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515 Little Canada Road, Little Canada, MN 55117 -1600 <br />(651) 766 -4029 / FAX: (651) 766 -4048 <br />www.ci.little-canadadnn.us <br />MEMORANDUM <br />TO: Mayor Biesener & Members of the City Council <br />FROM: Joel Hanson, City Administrator <br />DATE: March 8, 2013 <br />RE: Workers Compensation Renewal <br />MAYOR <br />13i11 Blesener <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 1st. As you may recall, in past years, we chose to increase our deductible to $10,000 <br />given our very good claim history. However, we did have one more serious claim during that <br />time that has been impacting us for a couple of years now in addition to hitting the deductible <br />amount. <br />Last year, we chose to pursue LMCIT's Retro Rating Option. That became an option because <br />our premium level exceeds $25,000. There are three Retro Options with minimum and <br />maximum premium levels (see spreadsheet for percentages). Based upon the savings and <br />exposure, staff believes Retro Option I is the best choice for us as it limits the high side exposure <br />to 115% of our estimated standard premium (115% x $30,857 = $35,486 or $4,629 additional). <br />From a savings standpoint, the minimum premium under Retro Option I (73.7% x 30,857 = <br />22,742) could save us $8,116. When comparing to the $10,000 deductible option, our premium <br />credit is 14% or $4,320 but we also take on an additional $10,000 of exposure for any work <br />comp claim. <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 />1 <br />