03-13-2013 Council Agenda - Laserfiche WebLink

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LEAGUE or MINNESOTA CITIES CONNECTING & INNOVATING SINCE 1913 November 18, 2009 To: Workers' compensation members using retro rating close -out option; and their agents From: Ann Gorgon, LMCIT Associate Administrator Re: Workers' Compensation Retro Rating Automatic Retro Year Closure and New Rate Schedule Your city either currently uses a retro -rated option for workers compensation coverage or has done so in the past. The LMCIT Board has approved two changes affecting retro -rated coverage: I. Beginning in 2010, all retro -rated coverage will automatically be closed out after 16 years, unless the city specifically elects to keep that year open. 2. Beginning in 2011, a revised schedule of close -out charges will apply for retro close -outs between five and 16 years. This memo will outline LMCIT decisions and possible impact on your city. Additional information will be provided to you at each annual retro adjustment. We encourage you to review all materials so you understand the options available and associated costs, and we invite you to contact us with any questions you may have. Background LMCIT offers workers' compensation program member cities several retrospective rating options. Under a retro plan the city's final premium cost reflects its own actual loss experience for the year. There are three retro options available to cities, letting each city select the level of risk appropriate to retain. Retro plans are only available to cities with standard premiums of $25,000 or more. Under a retro, a city's final premium is not known until all claim activity from that agreement period ceases. The city pays an initial deposit premium and adjustments are made in future years subject to minimum and maximum limits. Annual adjustments for each retro year continue until all claim activity ceases permanently. This includes activity on claims that reopen and claims for injuries that are filed later for an accident occurring within the retro year. After five years, the city has the option to close -out a retro rated year so that no further adjustments are made. The amount charged by LMCIT to close -out a retro year depends on the age — the longer after the coverage year, the lower the charge. If a city closes a retro year, LMCIT pays any and all future claims from that year. LEAGUE OF MINNESOTA CITIES 11S UNIV1RSITY AVE. WEST PRONE: (651) 281 -1200 FAX: (651) 281.1298 IN513 RANCETRUST T.mui.,MN5S103 -2Ui9 101.1.rarI:(800)925 -1122 Wrn:WWw.I.MC.one 3