SELF FUNDED WORKERS COMPENSATION STATE OF THE PROGRAM JANUARY 1, 2015

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1 SELF FUNDED WORKERS COMPENSATION STATE OF THE PROGRAM JANUARY 1, 2015 PRESENTED BY: Charlesworth & Associates, L.C. Consultants, Insurance & Risk Management 1

2 EXECUTIVE SUMMARY March 15, 1987, the City of Overland Park implemented a self-funded workers compensation program. The following exhibit illustrates the cost efficiency of that decision. FULLY SELF-FUNDED INSURED PLAN PROGRAM SAVINGS 3/15/87-12/31/2001 $ 6,047,907 $ 4,328,030 $ 1,719, $ 632,576 $ 367,758 $ 264, $ 778,415 $ 331,268 $ 447, $ 790,287 $ 479,524 $ 310, $ 826,573 $ 248,636 $ 577, $ 912,112 $ 361,617 $ 550, $ 920,400 $ 363,779 $ 556, $ 918,205 $ 225,279 $ 692, $ 1,005,742 $ 1,120,078 $ (114,336) 2010 $ 987,805 $ 662,043 $ 325, $ 1,038,355 $ 470,959 $ 567, $ 987,805 $ 318,352 $ 669, $ 1,115,026 $ 867,544 $ 247, $ 865,489 $ 636,223 $ 229,266 TOTAL: $ 7,045,607 As of January 1, 2015, the City has saved an estimated total of $7,045,607. Net savings DO NOT include interest income generated by the City s workers compensation fund. In addition, the incurred losses include $467,216 for Incurred But Not Reported (IBNR) claims and $549,736 in claim reserves and projections. 2

3 PROGRAM COST SUMMARY (5-YEAR) Average A) PREMIUM ON FULLY INSURED PLAN: $ 987,805 $ 1,038,355 $ 987,805 $ 1,115,026 $ 865,489 $ 998,896 NUMBER OF CLAIMS: B) COST OF SELF-FUNDED PROGRAM: 1) Claims & Expenses "Paid" as of 02/01/15: $ 442,033 $ 310,254 $ 202,473 $ 479,967 $ 210,164 $ 328,978 2) "Reserve" as of 02/01/15: $ 67,132 $ 28,803 $ 4,107 $ 165,150 $ 153,032 $ 83,645 Loss Development Factor ) Incurred But Not Reported: $ 43,279 $ 32,889 $ 25,203 $ 116,121 $ 158,717 $ 75,242 4) Reinsurance: $ 55,683 $ 51,416 $ 52,331 $ 53,814 $ 62,289 $ 55,107 Est. Audit (If Applicable): $ - $ - $ 1,000 $ 200 5) Third Party Administrator: $ 29,625 $ 32,315 $ 21,344 $ 40,730 $ 31,020 $ 31,007 6) State Assessments: $ 24,290 $ 15,281 $ 12,893 $ 11,761 $ 20,000 $ 16,845 COST OF SELF-FUNDED PROGRAM: $ 662,043 $ 470,959 $ 318,352 $ 867,544 $ 636,223 $ 591,024 ESTIMATED SAVINGS: $ 325,762 $ 567,396 $ 669,453 $ 247,482 $ 229,266 $ 407,872 3

4 2015 ESTIMATED FULLY INSURED PLAN This exhibit represents the estimated cost of a fully insured workers compensation plan effective 01/01/2015 offered outside the Kansas Assigned Risk Plan. National Council on Compensation Insurance published Advisory Loss Cost rates effective 01/01/15 with a 1.25 multiplier have been used. LC x 1.25 CLASS Estimated RATE PER MANUAL CODE PAYROLL ($) $ 100 PREMIUM ($) 5506 Street & Roads $ 2,425, , Fire Fighters $ 6,531, , Police $ 14,185, , Recycling $ 16, Auto Repair $ 266, , Messenger / Drivers $ 47, Clerical $ 10,137, , Attorneys $ 801, , Veterinary & Drivers $ 126, , Buildings $ 1,791, , Farmer's Market Mgr. $ 17, Golf Club Operator $ 479, , Health & Exercise $ 1,185, , Parks, NOC $ 2,409, , Soccer Operations $ 365, , Street Sweepers $ 179, , Municipal NOC $ 4,636, ,997 TOTALS $ 45,605,076 $ 1,427,751 INCREASED LIMITS - EMPLOYERS LIABILITY: $ 27,127 EXPERIENCE MODIFICATION FACTOR *: 0.65 SUB-TOTAL: $ 945,671 LESS PREMIUM DISCOUNT (13.5%): $ (127,666) ESTIMATED PREMIUM $ 818,005 4

5 EXPERIENCE MODIFICATION HISTORY Plan Year EMF ' ' ' ' ' ' ' ' ' EMF Experience Modification Factor History ' 09' 11' 13' 2015 Plan Year An Experience Modification Factor compares the loss data of the City to average loss data for all other employers in that state who share the same classification codes. An EMF of 1.00 is considered the industry average. 5

6 2015 SELF-INSURED PROGRAM A) Reinsurance - Deposit Premium (Estimated): $ 70,935 B) Anticipated Reinsurance Audit: $ 1,000 C) Third Party Administrator: $ 35,000 D) State Assessments: State Administrative & Workers' Compensation Fund: $ 20,000 ESTIMATED ADMINISTRATION COST OF SELF-FUNDED PROGRAM: $ 126,935 ESTIMATED COST OF FULLY INSURED PLAN: $ 818,005 INCURRED LOSS BREAK-EVEN: $ 691,070 5-YEAR AVERAGES LOSSES (Incl. IBNR) $ (487,865) POTENTIAL NET SAVINGS $ 203,205 6

7 STATUTORY WORKERS COMPENSATION ACT MAXIMUM BENEFITS: Effective 7/1/14... Medical/Hospital No Limit... Death Benefit to Spouse $ 300, Burial Allowance $ 5, Permanent Total Disability (PTD) $ 155, Temporary Total Disability (TTD) $ 130,000 Permanent Partial Disability (PPD) $ 130, Maximum Weekly Benefit Payable at 66 2/3% of Wages $ 594 The Maximum Death Benefit can fluctuate higher as it relates to dependent children 7

8 REINSURANCE MIDWEST EMPLOYERS CASUALTY POLICY PERIOD: 2015 A) SPECIFIC EXCESS: Limit, each accident: Statutory E.L. limit, each accident: $ 1,000,000 Retention, each accident: $ 400,000 (Fire / PD) $ 350,000 (All Other) B) AGGREGATE EXCESS Manual Premium: $1,795,818 (Estimated) Retention Factor: % City's Maximum Retention: $2,150,133 Limit: $ 3 Million Rate: 3.95% Annual Premium: $ (Premium / Subject to Audit) 70,935 8

9 Total SAvings SELF-INSURED HISTORY Above and Beyond, By Design $8,000,000 $7,000,000 $6,000,000 $5,000,000 $4,000,000 $3,000,000 $2,000,000 $1,000,000 $- 9