Memorandum

City of Lawrence

City Manager’s Office

TO:	David L. Corliss – City Manager
FROM:	Michael Bennett – Risk Manager
CC:	Cynthia Wagner– Assistant City Manager Diane Stoddard – Assistant City Manager
Date:	December 12, 2012
RE:	January 1, 2013 Excess Workers’ Compensation Insurance Renewals

Introduction

The Office of Risk Management administers the City’s self-insured, self-administered workers compensation program.  One of the items purchased by the City is Excess Workers Compensation Insurance coverage.

Self-Insured Retention & Excess Workers’ Compensation Insurance

The City maintains a self-insured retention of $750,000.  The City pays the first $750,000 of any workers compensation claim, the excess carrier pays next $1,000,000 in coverage.  Any costs in excess of $1,750,000 would be the responsibility of the City.

Insurance Brokers

The renewal was sent to three different brokers for comparative quotes: HRH Willis, Arthur J. Gallagher and the Hays Companies.  HRH Willis has brokered this policy for the last several years.  HRH Willis submitted the best renewal quote. 

Carriers and Renewal

The market has hardened significantly.  In 2011, the City switched carriers from Midwest Employers Casualty Company to Safety National.  This year, Safety National is the only carrier willing to write this stand alone policy.  A change in Safety National’s business model has caused the premium to rise from $40,779 to $50,000.  Safety National implemented a $50,000 minimum premium requirement.  Both the Hays Companies and Arthur J. Gallagher have confirmed there are no other more affordable options.  Carriers contacted by these brokers indicated they would not write a policy for less than $100,000.

Recommended Action

Staff recommends renewing coverage for Excess Workers’ Compensation Insurance with Safety National for the insurance period of 1/1/13 to 12/31/13 for an estimated premium of $50,000.  Should you have further questions, please do not hesitate to contact my office.