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dd1SU � Request for Council Action Date: 10/20/03 Item Number: Department Approval Manager Approval Agenda Section Consent Item Description: 2004 Life and Long - 'Perm Disability (L'I'D) Insurance Contracts Background: The City of Roseville contracts for Long -Term Disability (LTD) and Life insurance for 2003 will expire on December 31, 2003. While the City does have a two year rate guarantee with Fortis for LTD and a renewal bid from Ramsey County on Life showing a 30% decrease, staff went to the marketplace to ensure that these were competitive rates. Findings were that we could perhaps do better. Therefore, staff issued an RFP for 2004 Life and LTD coverage and received responses from six companies. The results of the bids showed that there would be saving by accepting one provider for both services to receive a greater discount. Also, Financial Concepts Inc. has agreed to drop the standard commission rates of 10% to lower flat fee rates equivalent to between two and three percent. Both of which will save the City just over $5,000 in 2004. The plans were bid out with minimal plan design changes. Standard Insurance Co. has an A to A+ insurance carrier rating has come in with the bid most like our current plan designs and with the most competitive rates. Standard is also offering a two year rate guarantee on both products. LTD is a benefit that is covered 100% by the City thus any changes in carriers should be virtually seamless to the employee unless they are out on disability at the time of the change. These employees would remain on the current carriers plan. The only plan design modification is in the definition of "own occupation ". An employee out on LTD would have only 36 months to return to their own occupation. If after 36 months the employee through training is still unable to work in any field of equivalent (80% or less) income they would be able to remain on LTD until social security /normal retirement age. Under the current plan the definition of "own occupation" was for 60 months. On life insurance Standard came in with a 12.5% decrease from the already 30% decrease that Ramsey Co. was offering on basic life and a plan modification on public safety officers that would give an in the line of duty benefit to those positions at only a one cent per thousand cost over the non - safety related positions. The benefit for this addition is equal to the AD &D (accidental death & dismemberment) coverage. Lastly, the maximum allowable benefit is 500,000 under our current plan and under Standard it will go up to 1,000,000. Policy Implications: The City provides basic life and ADA of 40,000 and LTD insurance for all full -time employees totally approximately 140. Employees assume the total cost of any voluntary life. Financial Implications: The cost of the LTD premium will decline by approximately $700.00 and the life premium will decline by approximately $4,420. Please see rate comparisons below.