention amount.
FISCAL NOTE:
Estimated premiums of $56,677 for the Excess Workers Compensation Insurance will be paid outof the
Workers Compensation Reserve Fund. The renewal quote resulted in an increase of 4.8%. The rate per
$100 payroll increased from $0.2107 to $0.2364 at the current $350,000 self-insured retention level, but the
lower projected payroll in some areas (resulting from vacant openings and the outsourcing of Bicentennial
Center operations) offsets the increase. The target fund balance for this fund is $750,000, with $250,000 of
that fund allocated for claims reserve, and the additional $500,000 as a cash flow reserve. Aside from the
reserve, the City budgets $200,000 for claims expense. At the beginning of 2012 the reserve fund balance
was $753,275.
Staff believes that the Excess Workers Compensation Insurance provides a reasonable approach to insuring
the City while reducing financial risk.
CITY OF SALINA
REQUEST FOR CITY COMMISSION ACTION DATE TIME
4/9/2012 4:00 P.M.
AGENDA SECTION ORIGINATING DEPARTMENT: APPROVED FOR
NO: 6 AGENDA:
HUMAN RESOURCES
ITEM
NO. 5
BY:
BY: Natalie Fischer
RECOMMENDED ACTION:
Approve Resolution No. 12-6895, authorizing City Manager to instruct binding coverage for Excess Workers
Compensation Insurance with:
Alternative #1: Midwest Employers Casualty Company at the $350,000 specific retention level in the amount
of $56,677.
Alternative #2: Midwest Employers Casualty Company at $400,000 specific retention for Police & Fire, and
$350,000 for all other class codes in the amount of $54,231.
Alternative #3: Midwest Employers Casualty Company at $400,000 or $450,000 specific retention levels in
the amount of $49,988 or $44,498 respectively.
Staff recommends Alternative #1.
Attachment(s):
Midwest Employers Casualty Company Quotation Sheet
RESOLUTION NUMBER 12-6895
A RESOLUTION AUTHORIZING THE CITY MANGER TO INSTRUCT BINDING OF
COVERAGE FOR EXCESS WORKERS COMPENSATION INSURANCE.
BE IT RESOLVED
by the Governing Body of the City of Salina, Kansas:
Section 1.
That the City Manager is authorized to instruct binding of coverage for excess
workers compensation insurance with Midwest Employers Casualty.
Section 2.
That the City Clerk is hereby directed to file the original agreement and retain
according to the City of Salina Records Management Policy.
Section 3.
That this resolution shall be in full force and effect from and after its adoption.
th
Adopted by the Board of Commissioners and signed by the Mayor this 9 day of April, 2012.
Samantha P. Angell, Mayor
(SEAL)
ATTEST:
Lieu Ann Elsey, CMC, City Clerk