Title
Contract Extension for Employee Life Insurance (Ordinance S-45885)
Description
Request authorization to amend the contract with Minnesota Life Insurance Company, Inc. Agreement (Contract No. 141100) by extending the term of the contract for one year in an amount not to exceed $1,320,000. The amount requested represents the City-paid life insurance premiums: basic, accidental death and dismemberment, occupational, and commuter life insurance. Employees pay the full cost of optional life insurance. Further request authorization for the City Controller to disburse all funds related to this item.
Report
Summary
The City entered into contract with Minnesota Life Insurance Company, Inc. on Jan. 1, 2015 to provide employee life insurance benefits. The second extension expires Dec. 31, 2019. Due to an unusually high number of employee and family member deaths during 2015 and 2016, the City experienced a loss ratio of 609% for 2015 and 306% for 2016, which resulted in a rate increase. The loss ratios experienced in 2017 and 2018 were much lower, and 2019 is trending well. It is recommended that the City add one more year of experience before issuing an RFP to avoid having one or both of these abnormally high years reflected in the plan experience for rate setting purposes. An RFP will be conducted in early 2020.
Procurement Information
A Determination Memo was approved that states that in 2014, a formal RFP was conducted which resulted in four submittals, with Minnesota Life Insurance Company, Inc. being awarded the contract.
Contract Term
The existing agreement is for a three-year period with the option to extend the agreement for two one-year terms. This request would extend the current agreement until Dec. 31, 2020.
Financial Impact
Funds are available in the Life Insurance Trust.
Department
Responsible Department
This item is submitted by Acting Deputy City Manager Toni Maccarone and the Human Resources Department.