Broken Arrow City Council
Meeting of: 07-03-2017
To: Mayor and City Council
From: Office of the City Manager
Title:
title
Approval of and authorization to execute a proposal with United States Fire Insurance Company to provide specific and aggregate re-insurance coverage for the employee health plan for fiscal year 2017-18
End
Background:
The City has provided employee health benefits through self-insurance since 1989. To protect the financial integrity of the plan, stop loss insurance is obtained to prevent significant loss from catastrophic claims on both an individual and aggregate basis. EmployerAdvocates, the City's benefit consultant, annually seeks proposals from re-insurance companies to determine the most competitive and comprehensive coverage available. Proposals for fiscal year 2017-18 were received from Optum, who currently provides stop loss coverage to the plan, and United States Fire Insurance Company.
The employee health plan experienced a high claims year. The renewal provided by Optum included reduced benefits and an increase of 8.08% over the 2016-17 expected plan costs. However, United States Fire Insurance Company provided a competitive proposal which matched the current benefit structure but did include a laser deductible. A laser is a common stop loss industry practice of setting a higher deductible for certain participants that experienced or are likely to experience high-cost claims. Including the additional cost of the laser, the proposal has an overall increase of 3.74% over the 2016-17 expected plan costs. United States Fire Insurance Company's proposal provides the lowest overall cost for specific and aggregate re-insurance coverage.
United States Fire Insurance Company is rated Excellent (A) by AM Best Company. Based upon the proposals submitted, it is recommended that this company be selected to provide re-insurance protection to the plan.
United State...
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