10.B.
City Council Meeting - FINAL
- Meeting Date:
- 04/19/2016
- Co-Submitter:
- Rick Compau
- From:
- Dean Coughenour, Assistant to City Manager - Risk Management
Information
TITLE:
Consideration and Approval of Contract: Approve the renewal of our Workers' Compensation contract with Copperpoint Mutual Insurance (Workers Compensation Insurance Contract).
RECOMMENDED ACTION:
Approve the renewal of our Workers' Compensation contract with Copperpoint Mutual Insurance at an estimated annual cost of $730,000.
Executive Summary:
Approval of the renewal of our Workers' Compensation coverage at a reduction of $50,000. No changes in coverage or insurance providers.
Financial Impact:
By renewing our Workers' Compensation insurance coverage with CopperPoint insurance the City will save an estimated $50,000 this fiscal period. Since policy ending 6/30/14 we have saved over $700,000 dollars, cumulative, in our renewals. The estimated annual premium for 2016-2017 is less than the total paid during the 2005-2006 fiscal period. There has been no change in our insurance carrier or coverage.
Connection to Council Goal and/or Regional Plan:
Effective governance.
Has There Been Previous Council Decision on This:
No
Options and Alternatives:
1) Approve
2) Request additional quotes
3) Self insure our Workers' Compensation program for the following fiscal period
Background/History:
The City of Flagstaff is required to carry Workers' Compensation coverage per Arizona statute. The City is currently insured with Copperpoint Mutual, formally SCF of Arizona and have been for over ten years.
The premium that the City pays is determined by several factors. They are; the rate per $100 of payroll as determined for Arizona by the National Council on Compensation and Insurance, our payroll by position type, our experience modification factor which is a multiplier that moves our premium up or down based on the City of Flagstaff's history of losses over a rolling three year period and our ability to negotiate a discount with our carrier if available.
Over the last three years our employee injuries have been reduced by 50% while serious injuries are down over 80%. Because of this our multiplication factor has dropped from 1.18 times the rate in fiscal year 14 to .93 times the rate for fiscal year 17.
The premium that the City pays is determined by several factors. They are; the rate per $100 of payroll as determined for Arizona by the National Council on Compensation and Insurance, our payroll by position type, our experience modification factor which is a multiplier that moves our premium up or down based on the City of Flagstaff's history of losses over a rolling three year period and our ability to negotiate a discount with our carrier if available.
Over the last three years our employee injuries have been reduced by 50% while serious injuries are down over 80%. Because of this our multiplication factor has dropped from 1.18 times the rate in fiscal year 14 to .93 times the rate for fiscal year 17.
Expanded Financial Considerations:
Because of the efforts of our employees, (who are the real risk managers for the City), and the subsequent reduction in injuries, we have been able to secure a reduction in each of our renewals over the last three years. Although our total payroll exposure has increased modestly and our rates per $100 have changed, our net savings over the last three years as compared to premium paid in FY 14 is $722,643. We anticipate continued savings in future renewals.
As our losses become more predictable and our Risk culture improves we will look to self insure our Workers' Compensation program over the next two to five years.
As our losses become more predictable and our Risk culture improves we will look to self insure our Workers' Compensation program over the next two to five years.
Community Involvement:
Inform