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LEAGUE or <br />MINNESOTA <br />CITIES <br />CONNECTING & INNOVATING <br />SINCE 1913 <br />RISK MANAGEMENT INFORMATION <br />WORKERS' COMPENSATION <br />RETROSPECTIVE RATING OPTIONS <br />The League of Minnesota Cities (LMCIT) Workers' Compensation program offers several <br />retrospective rating options. The retrospective rating options are alternate methods of <br />determining the premium charge for a city. Under a retro- rating plan, the city's final premium <br />cost reflects the city's own actual loss experience for the year. Each eligible city is given a <br />choice of three retrospective options, allowing the city to select the amount of risk it wishes <br />to retain. <br />Who is eligible? <br />The retro - rating options are available to any city whose standard premiums are $25,000 or more. <br />The election form will automatically be sent with the regular premium quotation to qualifying <br />members. A city can select only one premium option. If a city selects a deductible option or the <br />standard premium option, it cannot select a retro -rated option. <br />How do rating options work? <br />The city pays a deposit premium (net of discounts) to LMCIT at the beginning of the agreement <br />period. The timing and amount of this payment are the same whether or not a retrospective rating <br />option is selected. At the end of the agreement year, an audit determines the actual payroll for the <br />period and the resulting net actual premium. if a retrospective rating option is not selected, this <br />becomes the city's final premium. <br />When a retrospective rating option is selected, the final premium is not known until all claim <br />activity from that agreement period ceases permanently. The final premium reflects the city's own <br />losses and is subject to minimum and maximum limits. The premium amounts are estimated at the <br />beginning of the agreement period, and provided to the city prior to the election of an option. The <br />minimuun and maximum premiums are adjusted after the payroll audit is complete, and reflect the <br />net actual premium for the period. <br />The nainhnum premium for each option is equal to audited standard premium multiplied by the <br />percentage shown on a city's retrospective option quotation. The nufxinnann premium for each <br />option is audited standard premium multiplied by the percentage shown on a city's retrospective <br />option quotation. <br />The final premium equals the minimum premium plus actual incurred losses and loss - related <br />expenses, including assessments due to the state Special Compensation Fund. Unlike typical retro <br />This material is provided as general information and is not a substitute for legal advice. <br />Consult your attorney for advice concerning specific situations. <br />LEAGUE OF MINNESOTA CITIES <br />INSURANCE TRUST <br />115 UNIVERSITY AVr. WEST PHONE: (651) 281 -1200 tax. (651) 281 -1298 <br />ST. PAUL. MN 55103•201; 'roll. FRI :r: (800) 925 -1122 WIEIS: WWW.I.MCORG <br />7 <br />