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INDIAN RIVER COUNTY MEMORANDUM CONSENT 2N T0: Joseph Baird County Administrator FROM: Colleen Peterson Human Resources Manager DATE: September 16, 2014 SUBJECT: Authorize County Administrator to Execute an Agreement with SunLife for the County's Excess Loss/Reinsurance Policy for 2014/2015 Plan Year Staff seeks approval for the County Administrator to execute an agreement with SunLife for the County's Excess Loss/Reinsurance Policy for the 2014/2015 plan year at the September 23, 2014 regular meeting of the Board of County Commissioners. Background Although the County is self-insured in its Group Medical Insurance Plan, we carry a policy that reimburses the County for claims that exceed a specific limit. In the industry, these policies are referred to as Stop Loss Policies, Excess Loss Policies, or Reinsurance Policies. The County currently uses HM Highmark Life Insurance as the Reinsurance carrier. Staff requested the Gehring Group, Broker of the Medical Plan, to solicit reinsurance carriers for competitive bids. The Gehring Group received quotes from three different reinsurance carriers who provided a total of seven options (see attached). Listed below are the top three renewal options for the 2014/2015 plan year. Renewal Option - HM Hiahmark Life Insurance: The renewal option keeps the Specific Stop Loss deductible at $250,000 but decreases the Aggregate Specific deductible from $148,750 to $141,000. The Specific Stop Loss deductible ($250,000) per covered individual and the Aggregate Specific deductible ($141,000) must be met before the County is eligible for reimbursement. All claims paid in excess of $250,000 are counted towards the Aggregate Specific deductible whether it is one claim or several claims. This option minimizes the county's risk exposure but increases the fixed cost by $104,160, which is a 22.86% increase. This reduces the County's exposure at a significant increase in fixed cost. Option 1: This proposal from America Insurance Company (A+ rated) generates an increase of 9.4% or $42,780. However, America's expected claims and maximum claims factors are much higher than HM Highmark Life Insurance and 'SunLife representing an increase in claims of $1.84 million or 10.6% above current. Option 4: SunLife (A+ rated) proposed a decrease to fixed cost of $3,348 or -0.73%. This option also increases the Specific Stop Loss deductible from $250,000 to $275,000 which increases the County's exposure. However, this option, compared to the Renewal Option, reduces.the fixed cost by $107,508 to assume $25,000 in additional risk per claimant. Historically, the County has rarely had a claimant exceed $275,000, with only two in the prior five years. In addition, SunLife guarantees not to laser any claimants upon renewal of the contract and based renewals on pooled rates versus experience rates. • 116