2016 Stop Loss Renewal Package City of Independence Renewal Date: 1/1/2016 L O C K T O N C O M P A N I E S

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1 2016 Stop Loss Renewal Package City of Independence Renewal Date: 1/1/2016 L O C K T O N C O M P A N I E S

2 Executive Summary: Plan Performance Plan Performance Policy Terms Current Deductible: $250,000 Current Specific Composite Rate: $56.50 Current Annual Maximum: Aggregating Specific Deductible: $0 Has Aggregate Coverage: Contract Basis: Coverage Included: Unlimited Yes Paid Med, Rx Status Current Lasers: Renewal Lasers: Current Laser Liability: $0 Renewal Laser Liability: $0 1

3 Marketing Results: City of Independence, MO Carrier Results Notes Voya Financial Renewal offered, firm and final Claimant responses indicated claimants of concern for Voya, but offered premium increase from +17 to +23 in lieu of adding laser liability. Offer now includes guarantee of no new lasers at 2017 renewal with rate cap of +50%. HM Quoted, well above renewal, not finalized Updated review indicated pricing would not be competitive, did not offer firm rates. Cigna Declined to Quote Potential rates stated to be uncompetitive AIG Declined to Quote Potential rates stated to be uncompetitive Berkley Declined to Quote Potential rates stated to be uncompetitive Munich Re Declined to Quote Potential rates stated to be uncompetitive Optum Declined to Quote Adverse view of claims history/ongoing Partner Re Declined to Quote Potential rates stated to be uncompetitive Reliance Standard Declined to Quote Potential rates stated to be uncompetitive (>40% increase) Sun Life Declined to Quote Potential rates stated to be uncompetitive Symetra Declined to Quote Potential rates stated to be uncompetitive Zurich Declined to Quote Potential rates stated to be uncompetitive 2

4 Stop Loss Renewal Options: City of Independence, MO Policy Year Category Current Renewal Option 1 Option 2 Option 3 Carrier Voya Voya HM Voya HM Coverage Included Med, Rx Med, RX Med, RX Med, RX Med, RX Employee Count 1,716 1,716 1,716 1,716 1,716 Specific Coverage Employee Count 1,154 1,154 1,154 1,154 1,154 SPECIFIC STOP LOSS COVERAGE Specific Deductible $250,000 $250,000 $250,000 $275,000 $275,000 Aggregating Specific Deductible $0 $0 $0 $0 $0 Annual Maximum Unlimited Unlimited Unlimited Unlimited Unlimited Contract Basis Paid Paid 24/12 Paid 24/12 Composite Rate $56.50 $70.63 $83.26 $61.59 $73.31 Total Monthly Specific Cost $65,201 $81,507 $96,082 $71,075 $84,600 Total Annual Specific Cost $782,412 $978,084 $1,152,984 $852,898 $1,015,197 AGGREGATE STOP LOSS COVERAGE Composite Aggregate Factor $1, $1, $1, $1, $1, Attachment Point $31,064,885 $31,064,885 $30,603,007 $31,375,619 $30,756,005 Composite Rate $2.98 $2.98 $3.49 $2.98 $3.54 Total Monthly Aggregate Cost $5,114 $5,114 $5,989 $5,114 $6,075 Total Annual Aggregate Cost $61,364 $61,364 $71,866 $61,364 $72,896 COMBINED COVERAGE ANALYSIS Total Monthly Cost $70,315 $86,621 $102,071 $76,189 $90,674 Total Annual Cost* $843,776 $1,039,448 $1,224,851 $914,262 $1,088,093 Total $ Annual Change $195,672 $381,074 $70,486 $244,316 Total % Change 23% 45% 8% 29% Total Laser Liability $0 $0 $0 $0 $0 Maximum Annual Liability $31,908,661 $32,104,334 $31,827,857 $32,289,881 $31,844,098 Total % Change in Total Liability 0% 1% 0% 1% 0% Simulated Average Number of Claims Simulated Average Reimbursements $823,734 $823,734 $713,451 $713,451 Value to Change Current Deductible -$174,900 $14,903 -$147,395 * Illustration includes 0% commission and no GA override unless otherwise stated. Due to rounding, the above information could vary slightly from the stop loss carrier proposal. Please utilize the proposal documents as your source document. 3

5 Third Party Stop Loss: Risk Assessment Carrier A.M. Best Financial Rating Block Size Ranking by Premium Size Rate Cap / No New Laser Mirrors Plans R & C Limitations Voya Financial A $681 Million 6 Yes Yes Yes HM A- $792.9 Million 4 Yes Yes No 4

6 Next Steps Voya quote is firm, acceptance with signed form requested by HM did not finalize offer and a final offer is not expected. Please indicate renewal deductible selection as soon as decision is available. Best practice recommendation is to purchase minimum of two year rate protection with rate cap and no new laser guarantee. A cap has been approved along with final rate offer from Voya. Note if changing stop loss carriers, a signed disclosure statement and additional requirements may be needed. See proposal documents/contingencies for additional information. If the census submitted did not include all eligible participants please provide a final census including Active/COBRA/Disabled/Retirees/LOAs/New Hires. Once a stop loss carrier selection is made and confirmations are received the stop loss team will obtain renewal paperwork. Standard Leave of Absence assumes FMLA followed by COBRA. If your client's LOA provisions extend beyond this please provide documentation outlining client s LOA policies. 5

7 Our Mission To be the worldwide value and service leader in insurance brokerage, employee benefits, and risk management Our Goal To be the best place to do business and to work Lockton, Inc. All rights reserved. Images 2014 Thinkstock. All rights reserved. 6