Memorandum

City of Lawrence

Administrative Service Department

TO:	David L. Corliss – City Manager
FROM:	Michael Bennett – Risk Manager
CC:	Cynthia Wagner – Assistant City Manager Diane Stoddard – Assistant City Manager Jonathan Douglass-Assistant to the City Manager
Date:	December 9, 2010
RE:	January 1, 2010 Insurance Policy Renewal Excess Workers Compensation coverage

Introduction

On January 1, 2011 at 12:01 a.m., the City’s excess workers compensation coverage will expire.  This memo contains staff’s recommended actions and requests your approval to bind coverage in advance of the expiration.  I am recommending we change excess workers compensation coverage from Midwest Employers Casualty Company (MWECC) to Safety National. 

The cost of the insurance policy rose slightly from $38,900 to $41,180 or $2,280.  This amounts to a less than a 1% increase and is still lower than the City paid for the same coverage in 2009; $41,856.  It is also $800 below the 2011 budget.  The policy does include terrorism coverage.  Terrorism coverage cannot be excluded under this policy.

Background on Excess Coverage

There are only two excess workers compensation carriers that will write coverage for municipalities the size of Lawrence.  The two carriers are Midwest Employers Casualty Company and Safety National.  Our broker, HRH Willis, was asked to seek bids from both carriers at the same retention; $750K.  They were also asked to see if any other carrier would be willing to write the requested coverage. 

In November 2009, this office made two claims for excess coverage against MWECC for claims occurring in 2001 & 1999 that resulted in the City receiving $195,214.55 from MWECC.  While MWECC will not say so, this clearly caused our premium to rise.  This year, MWECC quoted our renewal premium at $98,883.The Safety National quote is considerably less,$57,703.00 lower,  than MWECC.  Safety National will provide the same coverage as MWECC.

Brokerage Fee

HRH Willis is being paid 15% of the premium.  This fee is built into both bids.  There is an additional file maintenance fee of $250.

Recommended Action

Staff recommends changing coverage for excess workers compensation coverage to Safety National from MWECC for the insurance period of 1/1/2011 to 12/31/2011 for an estimated premium of $41,180.  Staff further recommends keeping the same retention.  Should you have further questions, please do not hesitate to contact my office at 832-3009.