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(/9. <br />°di/ (l /- <br />(�... c l anaaa <br />�C t U <br />515 Little Canada Road, Little Canada, MN 55117 1600 <br />(651) 766 -4029 / FAX: (651) 766 -4048 <br />www. ci.11ttle- cariada. nv r. us <br />MEMORANDUM <br />TO: Mayor Blesener and Members of the City Council <br />FROM: Joel Hanson, City Administrator <br />DATE: March 23, 2012 <br />RE: 'Workers' Compensation Insurance Renewal <br />MAYOR <br />Hill Blescner <br />COUNCIL. <br />Rick Montour <br />John KeIs <br />Michael McGraw <br />Shelly Boss <br />ADMINISTRATOR <br />Joel R. Hanson <br />Our Workers' Compensation Policy with the League of Minnesota Cities Insurance Trust renews <br />on April 1 '. As you may recall, we have chosen the $10,000 deductible the last few years given <br />our very good claim history. (That did work against us the first year when we had an injury that <br />hit most of the deductible amount.) <br />Given our premium level now exceeds $25,000, we qualify for LMCIT's Retro Rating Option. <br />There are three Retro Options with minimum and maximum premium levels (see spreadsheet for <br />percentages). Based upon the savings and exposure, staff believes Retro Option 1 is the best <br />choice for us as it limits the high side exposure to 115% of our standard premium (11 S% x <br />$30,220 = $34,753 or $6,929 over our Net Deposit Premium of $27,824 versus $ 10,000 for each <br />claim under the deductible option.) From a premium savings standpoint, Retro Option 1 could <br />save us $5,572 versus $4,381.90 for the $10,000 deductible option. <br />There is some risk in the Retro option associated with long claims development and its impact on <br />future premiums. This would come into play where someone has on -going medical issues as a <br />result of their claim or has a disability factor that causes costs to be incurred in future years <br />versus a claim that closes quickly. <br />To aid in your review of this matter, the following is attached: <br />e Notice of Premium Options for Standard Premiums (LMCfh— 3 pages) <br />o Five Year Retro Assessment Spreadsheet estimating our costs had we been in the <br />program. We would have saved $10,769 over that period (not including the <br />current policy year of 4/1/11 to 12), That includes the last policy year where we <br />experienced the larger claim. <br />o LMC Memo on Workers' Compensation Retrospective Rating Options (3 pages) <br />1 <br />