.jpg)
Consent
Item No. 5.
| MEETING DATE: 03/17/2025 |
|
| TO: | HONORABLE MAYOR AND COUNCILMEMBERS |
| FROM: | JIM SADRO, CITY MANAGER By: Gabriella Yap, Assistant City Manager |
| SUBJECT: | APPROVE THE CITY’S EXCESS WORKERS’ COMPENSATION INSURANCE POLICY FOR A ONE-YEAR TERM
|
RECOMMENDATION:
That the City Council authorize the City Manager to renew the City’s excess Workers’ Compensation reinsurance policy with Midwest Employers Casualty Company and a Self-Insured Retention (SIR), or deductible, of $1 million per claim for all employees at an annual premium cost of $180,011 for the period of March 20, 2025, through March 20, 2026.
DISCUSSION:
The City’s current excess Workers’ Compensation policy will expire on March 20, 2025. In an effort to secure the lowest cost option, staff directed the City’s broker, Schrimmer Insurance, to solicit bids from insurers. Schrimmer contacted five carriers, three of which declined to submit a quote due to the number of open claims and inability to compete with the current policy pricing.
Current market conditions across the nation have made it challenging to find insurance carriers who are willing to quote workers’ compensation policies for cities, especially due to the risk of exposure from public safety operations. For this reason, Schrimmer Insurance was only able to secure two pricing proposals, one from the City's current carrier, Safety National Casualty and one from Midwest Employers Casualty Company. They indicated that the cost of insuring police personnel continues to be a significant factor in obtaining quotes.
A summary of the City’s current coverage and quote for the excess Workers’ Compensation reinsurance is listed below:
Current market conditions across the nation have made it challenging to find insurance carriers who are willing to quote workers’ compensation policies for cities, especially due to the risk of exposure from public safety operations. For this reason, Schrimmer Insurance was only able to secure two pricing proposals, one from the City's current carrier, Safety National Casualty and one from Midwest Employers Casualty Company. They indicated that the cost of insuring police personnel continues to be a significant factor in obtaining quotes.
A summary of the City’s current coverage and quote for the excess Workers’ Compensation reinsurance is listed below:
| Company | Policy Limits | SIR | Premium | ||||||
| Current Carrier | Safety National Casualty | $50 million | $1,000,000 | $230,709 | |||||
| Quote 1 | Midwest Employers Casualty Company (RECOMMENDED) |
No cap | $1,000,000 | $180,011 | |||||
| Quote 2 | Safety National Casualty | $50 million | $1,000,000 | $226,918 | |||||
Midwest Employers Casualty Company (Quote 1) has an excellent rating and financial strength and its proposal includes a $1 million Self Insurance Retention (SIR), or deductible, for all employees (including police), and no policy limit, with an annual premium of $180,011. This proposal represents a premium decrease of 22%, or $50,698 compared to the City’s current annual premium of $230,709.
Safety National Casualty’s proposal (Quote 2) includes a $1 million Self Insurance Retention (SIR), or deductible, for all employees (including police), and an aggregate policy limit of $50 million, at an annual premium of $226,918.
Staff recommends renewing the City’s excess Workers’ Compensation reinsurance with Midwest Employer Casualty. This will provide coverage for all City employees with a $1 million SIR and an annual premium of $180,011 with no cap on the policy limits.
The City’s excess Workers’ Compensation insurance premium history for the last 10 years is listed below:
| 2015-2016 | $119,752 |
| 2016-2017 | $120,876 |
| 2017-2018 | $122,888 |
| 2018-2019 | $115,363 |
| 2019-2020 | $106,080 |
| 2020-2021 | $109,896 |
| 2021-2022 | $187,988 |
| 2022-2023 | $212,282 |
| 2023-2024 | $230,050 |
| 2024-2025 | $230,709 |
FISCAL IMPACT/SOURCE OF FUNDING:
Sufficient funds for workers’ compensation insurance premiums have been included in the adopted Fiscal Year 2024-2025 risk management budget. Staff recommends acceptance of the pricing proposed by Midwest Employer Casualty with a $1 million SIR at an annual premium cost of $180,011.
GENERAL PLAN RELEVANCE/CITY COUNCIL GOALS & OBJECTIVES:
This recommended action achieves the following goal of the La Habra General Plan:
General Plan Goal LU 17.1 Adequate Community Supporting Uses.
This recommended action achieves the following element of the City of La Habra's FY 2024/2025 Goals and Objectives: Goal 2-Management of Public Revenues and Fiscal Assets/Objective A
General Plan Goal LU 17.1 Adequate Community Supporting Uses.
This recommended action achieves the following element of the City of La Habra's FY 2024/2025 Goals and Objectives: Goal 2-Management of Public Revenues and Fiscal Assets/Objective A