Title
Life Insurance Services
Description
This report requests City Council approval to issue a Request for Proposals for Life Insurance Services for employee life insurance coverage.
Report
Summary
Term Life insurance provided by the City to eligible employees are Basic Life Insurance and AD&D (accidential death and dismemberment), Occupational AD&D (payable when death or dismemberment occurs in the line of duty), Commuter Life Insurance (payable when death occurs while traveling directly to or from work), and Optional Life Insurance (additional life insurance available with premium paid via payroll deduction). The City offers these lines of life insurance coverage for employees as part of its benefit package and per union and employee association MOUs and MOAs.
The current contract with Minnesota Life was issued effective Jan. 1, 2015, for three years (2015, 2016, and 2017) with two one-year extension options exercised at the discretion of the City. Minnesota Life's rate guarantee ends on Dec. 31, 2017, and the company has presented renewal rates for 2018 that represent a 345 percent rate increase to the basic life insurance rates based on loss ratios of more than 600 percent and 300 percent, respectively, in years 2015 and 2016. Occupational AD&D rates would be reduced 15.3 percent and Commuter rates would increase 8.4 percent. Staff recommends issuing an RFP for Life Insurance Services to determine if lower rates for the same coverage can be procured.
Financial Impact
The City now pays $706,000 annually for Basic Life, Basic AD&D, Occupational AD&D, and Commuter Life Insurance. The proposed 2018 renewal rates would increase this amount to $1.85 million. Staff recommends issuing an RFP for Life Insurance Services to determine if lower rates for the same coverage can be procured.
Concurrence
This item was recommended for approval at the May 16, 2017, Sustainability, Housing, Efficiency and Neighborhoods Subcommittee meeting by a vote of 3-0.
Department
Responsible Department
This item is submitted by Assistant City Manager Milton Dohoney, Jr. and the Human Resources Department.