Exhibit 1 - Agenda Information SheetCity of Denton
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AGENDA INFORMATION SHEET
DEPARTMENT: Procurement & Compliance
CFO: Antonio Puente, Jr.
DATE: December 17, 2019
SUBJECT
Consider adoption of an ordinance of the City of Denton, a Texas home-rule municipal corporation,
authorizing, and approving the purchase of Excess Workers’ Compensation Insurance Coverage for the
City of Denton, through the City’s sole broker of record, McGriff, Seibels, and Williams of Texas, Inc., and
in accordance with Chapter 252.024 of the Texas Local Government Code such coverage is exempt from
the requirements of competitive bidding; and providing an effective date (File 7263 - awarded to Midwest
Employers Casualty Company at a rate of $0.1779 per $100 of payroll, in the three (3) year not-to-exceed
amount of $675,000).
INFORMATION /BACKGROUND
The City of Denton currently has an excess workers’ compensation insurance policy through Midwest
Employers Casualty Company (MECC). The City has a $500,000 per occurrence Self-Insured Retention
(SIR) under this policy with insurance coverage up to the statutory benefit levels under workers’
compensation. Although the City is self-funded for our workers’ compensation exposures, since the City is
still liable for all reasonable and necessary medical expenses, indemnity benefits, impairment benefits, and
other related expenses if an employee is injured on the job while in the course and scope of employment,
and since there is no cap on the potential costs of a workers’ compensation claim, the City has purchased
the excess policy to provide an added layer of protection to our self-funded program. Our expiring premium
with MECC was based on a rate of $0.1711 per $100 of payroll, for an estimated annual premium of
$181,398 in 2019.
Given the complexities of this insurance product solicitation as described in greater detail below, and given
that Chapter 252.024 of the Texas Local Government Code provides that such products are exempt from
the requirements of competitive bidding, the City utilized the services of our sole broker of record, McGriff,
Seibels, and Williams (McGriff), to assist us in procuring these coverages without going through the
Request for Proposal (RFP) process.
Over the past several months, McGriff has been actively engaged in the global excess market on behalf of
all their Texas public entity clients. The current excess insurance market has “hardened” significantly in
recent years which means that annual premiums for this product have increased significantly and many
insurance carriers have left the market entirely. Those insurance carriers who remain in the market are
seeking higher SIR’s, especially for public entities with fire and law enforcement exposures. Also,
underwriters for these excess insurance companies are requiring much more information from a prospective
insured than they have in the past.
City Hall
215 E. McKinney Street
Denton, Texas
www.cityofdenton.com
More specifically, the City has had one workers’ compensation injury involving an electrocution and
amputation that exceeded the City’s SIR, and the recent police officer shooting will exceed the City’s SIR.
As a result, McGriff received responses from two (2) excess workers’ compensation insurance companies:
Midwest Employers Casualty Company (incumbent) provided three options:
• $203,492 for a $600,000 SIR;
• $190,909 for a $750,000 SIR; and
• $168,490 for a $1,000,000 SIR
Safety National provided one option:
• $171,807 for a $750,000 SIR (please note that Safety will only provide excess workers’
compensation insurance if they also provide the excess liability insurance – see File # 7264)
A detailed analysis of the proposals from Midwest Employers Casualty Company and Safety National can
be found in Exhibit 2 and Exhibit 3.
The total annual premium for excess insurance is a function of the total payroll number for the City. The
proposed rate from Midwest Employers Casualty Company represents a 4% rate increase with a 7.9%
increase in total payroll compared to last fiscal year.
Based on the evaluation of the proposals, both staff and our broker of record, McGriff, recommend the
purchase of excess workers’ compensation insurance from Midwest Employers Casualty Company with the
$600,000 SIR, for the rate of $0.1779 per $100 of payroll, for an estimated one-year premium of $203,492.
The premium proposed by MECC does not represent the lowest overall upfront total cost to the City.
However, the annual premium savings of approximately $31,000, when compared with the potential of the
City being responsible for an additional $150,000 per claim, does not seem to be in the best interest of the
City since workers’ compensation claims do not have any type of cap on total claim cost.
The City’s account will be serviced out of the office located at 5080 Spectrum Drive, Suite 900E, Addison,
TX 75001. Midwest Employers Casualty Company is headquartered in Chesterfield, Missouri.
PRIOR ACTION/REVIEW (COUNCIL, BOARDS, COMMISSIONS)
In December of 2016, the City Council awarded a contract for Excess Workers’ Compensation Insurance
to McGriff, Seibels & Williams with coverage placed with Midwest Employers Casualty Company.
RECOMMENDATION
Award a contract with Midwest Employers Casualty Company, for Excess Workers’ Compensation
insurance, in a three (3) year not-to-exceed amount of $675,000.
PRINCIPAL PLACE OF BUSINESS
McGriff, Seibels and Williams, Inc.
Winston-Salem, NC
ESTIMATED SCHEDULE OF PROJECT
This is a three (3) year contract.
FISCAL INFORMATION
These services will be funded from Excess W/C Insurance account 860002.6719. The budgeted amount for
this item is $675,000.
EXHIBITS
Exhibit 1: Agenda Information Sheet
Exhibit 2: MECC Excess Workers’ Compensation Proposal
Exhibit 3: Safety National Excess Workers’ Compensation Proposal
Exhibit 4: Broker Recommendation Letter
Exhibit 5: Ordinance
Respectfully submitted:
Lori Hewell, 940-349-7100
Purchasing Manager
For information concerning this acquisition, contact: Cassandra Ogden, 940-349-7195.
Legal point of contact: Mack Reinwand at 940-349-8333.