Laserfiche WebLink
• Open meeting law defense coverage. The claims experience on the optional open meeting law <br /> defense coverage continues to be very good. That's made it possible to reduce the rates this <br /> year, as with the past several years. <br /> Property losses can and do vary a great deal from year to year,but on the average have been in line <br /> with what the rates are designed to fund. <br /> • <br /> What's happening with work comp rates? <br /> The 2009 Workers' Compensation Program increase of 2 percent is a fairly positive one in the <br /> industry. A minor increase in rates reflects a positive outlook on injury frequency and indemnity <br /> costs,and a slightly upbeat outlook on trends in medical costs. In addition,the estimated loss costs <br /> for this year turned out better than expected. <br /> Injury frequency and the frequency of claims that result in lost time have been stable for several <br /> years. The increases seen in lost wage benefits paid are generally consistent with wage inflation. <br /> Medical costs'continue to be the main driver in the workers' compensation loss picture, with costs <br /> expected to increase about 8 percent per year. Although there is some indication that medical cost <br /> increases are slowing just a bit, they'll continue to put a fair amount of pressure on work comp <br /> premium rates every year(just as they do health insurance rates). <br /> Rates for the volunteer firefighter class will increase during 2009 by an additional 4 percent. <br /> Volunteer firefighter rates are based,on population served,rather than payroll, as are all other <br /> classes. As a result, class rates for volunteer firefighters systematically lag all other job class rates <br /> by an amount about equal to annual wage inflation. The additional adjustment to volunteer <br /> firefighter rates will allow these rates to stay in line with other job classes. LMCIT expects to <br /> make similar adjustments to volunteer firefighter rates in future years. <br /> How was the Property/Casualty dividend amount determined? <br /> LMCIT premium rates are designed to incorporate a safety margin. This means that premiums plus <br /> investment income are calculated to produce enough revenue to cover losses and expenses, even if <br /> losses turn out to be greater than projections. If losses turn out to be at or below projections,the <br /> safety margin isn't needed to pay for losses and can be considered for return to members via <br /> dividend, used to strengthen the fund balance,or a combination of the two. <br /> The main factor behind this year's relatively small dividend is the increased liability loss costs that <br /> we're seeing—in other words,the same factors that are driving the increase in liability premium <br /> rates. These higher-than-projected losses reached into the safety margin established when rates <br /> were set for the year. Because part of that margin was needed to pay for these losses,there's less <br /> available to return to members as a dividend. <br /> The dividend formula used to calculate the Property/Casualty dividend is the same as that used for <br /> several years. Each city's share of the dividend is proportionate to the difference between the city's <br /> total earned premiums and total incurred losses for all years the city has been a member,with large <br /> individual losses capped for purposes of the formula. Members can expect to receive the dividend <br /> in mid-December. <br /> 3 <br />