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City consultant recommends tailored workers' compensation renewal; proposes mixed retention limits
Summary
An independent risk consultant recommended a renewal package that keeps a $1.5 million self‑insured retention for most employees but raises the retention to $2 million for police, fire and electric utility workers, and recommended Midwest Employers Casualty with a two‑year rate guarantee as the best renewal option.
City finance staff and a risk consultant briefed the Independence City Council on June 9 about pending property and excess workers' compensation renewals and recommended a renewal approach that preserves the city's self‑funded program while adjusting retention levels for higher‑risk classifications.
Why it matters: The city's choice of retention and excess carrier affects annual premiums, the city's exposure to large claims and long-term liabilities from legacy cases. Presenters said fully insuring the program would be fiscally unfeasible given both current premiums and the need to budget for claim runoff from prior years.
Bob Charlesworth, the city's independent risk management consultant, told the council that Safety National, the city's expiring excess carrier, indicated a shift in its market that would raise minimum self insured retention (SIR) to $2 million. Charlesworth said the state of Missouri has approved raising SIR levels to $2 million, but that alternatives exist and the consultant recommended a mixed approach from Midwest Employers Casualty: retain a $1.5 million SIR for most class codes while setting a $2 million SIR for fire, police and Independence Power & Light employees, with the carrier guaranteeing the rate for two years.
"The bottom line, the renewal recommendation is the option B that we've outlined with Midwest Employers Casualty," Charlesworth said, summarizing the preferred quote and noting it represented a roughly 2 percent decrease in cost compared with current expenditures and included a two‑year rate guarantee.
Charlesworth reviewed alternatives the city considered, including Safety National's offer to move to a $2 million SIR at a higher premium and a fully insured option that carried a multi‑million dollar premium (the consultant said a fully insured quote approached $8.7 million) and therefore was not practical. He also described the city's ongoing use of a third‑party claims administrator and an aggressive nurse triage program for early case management.
Councilors asked operational questions about legacy claims and citywide safety programs. Charlesworth described "legacy" claims — long‑running settlements that require periodic payments — and said some date back to the mid‑2000s, adding that the city is actively working to settle older claims and strengthen return‑to‑work efforts. He also said the city has limited citywide safety programming at present and staff are working on reinvigorating a coordinated safety effort.
What happens next: Staff said the city's renewal proposals will be before the council for formal consideration at the next meeting; Charlesworth's recommendation was for the Midwest Employers Casualty option with the mixed SIR approach and a two‑year rate guarantee.
Ending: Presenters urged continued investment in citywide safety programs and aggressive claim management to reduce long‑term costs; no formal council action on renewal was taken at the June 9 briefing.
