HomeMy WebLinkAbout4.11 ABD Ins. Rate RenewalCITY CLERK
File # El 171❑iC 1-01-& ��]
AGENDA STATEMENT
CITY COUNCIL MEETING DATE: July 1, 2003
SUBJECT: Prudential Life, Accidental Death & Dismemberment (AD&D),
Long Term Disability (LTD) and Short Term Disability (STD)
Insurance Rate Renewal
Report Prepared by: Julie Carter, Assistant to the City Manager
ATTACHMENTS: None
RECOMMENDATION: Authorize City Manager to accept the rate renewal as provide by
ABD Insurance Services on behalf of Prudential Financial.
FINANCIAL STATE ENT: Sufficient funds have been included in the City's proposed Fiscal
Year 2003-2004 budget to cover premium costs.
DESCRIPTION: The City currently provides Basic Life, AD&D, and LTD insurance
to regular City employees. Life/AD&D insurance is provided to employees who regularly work 40 hours
per week; LTD insurance is provided to employees who regularly work 20 or more hours per week. The
City also maintains STD insurance at the employees expense if working regularly 20 hours or more per
week.
The benefit levels provided through the City's current policies do not exceed those provided by most
employers. Basic Life insurance benefits are capped at a flat $50,000. Briefly, the LTD coverage has a
60-day waiting period and is designed to compliment the City General Leave policy, to provide coverage
for catastrophic, long-term occurrences. The monthly LTD benefit is 60% of monthly earnings up to a
maximum of $7,500 per month.
The City's Personnel Officer provided Prudential Insurance with an employee census and Prudential agreed
to continue the Basic Life and AD&D rates with a rate pass and a two-year rate guarantee through Fiscal
Year 2004-2005.
Based upon the City's experience the City should experience an increase of 130.1% to the current Long
Term Disability rates, however, Prudential Insurance is capping the increase at 25%.
The STD program has had a very unfavorable experience, running at a loss ratio of 188.9% over the past
year and at 135.3% the year before. According to the current re -rate strategy, the STD should receive an
increase of 110%. However, Prudential Financial is capping the STD increase at 50%. Again, the STD
insurance premiums are fully paid by employees.
COPIES TO: Dulcey Lester, ABD Insurance Services
it
I.TEM NO.
Recommendation
Staff recommends the City Council authorize the City Manager to accept the rate renewal as provide by
ABD Insurance Services on behalf of Prudential Financial.