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Home My WebLink AboutR-1994-144RESOLUTTON NO. 144-94 A RESOLUTION OF THE CITY OF DANIA, FLORIDA, ACCEPTING THE RECOMMENDATION OF MARY STANFORD RELATING TO GROUP HEALTH INSURANCE RENEWAL FOR THE 1994/95 FISCAL YEAR; AND PROVIDING FOR AN EFFECTIVE DATE. BE IT RESOLVED BY THE CITY COMMISSION OF THE CITY OF DANIA, FLORIDA; Section 1. That the recommendation of Mary Stanford, CLU,ChFC, relating to group health insurance renewal for the 1994/95 fiscal year, copy of which is attached hereto as Exhibit "A", be and the same is hereby accepted and the appropriate city officials are hereby authorized to execute any documents necessary to renew said group insurance. Section 2. That this resolution shall be in force and take effect immediately upon its passage and adoption. PASSED and ADOPTED on this 27 th layof Sept.,1994. Mayo -C mtsstoner ATTEST .-2. ity Clerk - Auditor APPROVED AS TO FORM & CORRECTNESS By a Frank C. Adler, City Attorney Resolution No. 144-94 Stanford & Co. Insurance Consultants, Inc. TO September 22, L994 Michael Smith Director of Personnel City of Dania FROM: Mary L.Stanford, CLU, ChFC RE: SCOPE OF GNMENT We were asked to assist the City in evaluating renewal costs and to solicit competitive proposals for the self-insured health plan reinsurance coverage and basic group life insurance coverages. A Request for Proposals was prepared and distributed publicly in August 1994. Proposals were received in September from the following insurers: North American Life Insurance Company Companion Life Insurance Company (KCS) Standard Insurance Company AIG Life Companies Lexington Insurance Company Uoyds of London Life Health Life Life Health Health RECOMMENDATIONS Specific and Aggreeate Stop-Irss Insurance After a thorough review of all proposals and careful analysis of differences in contractual provisions and costs, we recommend the City award the Specific and Aggregate Stop-l,oss coverages to Lloyds of I-ondon as follows: Specific Stop-Ioss 15/12 $65.80/EE/Month Composite Premium Aggregate Stop-loss 12/15 $559.18 Composite Liability Factor (Premium $8.25/EE/Month) 2519 McMullen Booth Road, Suite 510-246, Clea.rwater, Florida 3,1621. Telephone (8t3) 725-4441 - FA)( (8r3) 797'9679 Recommendations for Fiscal 1995 Life and Health Plans Page 2 Michael Smith September 22, L994 The cost of Specific Stop-l-oss coverage tor l0/l/94-95, based on curent enrollment, is a reduction of approximately $13,740 from current cost. The Aggregate Maximum Liabiliry Umit for 10/l/94-95, based on current enrollment, reflects a reduction in the City's liability from the current liability limit of approximately $166,000. These more favorable costs are the result of better management of claims costs during l0/l/93-94 through use of preferred provider discount arrangements and benefits. Life Insurance After reviewing and analyzing all proposals submitted, we recommend renewal of the group Life and Accidental Death and Dismemberment Insurance with North American Life at a rate of $.26 per $1,000 of life coverage and $.04 per $1,000 of AD&D coverage. This represents a reduction of $.03 per $1,000 for the cost of life insurance and $.01 per $1,000 for the cost of accidental death and dismemberment coverage. YOFAN PR PO Health Insurance - Self-Insured Stop-Loss Coverage Rates and liability factors at varying levels of coverage from each of the three stop-loss proposers are shown on the enclosed spreadsheets. The present kxington stopJoss poliry provides specific Reinsurance at $40,000 for individual claims incurred from April 1, 1993 through September 30, 1994, and paid within the policy period October 1, 1993 through September 30, 1994 (18f12 contract)' The Aggregate Reinsurance for all claims is aL2/L5 basis contract which provides coverage for claims incurred from October 1, 1993 through September 30, 1994 and paid within the incurred period or within 3 months thereafter (no later than December 31, 1994). The proposals received for Specific Stop-l,oss at $40,000 ot a 15f 72 basis and Aggregate Coverage on z 12/15 basis provide the greatest continuity of coverage with the least risk for the City. We have, however, considered all other proposed alternatives because of premium differences to assure highest benefits for least cost. Analysis of premium, specific and aggregate liability limits has confirmed the best alternative to be a 15/12 Specific and 12/15 Aggregate basis. The KCS Companion proposal was highest cost and was eliminated from consideration. The Lloyds proposal was approximately $14,000 less costly for Specific coverage compared to I-exington's renewal proposal. Page 3 Michael Smith September 22, 1994 lrxington's Aggregate premium was approximately $2,886 less than Lloyds Aggregate premiurq and their Aggregate liability limit was $30,000 less. However, since the Aggtegzle limit is only a consideration if aggregate claims are l25Vo of actual claims, this difference in the liability limit is not a great risk for the City. Currently, claims are less than 65Vo of the aggregate stop-loss limit, reasonably indicating minimal potential risk. Since Lloyds offered the best Specific Stop-Ilss proposal and there are administrative efficiencies in having Specific and Aggregate Coverage with the same carrier, we asked Lloyds to reduce their Aggregate Liability Limit to make it more competitive with the l.exington quote. Lloyds agreed to do so. In addition to the foregoing considerations, the I-exington proposal included a contingency regarding one large claim in progless. The contingency allows I-exington to increase the Specific Liability Umit on that one insured, or to increase the stoploss premiurq after reviewing more current claims and medical information regarding the insured's health history. The Lloyds proposal contained no such exceptions and is, therefore, deemed to be far superior to the Irxington proposal. In consideration of the lower cost and broadel coverage ploposed by Lloyds, we recommend changing carriers at the 10/7/94 renewal date from I-exington to Lloyds of London for both Specific and Aggregate Reinsurance. Life Insurance Proposed life and accidental death rates per $1,000 of coverage from the three proposing life insurance companies are as follows: North American AIG Companies Standard Insurance Life AD&D North American Life Insurance Company is the current carrier. The present rate is $.29 for life and $.05 for AD&D. The reduction to $.26 and $.04 respectively reflects elimination of the agent's commission since there are no agent servicing requirements necessary for the renewaf continuation of this coverage. North American has agreed to extend the reduced rate for a 2-year period, until October 1, 1996. (Note: AIG's proposal was $.30/.04 .25 .05 .26 .04 .26 .04 Page 4 Michael Smith September 22, 1994 and Standard's proposal was $.28/.05 including lUEa agenl's commission. The commissions were removed for comparison purposes and all rates shown above are net of commissions. Both AIG and Standard proposed 2-year rale guarantees.) In consideration of the cost and guarantees offered by the present carrier, we recommend renewal with North American Life for the l0/l/94-95 period. Prepared by: Mary L. Stanford, CLU, ChFclfrfl-/ MIJ/cjm Encls. RECo{HE}J0ED- - - -> FRS/r-EXIIGTOfl RATE PREI,I I UX TOTAL E',IPLOYEES/RET IREES = SI }IGLE 41 FAXILY 90 24112 SINGLE FAt.i I LY COIPOS ITE 15l,l2 STNGLE rAT I LY CO{POSITE 24l 12 SIXCLE FAXI LY COfiPOSI TE PROPOSAL ANALYSIS. CITY OE OAIIIA STOP-LOSS 130 GIIA/LLOYDS KCS/COI,IPANION SPECr f I C SIOP-LOSS (t35,000)RATE PREI.III,,X RATE PRE}III'}i 12l12 SIXGLE .A'.I I LY cotiPos I TE $29 -66 $72- 11 $60.21 12,/ 15 SINGLE FAI{ I LY CO{POSITE 348.03 91 ',t 5.30 394-08 $23,631 i121 ,521 s116,765 i41.53 i99.68 $81 .34 ,36-57 t17,992 $8ti.93 $96,044 $74.25 11'15,830 t 14,593 J77 ,479 393,928 $35.83 317,628 $87.13 $94,100 $72.75 t113,190 932.4E $15,980 $78.78 $85,0B2 $65.80 $102,648 $22,858 $99,706 $122,564 s21,615 tI?9,70a t152.840 $20,433 i107,654 3'126,890 $23,631 a1?1,521 9116,765 s14,715 $98,755 $116,407 t50.03 t120.10 498.00 $48.03 $1 15.30 $94.08 SPECTFTC STOP-LOSS ($40,000) 340.10 196.26 s78.55 919,729 3103,961 $122,534 ,I5,/ 12 SINGLE FAHI LY COI,4POS I TE 12l12 SIHGLE FAI,I I LY co.{P0sl TE $26 -31 $63.82 $5t _l1 $16.16 $92.32 $38. 10 $91.41 J71-62 12l15 STNGLE FAXI LY COI4POS I T E $31.83 315,660 i77.19 S83,365 $&.48 i100,589 51 2,945 968,926 983 , 164 $t2.88 $74.91 t64.11 916,177 $85,255 $100,480 $38.10 $91-41 t71-62 $18,7L5 $9E,755 $116,407 TOTAL E PLOYEES/RETIREES = SI IIGLE 11 FAI' I LY 90 PROPOSAL ANALYSIS - CITY OF OAIIIA STOP-LOSS 150 GHA/LLOYOS KCS/CCr.{PAXtON RATE PREI{ I UI.i RATE PREI.IIUI{ FRS/LEXI NGTON RATE PREI.IIUI,I SPECI FrC STOP-LOSS ($50.000) 21/12 StNeLE FAI.{ I LY COI{POS I TE $32.79 a78.72 t6/..23 15,/12 SINGLE FAI'I I LY cot{Pos I TE J26 -74 1-69 $5/,.05 $38.22 $76.21 $30.49 $73.21 s59.71 $15,001 s79,067 $93, 19/, 313,156 $69,865 s84,318 $12,8B5 s68,440 $82,602 $ 18,804 $42,307 $101 , 1 11 $16,133 $85,018 $100, ',199 $ 15 ,001 $79,467 $93, ',194 12./ 12 SIXGLE FAI.I I LY coltPostTE s21 .63 $52.35 943.74 12l15 SINGLE FAI{ I LY co+rPosI TE s26.19 3 .37 $52.95 $10,642 i56,538 s6a,234 926 -21 $62.98 $51 .39 $30.49 $73.21 $59.71 s12.9't 0 $64,018 $80, 168 RUI- I]l LII'IIT 3135,500 RU},I. I T LII.IIT $135,500 AC6REGATE PREI.II I,'X PROPOSAL AIIALYSIS. CITY OF DANIA STOP.LOSS 130 GIIA/LLOYDS KCS/CO,lPAllIOil FRS/LEX I I{GTONTOTAL EiTPLOYEES/RETIREES = sllGLE 41 FA,,iILY 90 21./12 SIIIGLE FAX I LY CO.IPOS I TE 15/12 STNGTE FAI,IILY COI,IPOS I TE '12l 12 SIITGLE FAI.I I LY ccHPosITE 24l 12 SIXGLE FAI'I I LY CC'4POS I TE 15,/12 STXGLE FAI'IILY cor'{Pos I TE 12l,I2 SINGLE FAI.{ I L Y c0.4Pos I TE 12lt5 SIltCtE FAI'{ I LY CCi.IPOS I TE AGG. ATT. A6G. ATT.RATE $260.87 t128,348 $691.30 5746,604 $570.65 3890,214 $224-80 $110,602 $595-73 S643,384 t191-75 t767,130 $264-48 $130,124 s700. $756,929 $57A.51 *902,522 $224.80 $110,602 $595.73 3643,384 $./.91 .75 $767,',130 $264.48 3130,124 \700. 9756,9?9 t5?a-61 J902,678 38-25 tI] - 25 3t] - 25 RATE RATE $559.18 $72,321 $559.18 ta72,321 t465.80 $726,&A $559.18 5a72,321 36.40 36.40 t5-84 36.40 AGG. ATI. AGGRECAT€ STOP-LOSS (t4OI( SPECI FIC) 12115 SIICLE 3261, -14 113O,12t, FA}r I LY J700. J756,929 co{PoslTE 957a.e 8902,674 REcoa,4ltENoED _ - _ _ > Adjusted Rote 3559.'18 ^GGREGATE STOP.LOSS ($5OK SPECI F IC) 21/12 15/12 12/12 12/15 $12,870 J12,870 312,870 i7.31 111,404 s9,941 $9,984 $9, 173 $9,984