DATE: May 17, 2018
TO: Board of Mayor and Aldermen
FROM: Eric Stuckey, City Administrator
Kevin Townsel, Human Resources Director
Sara Sylvis, Risk/Benefits Manager
SUBJECT:
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Presentation of Self-Insured Workers Compensation Program
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Purpose
The purpose of this memorandum is to provide information to the Franklin Board of Mayor and Aldermen (BOMA) concerning the option to move to a self-insured workers compensation program.
Background
The City of Franklin was insured through an insurance pool from 1979 through 2012. In 2012, the City transitioned to a commercial carrier, because it was growing quickly and needed the benefits of a larger insurance company. For many years, we had guaranteed cost workers compensation coverage which meant the City paid a premium up front and all claims were paid by the insurance pool. As we continued to grow and maintained a good loss experience, we transitioned to a per occurrence deductible. In FY 2011, we switched to a modified self-insurance program and had the program in place for two years. When the City went out to bid for insurance coverage in 2012, we went with a large deductible program that had a $100,000 protection cap per claim. Under this approach, the City has basically assumed a greater level of risk for the past six years, due to an increase in our attachment point. The attachment point increases based on the number of employees and increases in our payroll. The reason the City is considering a self-insured program now, is that it is the next progressive step in a strong workers compensation program. The City has a stable loss experience and a self-insured program would allow the City to control even more workers compensation cost through direct claims management.
Financial Impact
There are a lot of financial variables to consider and could be hard to quantify. One factor that is impossible to determine is how many claims the City might have in a fiscal year. When looking at estimating t...
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