Item C07
KevIsed J..fl))
Through September
BOARD OF COUNTY COMMISSIONERS
AGENDA ITEM SUMMARY
Meeting Date: 8/16/00
Division:
MANAGEMENT SERVICES
Bulk Item: Yes: X
No
Department: HUMAN RESOURCES
AGENDA ITEM WORDING:
Board of County Commissioner's approval of excess renewal premium for the workers' compensation
program in the amount of $1 04,930.00 for the period 101112000 through 101112001.
ITEM BACKGROUND:
Last years premium was $94,665.00, which was a decrease from the previous year renewals of
$140,000.00. The anticipated premium of 109,400.00 has been decreased due to a correction in the
anticipated payroll from 15% to 8%.
PREVIOUS RELEVANT BOCC ACTION:
N/A
STAFF RECOMMENDATIONS:
Approval
TOTAL COST: $104,930.00
BUDGETED: Yes X No
COST TO COUNTY: $104,930.00
REVENUE PRODUCING: Yes
No X AMOUNT PER MONTH
Year
APPROVED BY: County Atty
OMB/Purchasing
Risk Management
DIVISION DIRECTOR APPROVAL:
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James L. Roberts, ounty AdmInIstrator
DOCUMENTATION:
Included X
To Follow
Not Required
AGENDAITEM#~'
DISPOSITION:
KeVIsed 2/'))
Through September
BOARD OF COUNTY COMMISSIONERS
AGENDA ITEM SUMMARY
Meeting Date: 8/16/00
Division:
MANAGEMENT SERVICES
Bulk Item: Yes: X
No
Department: HUMAN RESOURCES
AGENDA ITEl\'1 WORDING:
Board of County Commissioner's approval of excess renewal premium for the workers' compensation
program in the amount of $1 09,400.00, for the period 10/1/2000 through 10/1/2001.
ITEM BACKGROUND:
Last years premium was $94,665.00, which was a decrease from the previous year renewals of
$140,000.00.
PREVIOUS RELEVANT BOCC ACTION:
N/A
STAFF RECOMMENDATIONS:
Approval
TOTAL COST: $109,400.00
BUDGETED: Yes X No
COST TO COUNTY: $109,400.00
REVENUE PRODUCING: Yes
No X AMOUNT PER MONTH
Year
APPROVED BY: County Atty
OMB/Purchasing
Risk Management
DIVISION DIRECTOR APPROV ALJ}
Y~d~
ames . 0 erts, ounty A mmlstrator
DOCUMENTATION:
Included X
To Follow
Not Required
AGENDAITEM#~
DISPOSITIOi'\:
AUG-01-2000 17:36
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July 31, 2000
Ms. Nancy Cohen
Workers' Compensation Administrator
Monroe County Board of County Commissioners
5100 College Road, Room 215
Key West, FL 33040
Re: Renewal of Excess Workers Compensation Insurance
Anniversary Date: October 1, 2000
Dear Nancy:
I am pleased to provide you with the fenewal terms offered by National Union Fire
Insurance Co. of Pittsburgh, PA (part of American International Group or AIG) for the
period of October 1, 2000 to October 1, 2001.
The renewal quotation originally included an additional charge of $5800 for the aircraft
exposure. In the past. AIG included the charge for the aircraft in the specific coverage
rate. By separating the charge, the client benefits because it is not subject to audit on
the basis of payroll, which may increase during the year. 1 was able to have this charge
removed because the change had not been fully explained to me in advance, and I was
not able to prepare you so you could budget properly.
The renewal terms are as follows:
Premium Basis: $50,069,000 remuneration
Retention: $250,000 each occurrence and each employee fOf occupational disease
Aggregate Retention: $2,514,465 (minimum; also subject to audit @ 5.022% of payroll)
Minimum and Deposit Premium: $109.400 (subject to year-end final audit)
Please refer to the proposal book that will be sent to you under separate cover for more
specific details.
As you requested, Arthur J. Gallagher & Co. checked with several other insurance
companies and we can ensure that the terms being quoted remain competitive.
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AUG-OI-2000 17:36
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T-811 POO2l003 F-250
ARTHUR J. GALLAGHER & CO.
Ms. Nancy Cohen
Page 2
July 31, 2000
You will note that the renewal premium is 15.5% higher than the expiring premium of
$94,665. The reasons are:
. 11 % payroll increase: Monroe County's payroll went from $44,801,374 to
$50,069,000
. 4.5% rate increase
The rate increase is considered very modest in the current workers compensation
marketplace. Until recently, underwriters were under a directive to obtain at least a
10% increase on all accounts, but thankfully management has since backed off that
position. A1G agreed to hold increases to a minimum on existing accounts.
Also impacting the rate, are the County's losses. Our underwriter expressed his
concern about several specific claims that have deteriorated in the past year. These
include the following losses:
Total Incurred Total Incurred
Date of Loss Claimant Last Year This Year Variance
11/25/97 9641008 $ 272,470 $ 430,453 +158%
9/5/97 Q#;'ld 1?1 $ 100,479 $ 326,567 +325%
10/9/95 9640022 $ 158,008 $ 316,462 +200%
The County's total losses have increased as well. When comparing the total incurred at
this time last year to the total incurred this year, the total incurred increased each of the
past four years.
Year Last Year Current Variance
98/99 $ 294,810 $ 809,398 +275%
97/98 $ 776,556 $ 1,081,257 +139%
96/97 $ 700,391 $ 948,390 +135%
95/96 $ 944,730 $ 1,057,368 +112%
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AUG-01-2ooo 17:36
FROM-
T-811 P 003/003 F-25o
ARTHUB J. GALLAGHER &. CO.
Ms. Nancy Cohen
Page 3
July 31,2000
Given this evaluation, we believe the renewal terms are very good.
As respects the renewal of the AD&D policy, we will be invoicing you for the second
annual installment of $1,391.
Please don't hesitate to call me if you want to review any of these items further. On
behalf of Arthur J. Gallagher & Co., thank you for allowing us the opportunity to be of
continued service!
Sincerely,
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Susan Ainsztein, ARM
Account Executive
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ARTHUR J. GALLAGHER & CO. - BOCA RATON
PROPOSAL
MONROE COUNTY BOARD OF COUNTY
COMMISSIONERS
WORKERS' COMPENSATION INSURANCE
OCTOBER 1, 2000 - OCTOBER 1, 2001
Submitted Bv:
SUSAN AINSZTEIN, ARM
Account Executive
HEIDI L. GREENE, CIC
Client Service Representative
Presented:
July 2000
THIS PROPOSAL is ISSUED AS A MATTER OF INFORMATiON ONLY AND DOES NOT AMEND, EXTEND, OR
ALTER THE COVERAGE PROVIDED BY THE ACTUAL INSURANCE POLICIES.
One Boca Place, 2255 Glades Road, Suite 400E, Boca Raton, Florida 33431-7379
561/995-6706 . Fax 561/995-6708
.-.~
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MONROE COUNTY BOARD OF COUNTY COMMISSIONERS
DISCLAIMERS
· Proposal
The proposal is an outline of the coverages proposed by the insurers, based on the information
provided by your company. It does not include all the terms, coverages, exclusions, limitations,
conditions of the actual contract language. The policies themselves must be read for those details.
Policy forms for your reference will be made available upon request.
· Actuarial Disclaimer
The information contained in this proposal is based on the historical loss experience and exposures
that were provided to Arthur J. Gallagher & Co. This proposal is not an actuarial study. Should you
wish to have this proposal reviewed by an independent actuary for accuracy of loss projections,
adequacy of retention or insurance limits, or for recommended methods of funding or funding levels,
we will be pleased to provide a listing of actuaries for your use.
· Fee and/or Commissions Disclaimer
In addition to the fees and/or commissions retained by Arthur J. Gallagher & Co., it is understood
and agreed that other parties, such as excess and surplus lines, brokers, wholesalers, reinsurance
intermediaries, underwriting managers, and similar parties, some of which may be owned in whole
or in part by Gallagher's corporate parent, may earn and retain usual and customary commissions
and/or fees in the course of providing insurance products. Any such fees and/or commissions will
be the responsibility of client and not Arthur J. Gallagher & Co.
· Additional Broker/Carrier Compensation Disclaimer
Gallagher and certain of its insurance carrier markets from time to time enter into arrangements
providing for additional compensation to be paid to Gallagher by such carrier generally with respect
to the volume of premium or insurance coverages written through Gallagher with such carrier.
Gallagher from time to time enters into arrangements with certain insurance carriers or those
carriers' reinsurers providing for compensation, in addition to commissions, to be paid by such
carriers or reinsurers to Gallagher or its affiliates based on, among other things, the volume of
premium and/or underwriting profitability of the insurance coverages written through Gallagher by
such carriers or reinsurers. In addition, Gallagher and its affiliates provide management and other
services to, and receives compensation for those services from, certain reinsurers that reinsure
insurance coverages written through Gallagher by other insurance carriers. The insurance coverages
you purchase through Gallagher might be issued by an insurance carrier or reinsured by a reinsurer
that has such a relationship with Gallagher or its affiliates.
....~
.,
."
MONROE COUNTY BOARD OF COUNTY COMMISSIONERS
TABLE OF CONTENTS
Executive Summary...... .............. .... .......... .......... ....... ... ............ ....... ......... ................... ........ ..1
Renewal Proposal...................................................................................................................2
· National Union Fire Insurance Company
Insurance Company Selection / Best's Rating .......................................................................3
MONR-BCC.700
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July 31,2000
Ms. Nancy Cohen
Workers' Compensation Administrator
Monroe County Board of County Commissioners
5100 College Road, Room 215
Key West, FL 33040
Re: Renewal of Excess Workers Compensation Insurance
Anniversary Date: October 1, 2000
Dear Nancy:
I am pleased to provide you with the renewal terms offered by National Union Fire
Insurance Co. of Pittsburgh, PA (part of American International Group or AIG) for the
period of October 1, 2000 to October 1, 2001.
The renewal quotation originally included an additional charge of $5800 for the aircraft
exposure. In the past, AIG included the charge for the aircraft in the specific coverage
rate. By separating the charge, the client benefits because it is not subject to audit on
the basis of payroll, which may increase during the year. I was able to have this charge
removed because the change had not been fully explained to me in advance, and I was
not able to prepare you so you could budget properly.
The renewal terms are as follows:
Premium Basis: $50,069,000 remuneration
Retention: $250,000 each occurrence and each employee for occupational disease
Aggregate Retention: $2,514,465 (minimum; also subject to audit @ 5.022% of payroll)
Minimum and Deposit Premium: $109,400 (subject to year-end final audit)
Please refer to the proposal book that will be sent to you under separate cover for more
specific details.
As you requested, Arthur J. Gallagher & Co. checked with several other insurance
companies and we can ensure that the terms being quoted remain competitive.
N:publprop.monroe-bcc.monroe _ wc_cover. 700
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ARTHUR J. GALLAGHER & CO.
Ms. Nancy Cohen
Page 2
July 31, 2000
You will note that the renewal premium is 15.5% higher than the expiring premium of
$94,665. The reasons are:
~ 11 % payroll increase: Monroe County's payroll went from $44,801,374 to
$50,069,000
~ 4.5% rate increase
The rate increase is considered very modest in the current workers compensation
marketplace. Until recently, underwriters were under a directive to obtain at least a
10% increase on all accounts, but thankfully management has since backed off that
position. AIG agreed to hold increases to a minimum on existing accounts.
Also impacting the rate, are the County's losses. Our underwriter expressed his
concern about several specific claims that have deteriorated in the past year. These
include the following losses:
Total Incurred Total Incurred
Date of Loss Claimant # Last Year This Year Variance
11/25/97 9641155 $ 272,470 $ 430,453 +158%
9/5/97 9641121 $ 100,479 $ 326,567 +325%
10/9/95 9640022 $ 158,008 $ 316,462 +200%
The County's total losses have increased as well. When comparing the total incurred at
this time last year to the total incurred this year, the total incurred increased each of the
past four years.
Year Last Year Current Variance
98/99 $ 294,810 $ 809,398 +275%
97/98 $ 776,556 $ 1,081,257 +139%
96/97 $ 700,391 $ 948,390 +135%
95/96 $ 944,730 $ 1,057,368 +112%
N:publprop.monroe-bcc.monroe _ wc _cover. 700
ARTHUR J. GALLAGHER & CO.
Ms. Nancy Cohen
Page 3
July 31, 2000
Given this evaluation, we believe the renewal terms are very good.
As respects the renewal of the AD&D policy, we will be invoicing you for the second
annual installment of $1,391.
Please don't hesitate to call me if you want to review any of these items further. On
behalf of Arthur J. Gallagher & Co., thank you for allowing us the opportunity to be of
continued service!
Sincerely,
C~, ... "\.\ l'f'-~'
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Susan Ainsztein, ARM
Account Executive
....~
!'
MONROE COUNTY BOARD OF COUNTY COMMISSIONERS
ARTHUR J. GALLAGHER & CO. - BOCA RATON
Account Responsibility at Gallagher
With Arthur J. Gallagher & Co., all of your Insurance program's service needs will be
satisfied and handled by one organization who will be directly responsible and accountable.
You can look to one Account Executive and Service Team to be fully responsible for all of
your insurance needs.
Telephone Number: 800-239-8454
Fax Number: 561-995-6708
MONR-BCC.700
.-_.~
"
MONROE COUNTY BOARD OF COUNTY COMMISSIONERS
SPECIFIC AND AGGREGATE EXCESS WORKERS' COMPENSATION
Policy Term: October 1, 2000 - October 1, 2001
Carrier/Rating: National Union Fire Insurance Company ofPAI(A++ XV)
, Coverage: Specific and Aggregate Excess Workers' Compensation Coverage-
I Policy Form 63114 (same as expiring)
I
Specific Limit: Cov. A Workers' Compensation Statutory
Cov. B Employers Liability $1,000,000 per employee/
aggregate per accident for
Employers Liability
Estimated Annual Payroll: $50,069,000
Aggregate Limit: $1,000,000 Aggregate Excess of Loss Fund Stop Loss Point
I Loss Fund Factor: 5.022% of Actual Payroll (subject to audit based on actual payroll)
! Deposit Loss Fund: $2,514,465
I Minimum Loss Fund: $2,514,465
Self-Insured Retention: $250,000 per occurrence (or for each employee for occupational
I disease under Coverage B)
I Rate: .2206 per $100 Payroll (subject to audit based on actual payroll)
I Minimum and Deposit $109,400
Premium:
Major Exclusions: . Punitive or Exemplary Damages
(including but not limited to) . Employment Related Practices Claims
. Serious or willful misconduct of the employee, including
intentional acts
Terms and Conditions: . Includes USL&H and Jones Act Endorsements - Jones Act (46
USC Section 688) See Endorsement #56301 (3/93) provided
with specimen policy
. Voluntary Compensation Endorsement
. Broad Form Other States Endorsement
. Defense Costs are included in Retention
. Industrial Aid Aircraft Endorsement
I . Premium and Loss Fund are subject to annual audit based on
I
! PAYROLL, NOT PREMIUM
. Signed Application to be provided subsequent to binding
. Quarterly loss runs to be provided to insurer by TP A
. Receipt and favorable review semi-annually of large losses of
$100,000 or greater
. Receipt and favorable review of recently valued large losses, and
aggregate claims information
MONR-BCC.700
....~
.,
..,
MONROE COUNTY BOARD OF COUNTY COMMISSIONERS
WORKERS' COMPENSATION PAYROLL WORKSHEET (10/01100 -10/01101)
5506 Street Road Const. & Drivers $667,058
7370 Taxicab Co. & Drivers $1,940,510
7380 Drivers, Chauffeurs & Helpers $229,932
7422 Aircraft/Heli Operation-Patrol $147,634
7423 Aircraft/Heli Operations $279,384
7590 Garbage Workers $398,045
7704 Firefighters & Drivers $140,653
7720 Police Officers & Driver- $16,428,918
8380 Automobile Service or Repair Ctr. $626,228
8720 Inspection of Risks for Ins. Or Values $866,365
8742 Salesperson, Collectors, or Mess. $437,805
8810 Clerical Office Employees $18,793,205
8820 Attorney - All Employees & Clerical $664,808
8829 Convalescent or Nursing Home $128,566
8835 Public Health Nursing Assoc. $551,645
9015 Building - NOC $1,877,795
9019 Bridge - Vehicle Tunnel Operations $329,322
9101 Public Library $206,693
9102 Park NOC $381,269
9410 Municipal, Township, Cty, Employees $4,781,823
9519 Household Appliances $191,342
TOTAL $50,069,000
MONR-BCC.700
...."
!'
MONROE COUNTY BOARD OF COUNTY COMMISSIONERS
INSURANCE COMPANY SELECTION
The Best's Guide is the guidebook the insurance industry uses to determine the financial stability
of an insurance company. A copy of the Best's Guide report on the insurance companies quoted
is available for your review.
While we strive to be certain that your insurance is placed with reputable, highly rated insurance
companies, we have no way of guaranteeing the financial accuracy of the Best's Guide or the
financial stability of any insurance company.
For these reasons, we recommend that you take into account the financial stability of all the
insurance companies prior to making your selection as to who will write your insurance.
1999 Best's Surplus
Assigned Admitted Lines
Company Proposed Rating Carrier Carrier
National Union Fire Insurance Co. of Pittsburgh, PA A++ XV X
Alphbf IL'ti
a e Ica IS n~ umerIca IS ng
A+, A++ = Superior Ranges from 1 to 15
A,A++ = Superior Ranges from 1 to 15
A, A- = Excellent 1 = Smallest
B+, B++ = Very Good 15=Largest Category
B,B- = Good
C+,C++ = Fair
C = Marginal
N
, I L' ti
Admitted Carrier - Authorized licensed insurer doing business in Florida.
Surplus Lines Carrier - An unauthorized insurer which has been made eligible by the Florida
Department of Insurance to issue insurance coverage. Surplus Lines carriers are not protected by
the Florida Insurance Guarantee Association, Inc. under F. S. 631.
MONR-BCC.700
....l.
.,
,..
MONROE COUNTY BOARD OF COUNTY COMMISSIONERS
BEST'S RATING
Arthur J. Gallagher & Co. will not use an insurance company of questionable financial or
managerial integrity. We use information obtained by the A.M. Best Company to monitor the
character of the various companies. The A.M. Best Company evaluates insurance companies on
the basis of general management and assigns one of six ratings:
A++, A+
A, A-
B++, B+
Superior
Excellent
Very Good
B,B-
C++,C+
C, C-
Good
Fair
Marginal
RATING "NOT ASSIGNED" CATEGORIES
NA-1 Special Data Filing NA-6 Reinsured by Unrated Reinsurer
NA-2 Less than Minimum Size NA-8 Incomplete Financial
NA-3 Insufficient Operating Experience NA-9 Information
NA-4 Rating Procedure Inapplicable NA-11 Company Request
NA-5 Significant Change Rating Suspended
Also considered by A.M. Best Company is the financial size of insurance companies to which 15
categories are assigned:
CLASS I $ up to $ 1,000,000
CLASS II 1,000,000 to 2,000,000
CLASS III 2,000,000 to 5,000,000
CLASS IV 5,000,000 to 10,000,000
CLASS V 10,000,000 to 25,000,000
CLASS VI 25,000,000 to 50,000,000
CLASS VII 50,000,000 to 100,000,000
CLASS VIII 100,000,000 to 250,000,000
CLASS IX 250,000,000 to 500,000,000
CLASS X 500,000,000 to 750,000,000
CLASS XI 750,000,000 to 1,000,000,000
CLASS XII 1,000,000,000 to 1,250,000,000
CLASS XIII 1,250,000,000 to 1,500,000,000
CLASS XIV 1,500,000,000 to 2,000,000,000
CLASS XV 2,000,000,000
The size category is determined by adding the surplus to policyholders, conditional or technical
reserves, plus equities and unearned premium and loss reserves, less indicated shortages in
reserves, if any. For stock companies, policyholders surplus is the sum of capital, and for mutual
companies, it is the surplus funds.
It is the policy of Arthur J. Gallagher & Co. to discourage the use of carriers whose Best
Rating is less than A VI.
MONR-BCC.700