Stop loss insurance is purchased to protect self-funded health plans against adverse claims experience.  Competitive hospital and physician contracts makes the use of stop loss protection infrequent; however, the plan must be protected from large individual claims and protect the self-funded health plan from significant losses.

The City has had two (2) catastrophic claims over the last three (3) years.

Renewal of this insurance was accomplished with the assistance and advice of the City’s health insurance broker/consultant – L/P Insurance Services.

Fourteen (14) companies were sent offers to bid, with eleven (11) choosing not to bid or offer quotes. Companion Life Insurance Company was chosen because they provided the most competitive renewal option.

Companion Life Insurance is our current Stop Loss provider.  Companion Life provided a very competitive renewal quote with an increase of 8.99% over last year's cost.  This is an expected increase based on industry trends and rising healthcare and pharmacy costs.  The second provider offered a bid nearly twenty-five percent (25%) above current cost.

By choosing this renewal option with Companion Life Insurance, we will be under the anticipated twenty percent (20%) the City budgeted for this renewal.

1.  The Council may choose to approve the proposed contract with Companion Life Insurance Company as outlined by staff and approve the Contracts & Risk Manager to execute the contract.

2.  The Council may choose not to purchase specific stop loss insurance from Companion Life Insurance Company.

3.  The Council may direct the City Manager to provide alternatives to staff to address the issue of large claims exposures.

I move to approve the purchase of stop loss insurance with Companion Life Insurance Company for the City’s self-funded group medical benefits program for 2017/18 in the amount of $417,237 and authorize the Contracts and Risk Manager to execute policy documents.