Item Coversheet
City of Independence

Agenda Title:

Approval of 2021-2022 excess workers’ compensation insurance renewal

Staff recommends approval.
Executive Summary:

The 2021-2022 renewal proposal is the result of an extensive effort by Lockton, Charlesworth, and staff to maintain the City’s self-insured status for its workers’ compensation program. The anticipated excess workers’ compensation insurance premium is $396,713 an 18% increase over the last year.

The City is self-insured for workers’ compensation, meaning that it pays its own claims and uses a third-party administrator to manage claims. The City is one of the oldest self-insured entities in the State of Missouri. Being self-insured, the City has more control over how claims are administered – providing better care for injured employees – and can save money over time if it has limited losses. For large losses, the City purchases excess insurance, which caps the City’s liability per accident.

Up to last year, the City had unfavorable claim development which negatively impacted the workers’ compensation program. As a result the City's excess insurance for losses was increased from $1,000,000 to $1,500,000 per accident last year. The City remains responsible for any losses below the retention.

The City has been able to control the claim development over the past two years. In May 2019 Charlesworth Consulting took over administration of the program, and in June 2019 all open claims were assigned to outside counsel. Also, in October 2019, the City issued a RFP for a workers’ compensation third-party administrator and selected Thomas McGee to take over all claims beginning January 1, 2020. Thomas McGee also provides loss control services to supplement Lockton’s loss control team. 

Perhaps the most positive change has been the creation of a City-wide Safety Committee. Stakeholders from across the organization are engaged in the committee and are working to enhance the City’s safety culture. While the Safety Committee is staff directed, the City’s outside partners are also involved.

These positive changes are already bearing fruit. However, since Insurance underwriters base their quotes on historical losses the City will need to show quantitative improvement for several more years before excess insurance terms become more favorable.

Fiscal Impact:

The fiscal impact to the City is $396,713. The premium will be paid from the City's self-insurance workers compensation fund account number 6592-5207. The premium will be passed through to departments in the 2022-2023 budget based on 2021-2022 claims data for each department (department line item code 5207).

Department:          Finance and AdministrationContact Person:          Bryan Kidney

Finance DepartmentApproved
Finance DepartmentApproved
City Managers OfficeApproved
City Clerk DepartmentApproved

Council Action:          Council Action:         

Excess ProposalBackup Material
Excess comparisonBackup Material