Agenda 12/15/2009 Item #16E 2
EXECUTIVE SUMMARY
Agenda Item No. 16E2
December 15, 2009
Page 1 of 2
Recommendation to approve the purchase of Group Health Reinsurance coverage for
calendar year 2010 in the amount of $1,018,777 which equates to a reduction of 19.9%.
OBJECTIVE: To protect the Group Health Fund from catastrophic losses through the purchase of
group health reinsurance coverage.
CONSIDERATIONS: The Board of Commissioners through its Risk Management Department
administers a partially self-funded Group Health Insurance Program (the Plan) for its employees and
their eligible dependents. Group Health reinsurance coverage is purchased to protect the health plan
against adverse loss experience. Two types of reinsurance coverage are available. Aggregate
excess insurance provides coverage to the Plan if total losses exceed an aggregate deductible for the
entire group. Specific excess insurance protects the plan if a covered member incurs claims in excess
of a "per member" specific deductible. Currently, the County purchases specific excess insurance
through Symetra with a specific deductible of $175,000 per member. The specific excess coverage
provides a maximum lifetime benefit of $2,000,000 per covered member.
Willis, Inc., the County's benefits brokerage and actuarial firm, marketed the excess health insurance
program on behalf of the County. Proposals were sought from eight carriers. Specific retention levels
ranging from $150,000 per claimant to $300,000 per claimant were sought. A total of three carriers
offered proposals providing nine coverage options. Five carriers declined to quote.
After reviewing the options, Willis recommends that the County select a proposal from ING Group
which increases the self insured retention from $175,000 to $225,000. The analysis suggests that the
number of large claims will either remain the same or decrease in 2010 as compared to 2009.
Increasing the retention will result in an estimated annual premium reduction of 19.9% or $253,566.
Willis projects a 97% probability that the reduction in premium will not be offset by higher retained
losses. Thus, this option offered the lowest net cost when comparing the cost of coverage and the
probability of an excess insurance recovery. The proposal from ING will continue to. offer a
$2,000,000 lifetime limit per member. ING carries a Best's "A" (Superior) rating.
Willis also analyzed the purchase of aggregate excess insurance. The cost of aggregate coverage is
$30,067 per year. However, based upon the terms of coverage, the actuary determined that there is a
99% probability that the aggregate deductible would never be reached. Thus, the purchase of
aggregate reinsurance is not recommended. Staff concurs with these recommendations.
FISCAL IMPACT: The total estimated cost of group health reinsurance in calendar year 2010 is
$1,018,777 based upon an average enrollment of 2,088 employees. There are sufficient funds
available in Fund 517 for this purchase.
GROWTH MANAGEMENT IMPACT: There is no growth management impact associated with this
item.
LEGAL CONSIDERATIONS: This item has been reviewed by the County Attorney's Office and does
not present any legally issues. This item is legally sufficient for Board action. - CMG
RECOMMENDATION: It is recommended that the Board approves the purchase of group health
reinsurance as outlined in the executive summary and authorizes the County Manager or his designee
to sign the documents necessary to commence coverage.
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PREPARED BY: Jeffrey A. Walker, CPCU, ARM, Director, Risk Management
Item Number:
Item Summary:
Meeting Date:
Agenda Item No. 16E2
December 15, 2009
Page 2 of 2
COLLIER COUNTY
BOARD OF COUNTY COMMISSIONERS
16E2
Recommendation to approve the purchase of Group Health Reinsurance coverage for
calendar year 2010 in the amount of $1.018.777 which equates to a reduction of 19.9% over
prior year's premium.
12/15/20099:00:00 AM
Prepared By
Jeffrey A. Walker, CPCU,
ARM
Administrative Services
Division
Director - Risk Management
Date
Risk Management
11/2S/2009 9:59:41 AM
Approved By
Jeffrey A. Walker, CPCU,
ARM
Administrative Services
Division
Director - Risk Management
Date
Risk Management
11/251200910:05 AM
Approved By
Colleen Greene
County Attorney
Assistant County Attorney
Date
County Attorney
11125120092:18 PM
Approved By
Jeff Klatzkow
County Attorney
Date
Approved By
1211/20094:05 PM
Len Golden Price
Administrative Services
Division
Administrator. Administrative Services
Date
Administrative Services Division
1212120098:45 AM
Approved By
OMS Coordinator
County Manager's Office
Date
OffIce of Management & Budget
12/2120099:52 AM
Approved By
Laura Davisson
County Manager's Office
Management & Budget Analyst
Date
Office of Management & Budget
12/21200910:28 AM
Approved By
John A, Yonkosky
Office of Management &
Budget
Director - Management and Budget
Date
Office of Management & Budget
1212120092:23 PM