Item 3.9 Renewal of the Citys Workers Compensation Insurance Coverage
Request for
City Council Action
DEPARTMENT INFORMATION
ORIGINATING DEPARTMENT REQUESTOR: MEETING DATE:
Administration City Administrator/Finance Director Flaherty June 8, 2026
PRESENTER(s) REVIEWED BY: ITEM #:
Consent 3.9 – Insurance Renewal
STRATEGIC VISION
MEETS: THE CITY OF OTSEGO:
Is a strong organization that is committed to leading the community through innovative communication.
Has proactively expanded infrastructure to responsibly provide core services.
Is committed to delivery of quality emergency service responsive to community needs and expectations in a
cost-effective manner.
X Is a social community with diverse housing, service options, and employment opportunities.
Is a distinctive, connected community known for its beauty and natural surroundings.
AGENDA ITEM DETAILS
RECOMMENDATION:
City staff is recommending that the City Council approve the renewal of the City’s workers’ compensation coverage.
ARE YOU SEEKING APPROVAL OF A CONTRACT? IS A PUBLIC HEARING REQUIRED?
No No
BACKGROUND/JUSTIFICATION:
The City obtains workers compensation insurance coverage through the League of Minnesota Cities Insurance Trust
(LMCIT). The coverage period for the renewal runs from July 1, 2026 – June 30, 2027.
LMCIT provides a quotation for a “deposit premium” based on payroll information provided by City staff, which for
this renewal period was based on approved 2026 budgeted personnel costs and preliminary 2027 budgets. This
deposit premium serves as the City’s cost until the LMCIT conducts a final coverage period audit, typically 6 -12
months following the end of a coverage period, which determines whether there is a refund to the City or a final
premium payment due.
The premiums are partially based off actual claim experience in the 3 oldest coverage periods out of the 4 most recent
coverage periods. This means the 2026-27 premiums are based on 2022-23, 2023-24 and 2024-25 actual claim
experiences (aka Experience Modification).
The quoted premium for 2026-27 is $95,320. This is an increase of $38,150 (66.73%) from the 2025-2026 quoted
premium of $57,170. The change is the net result of the City’s experience rating increasing from 0.71 to 0.89,
increased reported payroll numbers, and decreased class code rates from LMCIT when compared to the prior year.
LMCIT offers three premium options: 1) Regular Premium; 2) Deductible Premium; 3) Retrospective Rates Premium.
The City has historically chosen the Regular Premium, which can only change based on actual payroll numbers during
their final audit, and actual claims will have no effect.
Both other available options provide cheaper premiums if the City has good claim experience in the given period but
also has the possibility of paying higher premiums if the City has significant claims. These options can be found on the
attached LMCIT notice of premium.
Staff would recommend that the City accept the regular premium option.
SUPPORTING DOCUMENTS ATTACHED:
• LMCIT Notice of Premium
POSSIBLE MOTION
PLEASE WORD MOTION AS YOU WOULD LIKE IT TO APPEAR IN THE MINUTES:
Motion to authorize the City Administrator/Finance Director to accept the coverage offered from LMCIT with the
regular premium option for the 2026-2027 coverage periods.
BUDGET INFORMATION
FUNDING: BUDGETED:
Fund 101 – General
Fund 601 – Water Utility
Fund 602 – Sanitary Sewer Utility
Workers’ compensation coverage is allocated by the
employee to each fund/department of the City.
Yes
League of Minnesota Cities Insurance Trust
Group Self-Insured Workers' Compensation Plan
145 University Avenue West St. Paul, MN 55103-2044 Phone (651)215-4173
NOTICE OF PREMIUM OPTIONS FOR STANDARD PREMIUMS_LM4514_01/24
Page 1 of 4 LM4514 (3/02)(Rev.1/24)
Notice of Premium Options for Standard Premiums of $100,000 - $150,000
OTSEGO, CITY OF
13400 90TH STREET NE
OTSEGO,MN 55330-7259
Agreement No.:WC 1003689_Q-10
Agreement Period:
From:07/01/2026
To:07/01/2027
Enclosed is a quotation for workers' compensation deposit premium.Note:Renewal Coverage will be bound as
per the expiring coverage arrangement, including coverage for elected and appointed officials, with the
premium indicated on the quote, unless the member or agent sends a written request not to bind renewal
coverage.
PAYROLL DESCRIPTION CODE RATE
ESTIMATED
PAYROLL
DEPOSIT
PREMIUM
SEE ATTACHED SCHEDULE FOR DETAILS
Manual Premium 117,901
Experience Modification 0.89 -12,969
Standard Premium 104,932
Deductible Credit 0.00%0
Premium Discount -9,612
Net Deposit Premium $95,320
Adjustment for Commission*0
Total Net Deposit Premium $95,320
*Workers compensation rates assume a 2% standard commission.The commission adjustment accounts for the
commission difference, above or below 2%.
Agent:
01522 USI INsurance Services LLC
8000 Norman Center Dr #400
Bloomington,MN 55437-1180
Notice of Premium Options for Standard Premiums of $100,000 - $150,000
(Con't)
Page 2 of 4 LM4514 (3/02)(Rev.1/24)
OPTIONS
Please indicate below the premium option you wish to select.You may choose only one option and you
cannot change options during the agreement period.
1.*Regular Premium Option Net Deposit
Premium
Commission
Adjustment
Total Net
Deposit
Premium
95,320 0 95,320
2.*Deductible Premium Option
Deductible options are available in return for a premium credit applied to your estimated standard
Premium of $104,932.The deductible will apply per occurrence to paid medical costs only.
There is no aggregate limit.
Deductible
per
Occurrence
Premium
Credit
Credit
Amount
Net Deposit
Premium
Commission
Adjustment
Total Net
Deposit
Premium
*$250 0.60%-630 94,690 0 94,690
*$500 1.10%-1,154 94,166 0 94,166
*$1,000 1.90%-1,994 93,326 0 93,326
*$2,500 3.50%-3,673 91,647 0 91,647
*$5,000 5.00%-5,247 90,073 0 90,073
*$10,000 7.00%-7,345 87,975 0 87,975
*$25,000 11.50%-12,067 83,253 0 83,253
*$50,000 15.00%-15,740 79,580 0 79,580
3.*Retrospective Rates Premium Option
Retro-Rated
Minimum Factor
Est. Minimum
Premium
Retro-Rated
MaximumFactor
Est. Maximum
Premium
*0.557 %58,447 1.300 %136,412
*0.511 %53,620 1.500 %157,398
*0.429 %45,016 2.000 %209,864
This quotation is for a deposit premium based on your estimate of payroll and selected options.Your final actual
premium will be computed after an audit of payroll subsequent to the close of your agreement year and will be
subject to revisions in rates,payrolls and experience modification.While you are a member of the LMCIT Workers'
Compensation Plan,you will be eligible to participate in dividend distributions from the Trust based upon claims
experience and earnings of the Trust.
If you desire the coverage offered above, please return this signed document for the option you have selected.
This quotation should be signed by an authorized representative of the member requesting coverage.
Notice of Premium Options for Standard Premiums of $100,000 - $150,000
(Con't)
Page 3 of 4 LM4514 (3/02)(Rev.1/24)
Signature Title Date
Notice of Premium Options for Standard Premiums of $100,000 - $150,000
(Con't)
Page 4 of 4 LM4514 (3/02)(Rev.1/24)
CONTINUATION SCHEDULE FOR QUOTATION PAGE
REMUNERATION RATE CODE DESCRIPTION EST. PREM
652,446 3.385 5506 STREET CONSTRUCTION 22,085
306,302 1.925 7520 WATERWORKS 5,896
886,798 1.707 7580 SEWEAGE DISPOSAL PLANT 15,138
685,012 5.711 7706 FIREFIGHTERS (NOT VOLUNTEER) FULL-TIME PAID 39,121
110,800 5.711 7706 FIREFIGHTERS (NOT VOLUNTEER) PART-TIME AND
PAID ON CALL 6,328
183,369 3.091 8227 CITY SHOP & YARD 5,668
66,662 0.309 8810 PUBLIC UTILITIES CLERICAL 206
2,168,575 0.309 8810 CLERICAL OFFICE EMPLOYEES NOC 6,701
404,503 4.124 9102 PARKS 16,682
31,500 0.000 9411 ELECTED OR APPOINTED OFFICIALS 76
Manual Premium 117901.0
DEFINITION OF MEMBER ENDORSEMENT_LM4684_01/24
LM4684 (1/24)
League of Minnesota Cities Insurance Trust
Group Self-Insured Workers’ Compensation Plan
145 University Avenue West St. Paul, MN 55103-2044 Phone(651) 215-4173
DEFINITION OF MEMBER ENDORSEMENT
It is agreed and understood the “Member” named in item 1 of the Information Page is amended to include:
EDA