Mount Clemens votes to join group captive for stop-loss insurance; initial capital contribution discussed

The Mount Clemens City Commission voted to approve the city joining a group captive to purchase stop-loss insurance and to authorize required capital contributions after a presentation from the city’s health-care consultant, Plant Moran.

Plant Moran representatives described a captive domiciled in Tennessee that purchases stop-loss coverage for participating employers. Jonathan, a Plant Moran presenter, said the captive can reduce the city’s exposure to large renewals by capping renewal increases (he contrasted a typical 50% cap under the city’s current arrangement with a 30% cap available through the captive) and that the captive also offers access to shared cost-containment services such as patient advocacy and prescription savings programs.

City staff said the recommendation was based on the city’s favorable recent stop-loss renewal and the structure of the captive. The consultant explained capital contributions are required: the first-year capital contribution cited in the motion was $36,200 and, according to Plant Moran’s formula, capital contribution amounts are commonly 10% of the stop-loss premium. Jonathan said the capital is held as an asset invested conservatively and is refundable if the city later exits the captive.

Commissioners asked about participant size and examples (Jonathan said participants typically have at least about 50 employees and cited examples such as Clinton Township, Drake Enterprises and International Mold Corporation), returns on capital for other participants (one example shown in the materials was roughly a 5.5% notional return for a particpant), and whether the captive had required additional capital contributions historically (Jonathan said, in his experience since 2014, he has not had a client asked to contribute additional capital for recapitalization and noted that precise outcomes depend on reserve management).

One commissioner noted the materials appear to list the second-year contribution figure in a way that is inconsistent with other spreadsheet entries; Plant Moran explained the capital contribution is calculated as 10% of the stop-loss premium and provided an example (roughly $36,100 based on the exhibit) that aligns with the $36,200 first-year figure in the motion. Because the packet included a number that reads as $4,040,000, staff and the consultant were asked to clarify the second-year dollar figure in published materials; commissioners approved the motion while requesting clear budgetary documentation.

The motion, which approved membership in the captive and the initial capital contribution structure, passed by roll-call vote. The action authorizes staff to proceed with joining the captive and processing the capital contribution; the mechanics of funding and long-term financial impact will be tracked by the finance director and presented at future meetings.