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leaBue of <br /> <br />minnesota cities <br /> <br />LEAGUE OF MINNESOTA CITIES INSURANCE TRUST <br />SELF-INSURED WORKERS COMPENSATION PROGRAM <br /> <br />The League of Minnesota Cities Insurance Trust workers compensation <br />program is a joint self-insurance plan, designed to lower and stabilize <br />cities' workers compensation costs and to assure that cities have a <br />source of coverage available. This self-insured program was designed <br />for the League by Employee Benefit Administration Co. Now in its <br />seventh year, the program covers over 700 cities, with premium volume of <br />over $15 million. <br /> <br />HOW THE PROGRAM WORKS <br /> <br />Each participating city deposits with the League of Minnesota Cities <br />Insurance Trust its workers compensation deposit premium for its policy <br />year. This deposit premium is calculated using standard manual rates <br />with the applicable volume discounts and experience modification. From <br />these deposits, LMCIT purchases reinsurance to protect the program from <br />catastrophic and abnormal claims; pays for administrative and loss <br />control services; and pays claims. The balance of the deposits and <br />reserves are invested, with the earnings accruing to the benefit of the <br />participants. LMCIT's reserves and rates are reviewed annually by an <br />actuary to help assure that the program remains financially strong. <br /> <br />ADVANTAGES OF THE PROGRAM <br /> <br />1. Lower operating costs. Conventional insurance carriers typically <br />allow between 30% and 40% of the premium dollar for administrative <br />costs. The total cost to LMCIT for administration, reinsurance, and <br />commissions is well under 20%. <br /> <br />2. Investment Income. Earnings on investments accrue to the benefit of <br />participants. Due to the long-term nature of certain workers <br />compensation claims, substantial reserves are built up in the program. <br />These reserves, along with premium deposits, are invested; the <br />investment income further reduces the program costs. <br /> <br />3. Loss Control. A specialized approach to loss control provides <br />practical assistance in reducing losses. <br /> <br />4. Non-profit. Any surplus funds not needed for losses and expenses <br />remain in LMCIT's account. The only things LMCIT can do with this money <br />are to return it to the participants or to retain it as a reserve to <br />help further reduce future premiums. Either way a direct savings to <br />cities results. <br /> I ~3 university avenue east, st. paul, minnesota 551 01 [Sl 2)227-5S00 <br /> <br /> <br />