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CITY COUNCIL - MAY 28, 1991 Page 10 1 Mr. Flaten stated that it makes sense for the City to increase its deductible to • 2 $25,000 because of its positive experience, and because the City has saved 3 $224,000 over the last five years through its worker's compensation program 4 and its package program. However, City Manager Burt's recommendation was 5 to keep the deductible at $10,000. Mayor Ranallo agreed, noting that if the City 6 were sued it would have to pay attorney's fees and other expenses in addition 7 to the deductible, and stated that he would feel more comfortable with the lower 8 deductible. 9 10 Council Member Marks asked whether the Planning Commissioners were 11 covered under legal liability insurance. Mr. Flaten replied that the limits of that 12 liability are $200,000 per person, $600,000 per occurrence. This applies to all 13 City functions with the exception of the liquor operations, which falls outside the 14 sovereign immunity statute. 15 16 Mr. Flaten stated that the City had positive experience modification in the past 17 year, which is an indicator of worker's compensation performance. The City 18 has gone from a 1.08 experience modification, meaning eight percent worse 19 than average, down to a .9 experience modification, meaning nine percent 20 better than average. The City over the last five years has engaged in a 21 retrospective-rated workers' compensation program whereby the workers' 22 compensation premium is based upon past experience. Over those years, • 23 $117,000 has been saved by taking an aggressive approach in loss prevention 24 and return to work. 25 26 Along with the improvement in experience modification, the possibility of 27 obtaining additional premium returns has declined. The City now has the 28 option of staying with the retrospective-rated program or changing to a 29 guaranteed-cost program. According to the analysis prepared by Mr. Flaten, 30 projected losses for the coming year will generate a premium under the 31 retrospective program nearly equal to the premium under the guaranteed-cost 32 program. Mr. Flaten cautioned that additional losses beyond those projected 33 could cause the retrospective program premium to be higher than the 34 guaranteed-cost premium. He recommended that the City change to the 35 guaranteed-cost program for the coming year. 36 37 Mr. Flaten stated that the City's third consideration is its liquor liability insurance. 38 Currently the limits are at $500,000. Rates have increased. Last year's liquor 39 premium was $44,000, and this year the same policy limits will cost $59,691. 40 The City has the alternative of reducing its limit to $300,000 to make up for the 41 increased premium. Mr. Flaten recommended that the City keep its $500,000 42 limit because it is outside the sovereign immunity statutes. •